Las Vegas, Nevada – Aftermarket repair chains are the largest threat to auto dealerships for retaining customers, not independent shops as some may think. That’s the report from automotive marketing company DMEautomotive, released at the 2012 National Automobile Dealers Association (NADA) convention.
The report, The Changing Service Loyalty Landscape, shows a hyper-competitive market in serious flux, with only 23 per cent of customers staying loyal to a provider. Those loyal to their dealers also spend and service their cars less than those who are loyal to independent and aftermarket providers.
Service “loyalty” is defined as a combination of how much customers spend and how frequently they visit the shop. “Loyalists,” who both visit and spend the most, make up only 23 per cent of the service market. “Swing loyalists” who either visit or spend the most time at a store, but not both, make up 50 per cent, while “disloyalists,” who neither visit nor spend most at the store type, constitute 27 per cent. Loyalists may be the minority but they drive 62 per cent of revenue.
While many believe that independent service centres are the greatest threat to dealerships, the data showed that when customers go elsewhere, most go to independent chains.
Those who take their vehicles back to the dealer for service tend to be among the wealthiest customers and are less price-driven than those who go to independent shops or aftermarket chains. Such things as frequent sales, coupons and discounts, and different price options for parts were 2 to 5 times more important for those loyal to aftermarket shops versus those loyal to dealers.
Dealer-loyal customers are also the most compliant, with 70 per cent “always following manufacturing service recommendations,” versus roughly half of aftermarket and independent customers.
Despite this, those loyal to dealers also spend the less. Customers loyal to dealers spend an average of US$1,105 per year on their vehicles, versus $1,191 by those loyal to independents, and $1,178 by those loyal to aftermarket chains. Dealer loyalists also tend to drive less each year, requiring less-frequent service.