Tuning up auto dealer loyalty

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1 epsilon.com

2 Introduction Stereotypes about auto dealerships are as dated as the Edsel. To sustain loyalty in a low-frequency marketplace the focus has shifted from chasing sales to earning customer trust and maintaining customer engagement through the entire life cycle from purchase to maintenance and replacement of the vehicle. What tactics do auto dealers need to employ in order to shift gears and establish long-term loyalty with their customers? Accurate data collection used to personalize and anticipate consumer needs plays an important role, but so does breaking down myths about dealerships service offerings that set off warning lights in the customer s mind.

3 1st Gear: Market Shifts Consumers have a deeply embedded sense of loyalty and brand identification when it comes to the make and model of the vehicle they purchase. But that loyalty does not always permeate down to the local dealership level and translate with those handing customers the keys. Until recently, loyalty programs have not been prevalent in the auto world due to the front-end or sales first approach. But as the business model has evolved so has the mindset of those in the industry, and several factors have influenced this change. The Internet: consumers can virtually visit multiple dealerships to compare models and pricing, and even make purchases online; The economy: Americans aren t buying cars as often as they used to. The most recent research data from R.L. Polk & Co. indicates that the average vehicle age is 11.4 years a record high; Advances in technology: new cars are more efficient, accessorized and expensive. Enhanced technology often requires specialized diagnostics, tools and/or service experience. And it costs more. As a result, dealers have broadened their focus from sales or the front end of the business to developing the back end where service gains are emphasized and as a result stronger loyalty relationships can be developed. Establishing a holistic relationship with your dealer in which you leverage them for both sales and service is beneficial to the consumer. With the average timeframe of people keeping cars these days (11.4 years), there s a lot of opportunity with the service side of the business. Sell them the entire package and incorporate the benefits of your loyalty program. Once they see the rewards, they ll quickly learn that these outweigh their original concern of a higher priced service center. Julie Welsh, Vice President, Auto Client Services, Epsilon

4 2nd Gear: Dispelling Myths One major challenge for dealers is dispelling the myth that their service departments are more difficult and expensive to work with than alternative providers. Countering this conventional wisdom are car sellers who are initiating a number of consumer-centric strategies which are worth exploring. Fee Structure Dealerships have begun offering deeper discounts on service to existing customers. In addition, many dealerships have done away with commissionbased compensation, eliminating the incentive to include additional, up-sell items on a repair bill. For example, some simply make maintenance visits part of the customer s monthly car payment. Owners can schedule oil changes and routine maintenance with the service cost already covered. Streamlined Service Dealers have expanded their service hours many until 9:00 pm during the week to accommodate customer schedules. Management software streamlines the checkout process, providing owners with a detailed list of services and parts provided. Many offer a shuttle or courtesy car for owners whose vehicles may be in the shop for longer periods of time. Customer Satisfaction With an emphasis on maintaining long-term customer relationships, service departments are required to measure up to the corporate standards of customer satisfaction. In fact, customers are frequently surveyed by the manufacturer or dealership to measure their satisfaction. Customer Data With customer data now at their disposal, dealerships can effectively segment the customer base according to various criteria. This allows the dealer to match customers with the appropriate offers, products and services thereby addressing individual needs at multiple levels.

5 3rd Gear: Leveraging Customer Data Dealerships with successful programs typically have one thing in common, a customer-centric approach influencing how they communicate, provide service and reward loyalty. Timely Communication Communicating with consumers in the format and frequency they desire is the best way to influence purchase behaviors. Many prefer digital communication via their mobile phones, tablets or home computers, but a mix of electronic communication and traditional print collateral such as direct mail can provide a more comprehensive approach. Customers must be given the option to opt out of communication and then that decision must be respected. Commercial messages are regulated by the CAN-SPAM Act which gives recipients the right to have you stop ing them. If the recipients decision is not honored, penalties occur. Personalized Service According to recent reports, General Motors has prioritized the concept of courtesy cars by offering incentives to entice Buick-GMC dealers to operate loaner fleets for service customers. In addition to enhancing customer convenience and satisfaction, providing the loaner option puts more potential buyers behind the wheel of the newest models. To further enhance the experience, many dealers now designate a personalized service technician for each customer. This establishes a level of comfort, and familiarizes both the tech and the customer with the service history of the vehicle, building trust and paving the way for future interaction. Meanwhile, Mazda has reportedly encouraged its dealers to utilize ipads to foster a customer-friendly experience. These tablets provide videos that illustrate engine functions, service procedures and maintenance information.

