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Types of Loyalty in the Automotive Industry

July 25, 2023

Loyal customers are a pro for any car dealership. Instead of constantly investing in pricey marketing and ad campaigns to win new customers, you can count on your loyal followers to come back again and again. Ideally, those customers will become champions for your brand, referring friends, family, and acquaintances to you—and driving even more business in the process.

As the automotive industry evolves and competition increases, it's more important than ever to build that loyal customer base¹. This guide outlines the different types of loyalty in the automotive industry and provides tips for building your own steadfast following.

Types of Loyalty in the Automotive Industry

Brand Loyalty

Brand loyalty is a powerful tool. Companies with high brand loyalty show stronger revenue growth than their peers and deliver two to five times the returns to shareholders over a 10-year period².

In the automotive industry, brands like Lexus, Mercedes-Benz, Subaru, Ford, and Honda are known for having high levels of returning customers³. When it's time to get a new car, these people are likely to trade in their old vehicle for one from the same manufacturer.

Dealership Loyalty

Dealership loyalty is largely location-based. It's more convenient for a customer to buy in their area than to take a road trip to get a new vehicle. However, location alone isn't enough to make someone a repeat customer.

The dealership itself needs to provide great service from knowledgeable salespeople, have a solid inventory of cars, and generally create a positive customer experience during the purchase and any follow-up service visits. One unpleasant incident can be enough to deter people from returning or making a referral4.

Salesperson Loyalty

Some customers may connect with a salesperson and want to return to that individual in the future. Trust is a major factor here. If the customer has a positive sales experience and the product lives up to their expectations, the roots of a trusting relationship are starting to take hold.

When it comes time for that customer to buy a new vehicle, they're more likely to go to the person they trust. If the salesperson has moved to a new dealership, the customer may even switch with them.

How Car Dealerships Can Build Loyalty

How can you use your understanding of customer loyalty to build your own committed following? Try these steps.

1. Provide Quality Customer Service

Great service starts as soon as a potential customer walks in the door. Make a visit to your car dealership a positive experience from start to finish. This includes everything from having knowledgeable and friendly salespeople to creating a comfortable waiting area. Quality seating and amenities, like free coffee, are worthwhile investments—especially if you want to convert sales customers into loyal service department customers.

Make the sales experience practical. For example, before a customer drives their car off the lot, introduce them to the service team and give them a primer on vehicle maintenance. You're showing that you care about them, even after closing the deal.

2. Personalize Your Communication

Keep in touch with customers regularly through email newsletters and SMS. However, make sure the content you send is useful. Nobody likes spam. You might send reminders about car maintenance, like oil changes and swapping out seasonal tires, or share new products and promotions.

For maximum impact, make these messages personal. For example, if your customer bought an Audi, they may be specifically interested in news about the brand. This allows you to use brand loyalty to your dealership’s advantage.

You can also personalize messages by using the customer's name and having communications come from the salesperson they dealt with. This reaffirms salesperson loyalty. You can even send holiday wishes and birthday cards—both thoughtful, personal touches throughout the year.

3. Implement Practical Loyalty Programs

Every business seems to have a loyalty program, but for an initiative to actually inspire repeat customers, it needs to be useful. You might offer gift cards for referring a friend, provide discounts on vehicle maintenance or parts, or give free oil changes when a customer buys four tires. Another idea: Free car washes for the duration of vehicle ownership.

You can also offer perks and rewards through social media, for example, via contests. This can help drive dealership loyalty and build your online following, giving you a ready-made audience of potential customers to tap into (for little to no cost).

Why Nurturing Loyalty Is Worth the Effort

While the 2023 outlook for the automotive industry is positive, there's no telling 100% what the future may hold. From global pandemics to supply chain challenges, the last few years have made it clear that businesses should expect the unexpected. A loyal customer base can help your car dealership thrive through good times and bad.

Sources:

  1. Hensley, R., Laczkowski K., Möller T., and Schwedhelm, D. (May 12, 2022). Can the automotive industry scale fast enough? McKinsey Quarterly. Retrieved on April 27, 2023, from https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/can-the-automotive-industry-scale-fast-enough
  2. Kopp, C. (January 21, 2023). Brand Loyalty: What It Is, and How to Build It. Investopedia Marketing Essentials. Retrieved on April 27, 2023, from https://www.investopedia.com/terms/b/brand-loyalty.asp
  3. Effler, G. (15 July 2021). Effects of Lockdown Keeps Vehicle Owners Locked in on Their Current Brand, J.D. Power Finds. J.D. Power. Retrieved on April 27, 2023, from https://www.jdpower.com/business/press-releases/2021-us-automotive-brand-loyalty-study
  4. Leonard, J. (November 23, 2022). 59% of Customers Don’t Return After a Bad Customer Service Experience. Business 2 Community. Retrieved on April 27, 2023, from https://www.business2community.com/customer-experience/59-of-customers-dont-return-after-a-bad-customer-service-experience-01306480