This year and next will be critical for auto dealers and manufacturers to improve customer loyalty, and both will have difficulty surviving if they do not commit to viable and sincere customer retention strategies, according to research from RL Polk and Co.
The RL Polk and Co. assessment also shows that poorly selling vehicles and unprofitable dealerships will not survive, but concludes, ultimately, that “Detroit will pull through this.”
“Everyone is estimating lower new vehicle sales, so if you’re not selling as much as you used to, you don’t want to lose the people that you had in your brand or dealership because it’s an efficiency issue,” said Lonnie Miller, director of industry analysis, RL Polk. “In a retention strategy, you already have a relationship to the end buyer — you don’t want to throw that opportunity away.”
Miller said he notices more dealerships adopting CRM systems in order to better connect with existing customers, although he’s not sure if all dealer owners feel that loyalty is more important than usual due to the economy.
“I would argue the ones that are savvy and understand where their future bread and butter is coming from would feel strongly about loyalty,” he said.
AutoNation, a car retailer with hundreds of stores and franchises in 17 states, is one of the many dealers that has started investing more in loyalty and CRM strategies.
The company has begun using database analytics tools from Aspen Marketing Services in a move to segment and learn from its marketing efforts.
“We’re using the power of analytics to enable better targeting and timing of our messages,” explained Gary Marcotte, SVP of e-commerce at AutoNation. “That will allow us to increase our retention marketing at a time when most people are slashing advertising budgets.”
Dealers’ loyalty efforts extend far beyond selling cars. Aspen COO Cathy Lang pointed out that dealer services, such as oil changes, occur much more frequently than car sales, and that data gathered on each of these service visits can help improve a dealer’s relationship with a car owner.
“Those data can really be insightful at the aggregate level to predict who is going to come in and buy another car,” she said.
For AutoNation, customer data also can assist in cross selling and up-selling. Because the company owns multiple dealerships, when its data shows a traditional Ford customer getting older and earning more, it can make moves to get that owner to check out its BMW dealership.
These consolidated efforts could help AutoNation avoid the attrition worries of discontinued cars and closed dealerships. RL Polk and Co.’s research found that when a model is discontinued, owners of that model leave a manufacturer altogether 55% of the time — 8% more often than owners of continued vehicles.
In the future, Lang predicts that both manufacturers and dealers will incorporate more analytics in their marketing programs.
“All the OEMs [original equipment manufacturers] and dealers are very quickly running down the path trying to implement analytics, putting rigor in their CRM programs,” she said.
In an effort to remain on top of this trend, Aspen released the Aspen Portal for auto dealers at the National Automobile Dealers Association (NADA) convention on Saturday. The Web-based tool is designed to help dealers improve their CRM and loyalty strategies and is already available to more than 5,300 dealers nationwide.