As a dealership there are many ways you can identify if you’re losing customers. Through data, you can see that John Smith used to come into the dealership regularly for service but then disappeared without a peep. Why did John Smith stop coming in? Do you know? You could certainly reach out to John and see if you can get any insight, and he may even respond and tell you why. Perhaps he simply moved out of the area. But what if he defected to competitor or took his business to an independent service center? Wouldn’t you want to know?

An interesting article on allbusiness.com discusses how businesses can’t implement or maintain customer retention or loyalty unless they understand the reasons why their customers are leaving. In an “eating tomato soup with chopsticks” analogy, the author explains that without knowing the “why,” when it comes to customer defection, “you may be getting a little taste, but you’re not really catching any of the good stuff.” According to the article, the three reasons customers leave are as follows: they had a bad experience, their loyalty isn’t being rewarded, or they found a better deal elsewhere.

When it comes to these three reasons for customer defection, dealerships are certainly challenged – probably more so than other retail and service industries. Many consumers already enter the transaction with skepticism and low expectations.

Well, what about rewarding loyalty? If customers are defecting because they don’t feel appreciated, that would certainly be an area any dealership should consider changing. There are many ways to show a customer they are appreciated -- not just through loyalty programs. Taking the time to get to know a customer, greeting them by name, smiling and thanking them for their business -- these are all ways staff can show appreciation and make a customer feel welcome. A loyalty program on top of these basic interactions can keep a customer engaged and loyally returning.

If you find that you’re losing business because customers are getting better deals elsewhere, you have two choices: offer better deals or build more value into your services. As there will always be competitors willing to meet or beat prices on vehicles, many dealerships have chosen to add value through extra services including free car washes for life and other perks. Will this tactic work and help overcome losing customers over price? Only if the customer experience that goes along with any value-adds is also great.

A customer isn’t going to care about free car washes if they have a horrible experience and decide to never return. The same applies in the service drive. I’m pretty sure that most dealerships aren’t going to want to try and match pricing with independent service centers and you shouldn’t have to. Dealership service has many advantages over independents. The problem is that many dealerships don’t make customers aware of those advantages. So, when a customer sees a $19.99 oil change coupon, they make the decision to leave your business based on price alone, without factoring in why dealership service is superior.

If you can address these three challenges in your dealership which cause customers to defect and understand exactly why it is happening, you’ll be well on your way to creating a customer retention strategy that is both effective and reliable. As the old saying goes, if you don’t know it’s broken, you cannot fix it.