Channel | Industry

Escape the Complacency Trap

Forward-thinking agents are helping dealers prepare for the next downturn by focusing on customer retention.
By: Dean Harrison

Escape the Complacency Trap

As 2016 drew to a close, new-vehicle sales were expected to top out at 17.1 million, a slight decrease from the record 17.7 million units sold in 2015. Experts say this may be as good as it gets for sales volume. Experienced agents know the car business is cyclical. History tells us that, with every big swing up, there will be, inevitably, a swing down.

If we have hit peak sales, now begins the slide. The Great Recession of 2008–’10 caught us all by surprise and claimed a lot of dealers and agents and several product providers as its victims. No one is predicting a drop in sales volume like we saw from 2008–’10, but are you ready for the next downcycle?

The Case for Retention

It’s easy to get complacent when times are good and the revenue is pouring in. I see many dealers and agents lulled into a false sense of security during times like these. Sales and profits are great, we are running on all cylinders, don’t change a thing. … Unfortunately, history tells us it won’t last. What are you doing today to prepare your dealers and your agency for the next decline in sales?

The only way to protect yourself is to constantly be prospecting and putting on new business. But that’s easier said than done, especially when sales are at all-time highs and dealers aren’t looking to make changes to their existing structure. What is the catalyst for change that will motivate dealers to do business with you?

First, give them a little history lesson. Then give them a solution that keeps the dealer connected to each and every customer in ways they have never been able to in the past by bolstering service retention and creating truly dealer loyal customers.

When manufacturing output and new-car sales slowed in 2008, the automotive service market — regular and emergency maintenance, parts and service sales — performed extremely well. If someone cannot purchase a new car, they’re going to maintain the car they have. The question is where these customers get their service work performed. Independent service facilities and quick service oil change locations tend to get more than their fair share of the dealers’ service customers. Dealers with a strong customer retention program are better equipped to weather the storm because their service bays stay busy with repeat service customers.

Studies show that a loyal service customer is 25 times more likely to purchase their next vehicle from that dealership. Closing the sales-service-sales loop means that dealerships with strong retention programs not only benefit from increased service business but also more repeat business.

Difference Makers

As agents and product providers, we must encourage our dealers to focus on retention. Dealer-branded mobile apps are the perfect tool for the job. They allow dealers to stay connected to their customers in ways they have never been able to in the past.

Why is a dealer-branded mobile app a game changer, you ask? Because mobile is where the dealers’ customer lives. This year, for the first time, Web-enabled mobile devices eclipsed laptop and desktop computers as the No. 1 way Americans access digital media. How connected are the dealers’ customers to their phones? Over 70% of smartphone users sleep with their phones and over 80% of them check their phones before they brush their teeth. If you want to reach your customer, you had better be on their mobile device.

All quality agents bring training, income development and great F&I products to the table for their dealer clients. But if all you are offering to your dealers and prospects are similar resources and services as other quality agents in your area, I’m here to tell you it’s not enough. Now is the time to start using technology to solidify and expand your dealer base by offering a solution which will help your dealer clients maximize their retention efforts and soften the effects of the next downcycle.

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- has written 1 posts on Agent Entrepreneur.

Dean Harrison is the president of Maximus Auto Group (MAG), a leading F&I product, training and technology provider.

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The views expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views of Agent Entrepreneur or any employee thereof.

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