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* Topics * Essentials * Services Close * Home * Dealer Ops * Digital * Compliance * Fixed Ops * Training * Awards * Opinion * News * Articles * Whitepapers * Subscription * Advertise * Contact Us * Privacy Policy * Terms and Conditions * Cookie Settings * Bobit Business Media * Marketing Solutions Search Search * News * Articles * Photos * Blogs * Videos * Whitepapers * Webinars * Magazine * Advertise Search Close Menu Log In Create Your Account Search Newsletter Sign Up! ! * * Dealer Ops * Digital * Compliance * Training * Fixed Ops * Awards * Opinion DEALER OPS HOW TO IMPROVE RETENTION, DEFECTION AND CONQUESTS October 10, 2023 • by Ronnie Wendt • Bookmark + Much of the data needed for marketing strategies resides in the dealer management or customer relationship management systems. IMAGE: Pexels/Erik McIean No matter which brands a dealership sells or where they are in the country, three things are consistent concerns: retention, defection and conquests. Dealers must keep the consumers they have from defecting to another brand while adding customers from other brands in order to grow and run a profitable business. “Retaining customers is as important as it has ever been, and understanding where to find conquest opportunities remains essential,” concludes the “Automotive Brand Retention and Defection Report: Understanding Your Opportunities for Conquest” by Reynolds and Reynolds. The research delivers a critical analysis of retention and defection data that dealers can pair with other demographic, behavioral and transactional information to improve retention rates and conquests of customers. This year, the report digs a little deeper, breaking down data to the regional level and providing a detailed analysis of the truck segment. Auto Dealer Today caught up with Greg Uland, vice president of brand marketing at Reynolds and Reynolds, for a recap of researchers’ discoveries and how dealers can leverage the information. Brand Retention “Brand retention actually increased year-over-year,” says Uland of the research, which put overall nationwide brand retention at 42.6%, up nearly 3.5 percentage points from 2021. Despite supply chain challenges and inventory shortages, the data shows consumers were more loyal to the brand they preferred year-over-year. According to the data: * 15 brands saw a retention change of less than one percentage point up or down. * 10 brands’ retention changed one to three percentage points up or down. * Seven brands saw a retention increase of over three percentage points. * Six brands’ retention decreased over three percentage points. However, only four brands, BMW, Aston Martin, Cadillac and Lincoln, retained more than half of their customers in 2022, which Uland says leaves room for improvement. “There’s a lot to be desired,” he says. “ A dealer needs to keep consumers coming back.” Uland says two factors affect retention: The product must look good, meet customers’ needs and offer desirable features. “Do customers enjoy driving the car and are they happy with the features it offers?” The ownership experience is also important. Are customers happy with the maintenance and service they receive as they own the vehicle? “A product will draw a customer in, but the ownership experience with the dealership has a bigger impact.” He adds, “The reasons for defection are the converse of reasons for retention. If a product doesn’t fulfill what you thought it was going to fulfill. Maybe the features don’t function the way you thought, or the product wasn’t as long-lasting or as reliable as you thought it would be. You’re going to want to try something new. Same with the ownership experience. If a dealer doesn’t connect with a person emotionally or provide good service, they will not want to continue with that brand.” Geography Plays a Role Researchers broke states into five regions for the report: the Midwest, Northeast, Southwest, Southeast and West. As they looked at the data, Uland says a few things stood out. “We saw that manufacturing plays a role in meeting consumers’ needs, and the type of vehicle also plays a role,” he says. “We also saw that retention varies by region.” The Northeast region, which includes New York, Pennsylvania and Maine, had the highest retention across all brands, especially among highline vehicles. Here, retention stood at 47.2%, and five of the top six retained brands were highline brands like Ferrari, Lexus, Aston Martin, Volvo and BMW. Of the 10 brands with retention greater than 50%, four were mainstream and all were foreign brands: Toyota, Mazda, Hyundai and Honda. In that region, 71.9% of truck owners purchased another truck. Meanwhile, the Midwest, which includes Wisconsin, Minnesota, Kansas and Missouri, had a 43.7% retention rate and the highest retention rate among mainstream , such as Honda, Toyota, Subaru and Chevrolet. Thes region also had the highest number of owners purchasing a truck after trading one in, at 72.2%. Also, 55.2% of conquests purchased a domestic vehicle. The Southwest, which includes Arizona, New Mexico, Oklahoma and Texas, had the lowest retention rate across all