Following Chancellor of the Exchequer Jeremy Hunt acknowledgement that the UK was in recession during last week’s Autumn Statement Mad Devs chief executive David Boyce is keen to highlight the need for car retailers to keep their customers close through challenging economic times.
Read on to hear why the automotive software solutions company boss believes a over-arching view of dealership customers will be key to maintaining loyalty, and profitability, in the months and years to come.
Hold your customers close.
All the signs point to a tough winter for automotive dealers due to rising energy bills, weakening consumer demand and ongoing problems with the supply of new and used vehicles.
In this market, it's essential that dealers do all they can to hang on to customers after they walk out of the showroom.
Too often, the relationship between dealer and buyer is transactional, with little structure put in place to build longer-term brand loyalty.
Existing customers provide the lowest cost source of revenue with aftersales, add-on sales and the ability to upgrade a vehicle providing valuable sources of income in a tightening economy.
Technology can help to structure communication more effectively and create a stickier relationship.
For example, creating a shared digital space can help to drive customer insight.
At the same time, additional purchases can be triggered with customer surveys, service reminders, online service bookings and vehicle valuation.
The technology is available today to allow dealers to become the one-stop point for all their customers' mobility needs.
Giving customers a central point to manage their service schedules, invoicing, insurance and any relevant video content will bring them back to the brand and create a longer lasting and more meaningful relationship.
Data can be used to trigger sales opportunities. Allow customers to value their own vehicles and suggest alternatives available to them at a similar price point.
The commercial case is clear. Investing more in each customer relationship will pay dividends by increasing revenue while lowering the cost per sale.
It is helpful to use the customer lifetime value model, which is a projection of the typical revenue a customer will provide over the course of their relationship with a business.
A lifetime value assessment of a customer's worth will influence budgeting for marketing, technology, profitability, and many financial decisions.
It's a crucial factor in revenue forecasting because every additional customer increases income both each month and during their anticipated lifetime.
Allocating resources to current customers is a crucial area where lifetime value may be used. You can devote more resources to acquiring and maintaining particular clients after you segment your customers.
Depending on the stage of the customer lifecycle, customers with a high value should receive additional resources, especially if they are close to the cycle's conclusion with a chance for renewal.
Long-term profitability will be supported if you can enhance the lifetime value of new customers while decreasing churn. In order to lower churn, it is advised that you create a retention plan powered by data and technology. Aim to put yourself in the pocket of each customer and be a part of their daily lives.
Both the Society of Motor Manufacturers and Traders (SMMT) and the National Franchised Dealers Association (NFDA) have called for urgent action from the government to support dealers through the coming challenging period. There is no doubt that all help will be welcome to manage issues that are beyond dealers' control.
However, there are steps that dealers can take now to take advantage of digital transformation. To get closer to customers and build longer-lasting, more profitable relationships that also deliver a better ownership experience.
The goal of technology over the past ten years has been to transform how people work. The goal of technology over the next ten years will be to alter your business model.