6 Engaging Rewards Nissan is working with its dealers to support and promote the Nissan One To One Rewards (NOTOR) program. Members receive incentive points for every dollar spent on parts and services, as well as any vehicle purchases. The reward points can be applied toward future service, parts and accessory purchases. Approximately three-quarters of Nissan dealers currently participate in the program; in addition to a NOTOR-specific online dealer portal, Nissan has more than 30 people in the field for dealer support. Bringing it all Together: Data Management Mass customization does not have to be an oxymoron. Working in partnership, the relationship between manufacturers and dealers ensures customer data and communication is accurate - clean and updated. For example, one manufacturer helps its dealers send out eight versions of a dealer-branded e-newsletter to customers, with the recipient s version based on the owner s model year vehicle. Epsilon Recommendations Remember, customer service is a key driver in keeping consumers loyal to your brand. Exceptional customer service with personalization being a factor, coupled with the relational rewards that are meaningful to your customers time savings & convenience helps to drive a lifetime relationship resulting in brand advocacy. Lori Williams, SVP of Automotive, Epsilon

7 Through a strategic, systematic approach to customer relationship building, auto dealerships are hoping to dispel long-standing myths regarding their service offerings, and establishing long-term loyalty with customers. It has to start with accurate information in a workable database; with that in place, here are some basic tips for effectively reaching - and keeping - satisfied customers. Segment customers. Grouping customers by demographic, buying history, psychographic or other characteristics provides a starting point. By knowing your customers and their tendencies, you can develop your plans and allocate resources appropriately. Segmentation can spotlight areas of opportunity and provide the baseline for all marketing efforts Tailor messages. To have any impact, the content of customer communications must be timely, relevant and valuable. It must be in a format and a channel that they prefer. And it must give them a reason to change behavior, think differently or otherwise alter their perspective. The closer you get to that bulls-eye, the more successful you will be. Keep the big picture in view. Think long-term and consider the value of customer relationships over an extended period of time. Be ready to make sufficient investments to build credibility and trust with customers. In a crowded media environment with constant competition for customer attention, plan for multiple touchpoints and periodic assessments to track progress.

8 Conclusion The auto industry has come a long way from the quote attributed to Henry Ford regarding his iconic Model T: People can get it in any color so long as it s black. That one-way relationship has radically shifted with the consumers now wielding an ever-increasing power of choice. By looking beyond the initial point-of-sale, dealerships can maintain the customer connection, providing maintenance services and continuing to gain their business until they need to purchase another car and begin the cycle again. Effectively managing customer data is the key to ensuring the relationship cycle works. Dealerships that master that approach will keep their operation in high gear.

9 Epsilon solutions Epsilon has the technology and creative resources to help you build genuine loyalty and create lasting bonds with consumers. Agility Loyalty, an end-to-end suite of loyalty services and products, backed by decades of strategic development and execution of solid brand strategy, helps you engage customers to build brand affinity. Epsilon offers real-time data management capabilities designed to link consumer experiences across online and offline channels. It s time to ignite your customer connections. Find out how Agility Loyalty can help your brand build long-term loyalty. Visit or call to learn more.

10 About Epsilon Epsilon is an all-encompassing global marketing company, the leader in creating connections between people and brands. We find, acquire and retain customers for brands around the world. We employ >5000 associates in 60 offices and are recognized by Ad Age as the #1 World Largest CRM/Direct Marketing Network, and the #1 U.S. Agency from All Disciplines. Independent studies by Forrester Research name us as the leader in database marketing, and loyalty. epsilon.com Copyright Epsilon 2015 Epsilon Data Management, LLC. All rights reserved.