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Is This Why the Automotive Industry Neglects Customer Retention?


Is This Why the Automotive Industry Neglects Customer Retention?

Here are some well-known facts about customer retention:

  • Acquiring a new customer can cost up to 7 times more than keeping an existing one.

  • The chances of selling to an existing customer range from 60% to 70%, while selling to a new prospect is only around 5% to 20% likely.

  • Increasing customer retention by 5% can boost profits by 25% to 95%.

  • Loyal customers tend to spend 67% more than new ones.

  • 82% of companies agree that retaining customers is more cost-effective than acquiring new ones.

Yet only 18% of companies focus more on retention than acquisition.

I have a theory about why that could be.


In the UK, the average age of a car is now 9 years. Maintaining a cosy relationship with a customer for such a long time requires a lot of effort, careful thinking, and planning.


Considering that 73% of salespeople and dealership managers stay in their positions for less than two years, it's hardly surprising that the showrooms may not be of much help.

I haven't found any stats about dealership group directors, but I doubt they stay in their positions for nine years, either.

And the same goes for the OEMs. While people may keep new cars for only three years, that's still longer than the annual bonus periods linked to sales targets for those high up in the NSCs.

So, there you have it - no one stays long enough on the job in the automotive industry to become genuinely interested in customer retention.


And as for the customers? Well, does anyone care?

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