brands at 39.7%. Four brands had a higher than 50% retention rate – Lamborghini, Toyota, Ferrari and Aston Martin – and three were performance or exotic vehicles. Here, the lowest retention rates in the country fell to Dodge/RAM and Jeep. Just 34.8% of Dodge/RAM truck owners stayed in that truck brand, and 12% of Jeep owners stayed in that brand. “A dealer in the Southwest has an opportunity to really shine, because retention is so much lower,” Uland says. “They can create interest in the product or in the ownership experience and have a decent opportunity to conquest across the board.” Truck Analysis The research examined truck retention and conquest data for Chevrolet/GMC, Ford, Dodge/RAM, Toyota, Jeep, Honda, Hyundai and Nissan. Notably, retention slipped slightly in 2022 overall, according to Uland. “In 2021, 72.6% of all truck owners traded in their truck for another truck (any brand). This year’s report shows that number slipped to 70.6%,” the report says. Chevrolet/GMC led the way in brand retention when looking at deals where a Chevrolet/GMC truck was traded in for any vehicle (54.7%) and when the truck was traded in for another truck (73.8%). Honda and Toyota bested Ford in retention versus any truck, and Honda beat Ford in retention with any other vehicle, Uland noted. “When examining conquest opportunities for truck dealers, it became clear that most new truck customers are coming from the light vehicles of the truck brand, with one exception: Dodge/RAM truck,” He explains that customers who bought a RAM pickup and were not already in one traded in a Chevrolet/GMC or Ford truck. For dealers whose brands don’t offer a truck, Uland notes that it’s important to fill that need. First, he says dealers mus understand why a customer wants a truck. “Is it towing capacity? Is it how it looks? Is it status? Or is it something else? When you know why they want a truck, you can position the vehicles you do have available in a way that fulfills those needs.” Dealers might also develop a used-vehicle strategy that meets customer needs for a truck. “Then develop marketing that targets the right people to buy them,” he says. A Primer on Targeted Marketing Retaining and conquesting customers boils down to understanding the data and targeting potential customers with the right messaging, according to Uland. “Dealers need to identify the customer they want to retain or conquest, and craft the appropriate messaging to move them into a different model. Doing this requires them to know their personal situation through demographic and behavioral data,” he says. “Understanding who those potential buyers are and what is most likely to trigger a sale is a huge piece of it.” Uland also recommends identifying the questions those customers may have and answering them through marketing. Those may include: * How the vehicle compares to the vehicle the customer is in * What it’s like to own this vehicle * Features and benefits make it worth the customer’s while “A conquest buyer doesn’t know your brand or the vehicle they are looking at,” he says. “You need to help them feel empowered and educated so they can make that buying decision. That involves putting information in their hands so they feel comfortable making a switch.” Much of the data needed for marketing strategies resides in the dealer management system or customer relationship management systems. First-party information is the most reliable, according to Uland. Dealers can then add in manufacturer data and other third-party information. “Taking these steps will paint a clear picture of who these customers are and who is most likely to buy,” he says. He adds that most dealerships have all the data they need at their fingertips, but it lives in silos in different systems and software tools. “There needs to be integration points to fill in this data across different platforms. That has always been a struggle,” he says. “Dealers need a unique identifier for each individual and must remove duplicate records. Without doing that, it is extremely difficult to leverage data for targeted marketing.” Addressing service models is another way to improve retention and conquesting efforts, according to Uland. He stresses that franchise dealers often will service only the brand they offer. “But if they take it a step further and service all makes and models, especially those brands they hope to conquest, it becomes easier to attract these customers to their brand,” he says. Let’s say Ford is a great conquest for a Toyota dealer in a specific area. If the Toyota dealership brings in a strong Ford technician and stocks after-market parts for those vehicles, then advertises, they may pull in Ford customers for service. “When the time comes for that customer to trade in their vehicle, there is a good probability you will win their business from a conquest perspective.” Originally posted on F&I and Showroom Read more about customer retention new customers 0 COMMENTS Comment Please enter a comment. Name Please enter your name. Email Address Please enter a valid email address. Post Please validate that you are human. 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