Building Dealership Loyalty, Far and Wide

in Dec 21, 2021

The automotive industry has been in constant flux. New technologies have exploded onto the scene with electric vehicles, autonomous vehicles, and assistive tools. Include the challenges that Covid-19 has created and many dealers have had to adopt a whole new way doing business and that includes new ways to build dealership loyalty.

In addition, consumer preferences are constantly changing and are generally tied to economic conditions. So, how can you make sure that your local brand keeps up with and stands out in this ever-changing market? How do you create or continue to maintain dealership loyalty among your brand with so many options out there? Building dealership loyalty is not a huge task, provided you have a clearly defined customer experience procedure in your store.

Current Market Trends

Over 17 million new passenger vehicles were sold in 2019, a slight decline from the previous year. But, not all passenger vehicles are created equal. According to a comprehensive study conducted by Edmunds, a decade ago sedans made up 50% of the market, while today they only account for only 36% of new purchases.

Consumers’ taste has dramatically shifted in favor or Trucks and SUVs, attributed to lower gas prices, economic growth, and more environmentally friendly options. Edmunds reports that 75% of SUV owners traded in for an SUV and 74% of truck owners stranded for trucks. These shifts in preferences have sent many brands scrambling to abandon their traditional sedan options and bring more SUV and truck options to market.

This has certainly led to a loss in loyalty to those brands that have not been able to make the transition for their consumers’ preferences. It important, however to note other mitigating factors in car brand loyalty such as safety, access to maintenance, and warranties. These factors must be accounted for in order to have a successful brand. The product must meet the quality of vehicle the brand claims to offer.

Luxury Auto Segment

In general, the luxury car market tends to experience less loyalty than mainstream market brands. For example, Lexus dominates the luxury market but only has a 51% loyalty rate compared to top mainstream brands, such as Toyota, with 63% loyalty, according to Edmunds. Some luxury car owners have made the switch to mainstream brands, which may be due to the wider selection of more affordable, more environmentally friendly SUVs and trucks.

That being said, it is important to note that family of brands loyalty remains strong. Mainstream brands like Kia and Hyundai have begun to introduce premium versions of their automobiles as an attempt at the luxury market. Vehicle brands do their best to meet the luxury needs of their customers, in hopes to deter them from buying from luxury car dealerships.

“Respondents were loyal to auto manufacturers (or family of brands), with 81% owning multiple vehicles from the same manufacturer. For instance, we spoke to Lexus owners who had previously owned a Toyota, as well as Acura owners who had owned a Honda in the past.” – Jumpstart Automotive Media

 Subaru Give Love, Get Love

A seemingly effective way to retain loyalty among dealership customers has been the use of automotive retention campaigns.

Subaru has become somewhat of a superstar in the car market, boasting one of the highest loyalty growth rates in the past decade. They’ve moved from 45% loyalty in 2007 to 62% loyalty in 2018 according to Edmunds. This growth can be attributed to Subaru’s innovated campaign strategies, dating back to 2008 when Subaru launched its Love campaign. The Love campaign puts a socially responsible spin on loyalty by tapping into its customers’ prefrontal cortex, targeting empathy. Subaru pledges that its proceeds contribute to helping animals, the earth, and humankind – tugging at everyone’s heartstrings.

Through this campaign, Subaru has engaged in various service projects and has made donations to help the advancement of each Love recipient. Subaru periodically runs specials that allow purchasers to choose the charitable cause they would like the store to donate a portion of their proceeds to. Dear Subaru, is another program they utilize, it is an ode to brand loyalty.

An additional campaign, Dear Subaru, is a collection of letters from real customers, highlighting special moments or reasons why they love Subaru. They use these letters as the basis for some of Subaru’s most beloved commercials. Subaru has created strong, emotionally based commercials that demonstrate the longevity of Subaru autos. Their commercials often feature “man’s best friend” to showcase their cars’ durability, reliability, and family friendly qualities – no matter how many legs your family members have.

As Forbes’ Jaysen DeMers notes, “Brand loyalists are driven by emotions, at least to some degree, when going back to their favorite companies”.

Honda Drives Repurchase Loyalty

Honda regularly comes in near the top for customer loyalty. They have no official OEM sponsored traditional loyalty program, but many of their dealerships independently offer a third-party version. Honda drives loyalty by frequently offering a customer a discount for repurchasing a Honda model. Customers who own a 2009 or newer Honda (all models included) are considered loyalty customers. The advantages correlating to being a loyalty member can be shared within the customer’s household, and does not require a trade-in of a previous vehicle. This allows Honda the unique opportunity to extend its presence among customers alike.

General Motor’s Traditional Brand’s Approach

General Motors, or GM, has been named the victor of IHS Markit’s Automotive Loyalty Awards for the last three years. GM is unique because it holds multiple brands under the GM umbrella, allowing consumers options within the same family of vehicles.

GM’s My Rewards program is great for the company’s various brands, and is helpful to dealerships that have little to no same brand competition in their local markets.  However, the downside to this program is that a customer can go to any GM dealer to redeem their rewards. This leaves room for possibly by-passing their local location, which could have been their place of purchase. Unfortunately, OEM loyalty programs provide little to no loyalty to local brands, and the same holds true for the Ford program

Electric Vehicles Produce High Loyalty Numbers

According to Experian, Electrical Vehicle (EV) owners tend to demonstrate a very strong sense of brand loyalty. Studies project that 62% of EV owners remain EV costumers on their next purchase. A clear champion of the EV movement is Tesla, boasting an 80.5% loyalty rate and a 13.77 to 1 Conquest/Defection ratio. This brand has established a unique position as a luxury tech brand, with a focus on environmentally safe vehicles. Tesla’s ability to corner this niche market contributes to its successful brand loyalty.

How to Build Your Local Dealership Loyalty

Consumer economic, environmental, and emotional automotive brand preferences are everchanging. It is important to build a brand that is flexible and caters to market changes, while keeping safety and quality in mind.

It’s easy to build local brand loyalty for your dealership by following the initiatives proven to be successful, and applying them on a smaller level. There are many third party loyalty program suppliers that are happy to get you going in the right direction as customer retention has become paramount in maintaining a healthy business model.

This article originally appeared on Annexcloud and is reprinted in part only.

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