As ongoing auto inventory shortage challenges fuel fierce competition for customers and pre-owned acquisitions, buyer expectations are changing, driving diminished loyalty and tightening dealership margins industry wide.
At the same time, dealers have new opportunities to grow their customer base, sales and service revenue – if they can adapt and create an efficient and effective sales strategy.
While some short-sighted dealers consider pumping the brakes on their marketing efforts, proactive dealers are turning 2022 into another record-breaking year by taking their sales strategies and customer experiences from good to great.
In this blog post, we’ll discuss three considerations for dealers to build an effective and efficient dealership strategy, including:
· Committing to consistent communication with your audience
· Understanding the cost of not communicating
Commit to Consistent Communication with Your Audience
While the vehicle buyer journey has changed rapidly in the last few years, the importance of car dealerships staying in consistent communication with their customers remains the same – even during ongoing inventory challenges.
Research finds customers are looking for personalized, consistent and high-quality dealership communications. This guides customer’s way at every stage of the buying journey. Dealers often underestimate how much of this journey they want to complete online.
In a 2022 industry survey, 68% of car dealers said they believe their customers prefer discussing pricing with the dealership online, while only 30% of customers agree. Auto buyers still plan to visit dealerships, particularly as they get further into the car- buying process – in fact, future car purchasers are planning to visit more dealerships than those who purchased a car in the last six months.
To capture buyers in today’s hyper competitive market, it’s more important than ever that dealers engage customers early. Targeted and personalized messaging can generate brand loyalty and drive shoppers into the dealership to buy a car.
Engaging these customers proactively – before they’ve started shopping around – is equally important, especially as 35% of customers said they didn’t contact the dealership because vehicle prices were too high, a 28% increase over 2021.
Using Data to Drive Messaging
Using comprehensive insights from your CRM, DMS and sales platform, mine your dealership’s portfolios to identify the customers preparing to return to market, such as those approaching the end of their lease or warranty.
To guide their car buying journey, look for opportunities to consistently engage prospects with tailored messaging that includes relevant offers and incentives. Remember: every messaging should build on the last and be delivered in your customer’s preferred format.
Download the Guide:
3 Tips to Grow Your Portfolio with Conquest Marketing
Building Brand Loyalty
The importance of dealers staying in consistent communication with their customers can’t be overstated, particularly when it comes to building trust with buyers and proactively preventing customer defection.
In a 2021 car buyer study, trust in the dealership or salesperson was found to be just as important as the price of the vehicle to customers when buying – and the quality of dealership communication was only one percentage point lower.
Dealers need to understand and calculate the cost of not communicating with their audience, especially as brand and dealership loyalty is on the decline amid inventory shortages. Today, missing an opportunity to engage your audience could mean losing a customer for good.
According to research from IHS Markit, now part of S&P Global, brand loyalty has fallen alongside days’ supply since 2020, demonstrating the impact of inventory shortages on brands industry-wide. Despite some notable improvements at the end of 2021, from September to November, make loyalty for the industry fell an additional 3.4%.
A collective 5-10% drop in customer loyalty may be hard to imagine, but many dealers today have seen just that. To put that number in perspective, take a dealer with a 55% loyalty rate who sells 1,000 cars per year, or approximately 550 loyalty cars per year, for example.
A 10-point drop in loyalty, from 55% to 45%, means selling 100 fewer vehicles per year, or around eight cars lost per month. At an average of $4,000 gross profit, that’s an approximate loss of $400,000 in gross revenue every year – just from loyalty customers lost.
Download the Whitepaper:
3-Step Guide to Protecting Your Dealership Loyalty Customer Base
Create Efficiencies Wherever Possible
With increasingly tight margins forcing dealers to continually “do more with less,” creating efficiencies wherever possible is critical to a successful automotive sales strategy.
Clean and comprehensive customer data is key to creating efficiencies, helping reduce the likelihood of duplicate efforts, improving the hand-off from department-to-department and aiding in the automation of manual, tedious tasks like sifting through leads.
Comprehensive data also empowers dealers to paint a clearer picture of their market and improve the efficiency of the sale process. By only focusing on their best leads and opportunities, dealers can reduce time wasted on nurturing unqualified leads and resources lost to spray-and-pray marketing, as well as say goodbye to costly third-party leads.
To identify opportunities to improve your dealership’s sales strategy and create efficiencies within your processes, dealers need to ensure their team’s tools and training is up to the task. To audit your process, ask:
Download the Checklist:
How to Audit Your Dealership’s Operational Efficiency
For dealerships to truly maximize the efficacy and efficiency of their sales strategy in 2022, they need to ensure they are connecting with their customers early, offering the path of least resistance with clear and consistent messaging.