Customers come and go. Hopefully, they come back. If they don’t Just send them a coupon!

Does this sound like your customer retention program? It might. After all, when times are good it’s easy to let retention fall off the radar. Investing in programs designed to bring back existing customers just doesn’t seem very important when they’re likely going to come back anyway.

And if they don’t, well – there are plenty of car buyers out there to take their place.

The trouble is that today’s environment is no longer so sunny. Granted, annual sales forecasts are still at healthy levels despite recent declines; a 16.73 million SAAR is a far cry from the days of the Great Recession. But sales volume is not the only factor. The current market condition is unique and volatile; as sales have slowed, credit has tightened, and the average cost of a new car has stayed pretty much the same. Meanwhile, variable expenses are up, in some cases significantly. Floor plan interest rates, the cost of hiring and employee retention, as well as marketing and advertising expenditures…smart dealership managers are already actively looking to cut costs and hang on to current profit margins for as long as possible.

The bottom line? The cost of doing business just got more expensive.


Time to Think About Customer Retention

Which brings us to the need for customer loyalty. An effective customer retention program will help lower the cost of acquiring new business, increase CSI scores and boost overall profitability. Indeed, as reported in the Harvard Business Review, most studies have found that acquiring new buyers is from five to 25 times more expensive than retaining existing customers. According to global consulting firm Bain & Co., increasing customer retention by just 5 percent boosts profits by 25 to 95 percent.

It’s just hard to beat a happy customer who comes back for repeat business and tells all their friends. Best of all, it doesn’t take a million-dollar marketing “points” program to build and nurture a strong base of loyal customers (though that may help!). You just need a service drive that’s open to change and willing to work in a customer-centric manner. In fact, put these three simple tips into action and see how effective your service drive can be at improving customer retention:

#1. Connect Sales and Service with a Simple Introduction

During the sales or F&I conversation, walk the customer over to the service department. Introduce them to a service manager or advisor, and briefly talk about the strengths of your department. That may seem a bit obvious, but it doesn’t happen nearly enough: recent studies found that most new and used car buyers were not introduced to the service department, even though it’s a clear difference-maker.

Remember, consumers generally look at dealership service departments as the primary source of expertise when it comes to vehicle maintenance. Linking sales to service, with a simple introduction and/or a technology connection, is a good way to introduce a dealership strength into the experience.

#2. Sweat the Small Stuff

Make sure communication is tight. That includes dialogue between advisor/customer and advisor/technician. Make sure you’re leveraging the customers preferred feedback channel, and that promise times are transparent and carefully communicated. Indeed, how you communicate is almost more important than what you communicate.

As such, finding the customer’s preferred channel is paramount. For example, studies as far back as 2014 show that texting improves customer “show” rates and that properly staffed and scripted service BDCs can have a significant impact on appointment-setting – not to mention the reduction of ghost customers. For example, according to Connect Mogul, 90% of all text messages are read in under 3 minutes. That’s a powerful example of how the right communication channel can deliver results. Remember, we live in an on-demand world of customer service expectations; our ability to communicate properly helps to control what that means to customers.

#3. Measure Twice, then Optimize

Virtually everything in the service department should be transparent to managers, and trackable as a performance indicator. Whether that’s car washes, promise time success metrics, or more, service managers should have the capability to gauge the effectiveness and efficiency of the shop’s workflow by identifying key metrics unique to the business. When results are tracked and socialized, the culture of the team will change toward a more precise reflection of critical needs and retention opportunities.

Ultimately, dealerships that make the service department a centerpiece of their retention efforts, and do so consistently, are bound to create a strong first impression that’s reinforced over time, service and repair appointments. Leave it to the service department – the bastion of margin preservation during tough times – to be the place you can turn to improve retention and increase profitability.

Originally appeared in Dealer FX