How to increase customer retention in the Automotive industry

Brand loyalty is, literally, a customer’s loyalty to a brand. But it’s more complex than that. A positive attitude towards a brand—”acceptance”—is level one. From there, it’s about “preference,” when customers prefer the products of one brand over those of another. Finally, there is what some people call “allegiance,” the most important stage of loyalty, when we give our absolute trust to a brand, so much so that we are not willing to accept similar substitute products made by other brands.

Now, let’s apply this to the automotive world. Automotive is an enormous and intricate industry, a market where competitors are large organizations with long histories. At the same time, it’s an industry that is experiencing a real paradigm shift, especially due to digital transformation (we have dedicated this article to the digital revolution in the Automotive sector, which you can read here).

Today there are many new technological challenges, including those related to production processes and those of the Employee Experience (i.e. the quality of the work experience within the company; a factor that has its own significance also for the external image that the company has of itself). Then there are all the challenges of marketing, from traditional marketing to (increasingly) digital marketing, and those of the Customer Experience.

Last but not least, a decisive factor must be kept in mind: it’s not just about car manufacturers, but also the dealers, resellers and the huge supply chain of this sector. Finally, we must remember one important (if obvious) detail: the car is not like other consumer goods. The period of time between one purchase and another is very long (in Italy, it’s an average of 10.5 years; source); of course this has a strong impact on the dynamics of brand loyalty in the sector.

Therefore, we are talking about dynamics that, in many ways, are not comparable to those of other industries. But that’s not all: if we go further, we can see a new trend that is emerging on the horizon: the transition from the car conceived as a “good” to the car understood as a “service.”

In short: if on the one hand loyalty is one of the most crucial factors for the automotive industry, on the other hand, to achieve it, it is necessary to implement targeted, specific strategies that are different from those in other sectors. That’s what we’ll focus on in this post.

 

The importance of customer retention in the Automotive industry

Loyalty in the automotive sector is not something that exclusively concerns product quality. It all starts here, of course, but we must always bear in mind that the process is much broader.

Think of your favorite place to have breakfast: you go there because the coffee and croissants are good, of course. But also probably because you like the environment, you’re treated well, and perhaps because you feel a bit “at home,” because whoever is on the other side of the counter knows what you like, knows your habits. From here, you can begin to realize how decisive the relationship with customers and personalization really are.

Returning to Automotive, the quality of the vehicle and its cost are two of many factors of great importance; among these, we believe two are decisive: the “recognition” of a brand and its values (remember, the car is also a status symbol); and the quality of customer service, then the “dialog” between the brand and the driver in all phases, from purchase, to ordinary and extraordinary maintenance, to emergency situations.

Let’s take into consideration what Tyson Jominy, Vice President of Data & Analytics at J.D. Power (a leading consumer intelligence company for the Automotive sector) said: “Customer loyalty is perhaps the most important metric for manufacturers because it incorporates many factors that lead customers to become brand ambassadors. When a brand can connect emotionally with owners through the vehicle’s content, capabilities or prestige level, owners are much more likely to come back and purchase that same brand again.”

 

4 rules to increase customer retention in the Automotive industry

So, at this point, what are the best strategies that brands and retailers can put in place to increase this type of loyalty? Let’s make one thing clear right now: there is no single, infallible recipe. And, there are many “ingredients” to consider. Despite this, there are some essential elements. 

 

1. The starting point: brand image 

To inspire brand loyalty you need, first of all, a good brand.  A recognizable, coherent, memorable brand. And one that the customer can “feel part of.” So, how do you build this kind of brand image?

There are many factors at stake, but they all have to do with storytelling. Telling a story, one that both fascinates and that makes the customer feel a part of, is one of the oldest and most consolidated techniques of advertising, and of communication in general. Stories interact with the emotional sphere of the listener, and for this reason they are unrivalled in terms of effectiveness.

But what aspect has given new life to storytelling? The answer: digital transformation. Today, thanks to digital tools, you can exploit different media and different channels; from simple texts, to much more powerful videos, from social media, to customizable apps, to the frontiers of Augmented Reality and Virtual Reality. But digitization is also responsible for another revolution, one that is even more important: today brands can increasingly know the recipients of their storytelling, their audience. And, as we know, no story is more effective than one that is “tailored” to the listener. 

Here, we can refer you to some successful storytelling examples by several car manufacturers. You can find it here.

 

2. Get to know and segment your audience

Some messages, or stories, are more effective than others. But, as we have seen above, the perfect message for everyone does not exist. It is a matter of target: not everyone is the same, not everyone has the same preferences, the same sensibilities, the same behaviors, the same needs. So, what can a brand do? Today, thanks to digital transformation, a lot.

In fact, brands can go as far as personalization, by understanding the individual (and we’ll come back to this in the next point). But the intermediate and fundamental step is that of segmenting one’s target. You have to know how to collect as much data as possible on your customers, across all digital touchpoints (and in the Automotive sector these touchpoints are many and – often – significant). You have to do it in a functional way—omnichannel—selecting from this mass of “Big Data” the data that is most significant and useful for your purposes. Then comes the phase of interpreting this data, through Artificial Intelligence and Machine Learning systems.

All of these operations, if well processed, allow you to know your audience and divide it into coherent segments based on personal, social, and geographical data. In short, divide the target into increasingly specific segments, to be hit with messages and “tailor-made” storytelling.

Think of a simple email campaign. Using segmentation the right way, you can increase revenue by 760% (source). You understand, of course, how fundamental this is to boost engagement and, consequently, loyalty, with targeted actions that are spread out over time. Can we go even further? Yes, we can go as far as personalization, as we’ll see in the next point.

 

3. One-to-one dialog: personalization

Beyond the segments of people with uniform characteristics there are, in fact, individuals. Today it is possible to put on track a personalized dialog with each customer, with exciting results in terms of effectiveness and loyalty.

And there are companies that specialize in this very field, such as Doxee, able to put on track marketing and customer care operations that address individuals, in an effective one-to-one dialog.  Let’s look at a real example: personalized Doxee Pvideo® videos. In other words, videos that adapt to the user, even in real time, that are interactive and built according to the characteristics of the person to whom they are addressed.

One of the first car manufacturers that decided to exploit the power of personalization was BMW, who created the BMW Individual App, an application based entirely on the interactive and personalized experience (learn more about it here).
 

4. The decisive role of Customer Service

So, personalization is the key “tool,” the real secret to achieve maximum brand loyalty. Perhaps the most decisive area where this can be put on track is that of Customer Service. In terms of the importance of this field, we prefer to let the data speak for itself:

  • 54% of customers are ready to buy a car from a dealer who offers them the best experience, even if they don’t have the lowest prices (source).
  • In turn, 56% of dealers would buy more vehicles from the carmaker if the process was faster and easier (here, we’re talking about B2B Customer Service; source).
  • Only 10% of customers dissatisfied with their dealer experience will return for their next purchase. In contrast, 87% of “highly satisfied” customers will buy cars of the same brand; 85% will buy them from the same dealer (source).
  • Finally, according to a 2017 survey by Gartner, as many as 81% of marketers expect the Customer Experience and strategies to improve brand loyalty to be the main areas where marketing challenges will be played out over the next three years.