Gaining a loyal customer is like forming a relationship. The introduction is followed by a period of courtship and, commitments are made. However, did you know that the longer you’ve had a customer relationship, the harder it is to keep it?
Logically, you would expect to focus more on creating customer loyalty at the start of a relationship rather than a long white after it’s been formed. However, according to R.L. Polk, loyalty rates decline after the third year of ownership. They continue to decline after the fourth year, including every year after that. Polk attributes this to boredom. Studies show that the longer a customer owns a car, the less exciting the ownership experience becomes.
Just like in a relationship, there is a “honeymoon” period. According to Polk, a similar phase exists in customer loyalty and retention. Length of vehicle ownership is directly related to customer loyalty. No matter how long you’ve had a loyal customer, if they decide to switch to a new vehicle make, you’ve lost a sale and a service customer.
To prevent losing a customer to another dealer, OEMs introduce the latest models with new features, more powerful engines, modern bodies, and technological advances. They also encourage leasing by offering low residuals, with the hopes that the customer will remain loyal when needing to replace their lease.
So, how do you keep your customers at bay?
Ensure your customers’ experience is exceptional.
Consumers appreciate excellent customer service, one of your greatest weapons in creating dealership loyalty.
Implement a loyalty program that incentivizes customers to continue doing business with you.
There’s a reason that almost every major retailer in the US has a rewards program. It allows them to track how their customers are spending money, which then provides data for creating more personalized deals.
Regardless of your dealership’s strategies for maintaining loyal customers, ensure that your retention strategy isn’t focusing solely on creating loyalty in new customers. Instead, analyze your sales history and shift some of your focus to customers who have purchased 24-36 months ago. You’ll be well on your way to helping your OEM increase brand retention, while ensuring that you’re providing your dealership the opportunity to recapture your loyal customers before they lose interest.