Aftersales on back burner?
2013 saw 2.26m new cars sold from UK dealerships breaking all records. Over 74% of these new cars were bought through finance agreements putting more cash into dealerships’ coffers.
This new car sales bonanza looks set to continue through 2014 - the Society of Motor Manufacturers’ and Traders (SMMT) has just revised its 2014 forecast upwards to 2.4m registrations –promising a 6% rise on an already record year.
With all these positive sales numbers it is easy to see why many dealers are simply focusing on increasing sales volume rather than what they should be thinking about - calculating the lifetime value of each of their increasing numbers of new customers.
Once this figure has been calculated at point of sale, DPs can work with aftersales managers to draw up a strategy for increasing the percentage of each customer’s lifetime value that they can retain in-house.
Using new car sales boom as a platform for rolling out a strategy for securing higher percentage of customer lifetime value
I’m talking now about using the current sales boom to build a long-term platform for higher margin aftersales business, something which far too few dealers are even attempting to do in their quest to process more sales today.
By getting too one track-minded, they are failing to capitalise on the very sales increases they are generating in advance of leaner sales times that must come. They are not placing a high enough value on the whole lifecycle value of each of these new customers.
There should be several things happening during purchase which, in the main, we are not convinced are happening today:
1. Not enough customer information is being captured at point of sale about why the customer bought the car from your dealership
Questions should be asked such as:
a. Why did you choose the car you went for?
b. What went well during the pre-sales process and what did not go as well?
c. Which aftersales packages did you purchase and which did you not and why not?
d. Do you have an alternative servicing garage in mind for your new car?
e. How do you preferred to be communicated with by us (if at all)?
For example we believe that when new cars are being sold that the salesman completing the handover should also walk the new customer around to the aftersales department. Cards can be exchanged and connection established with a member of staff there. That after sales person could even diarise a call for a few weeks hence to make sure the new car has no teething problems. In short the handover to aftersales can and should be done then and there as once the car has been driven off the forecourt the salesman’s connection with the customer is effectively at an end, at least for the next year or two when the finance package stimulates a return trip to the showroom.
2. This information should be stored on the dealers’ CRM system. Marketing campaigns should then be run to specific types of customers based on their preferences.
For example it should be possible to reach customers which have agreed to you TXT messaging them with aftersales offers specific to that individuals sets of concerns.
So one personalised message might be: “Dear Mr Smith. We hope you are enjoying your new VW Golf. Are you aware that in order to maintain its fuel efficiency at peak level you need to clean/replace X part within 15,000 miles? For the next 2 months we are offering 30% off all servicing costs associated with this part replacement and we will also provide a courtesy car free of charge. TXT xxx if you want one of our mechanics to call you.”
Personalisation pays off
Marketing messages that offer an element of timeliness and relevance and truly add value to specific customers will be the most effective ones and offer the highest sales penetration rates. You should monitor the response and conversion rates relevant to more blanket catch all campaigns like the ones we all get for ‘Preparing your car for winter’ which fail to differentiate your service and generally fail to excite.
The facts are that right now many dealerships don’t offer compelling enough reasons to stay with them for servicing and other maintenance.
The fact that 20% of Mini owners are going to independent dealerships despite purchasing their TLC servicing package which provides all servicing costs for five years or 50,000 miles: http://www.am-online.com/news/2014/6/23/quarter-of-mini-customers-head-to-independents-despite-already-paying-for-franchised-service-plans/36318/
This is despite the fact that the TLC package is sold to 97% of new owners and is transferrable to the new owner if within the life of the package. This example illustrates the problem – many customers are running a mile to avoid apparently high charges of aftersales and servicing in dealerships and dealerships need to work much harder to win them back. The dealership ought to be checking in with the customer and offering preventative maintenance options in a timely manner through their communications channels of choice. But how many dealerships are doing this in a consistent manner today?
We think the bulk of the real lifetime value of new customers is still walking out of the dealership with the new car, never to be seen again until the finance agreement times out or some other upgrade opportunity arises.
One clear solution is to align aftersales campaigns much more closely with CRM system-held intelligence and multi-channel marketing campaigns.
In this way all that investment in improving your websites’ look and feel can be put to work to deliver mini-campaigns to boost aftersales alongside the burgeoning inventory or images and descriptions of new and used cars increasingly finding its way onto your website.
Aftersales options also deserve a more significant place on your website but that topic is for another IMD blog post. Watch this space…