Service Customer Retention

The amount of revenue that dealers generate from service & spare parts is substantial, and is a key component of their ‘fixed coverage ratio’. As such, we have undertaken the path-breaking research to determine service loyalty levels for our clients.

In essence, service customer retention is a key measure for repurchase rates – as those customers, who are loyal in their vehicle servicing at the dealership, are more loyal to the brand overall, and are more likely to purchase the same brand again. In fact, from similar research in the past we have noticed that once these owners make a decision to regularly service their vehicles at the dealership, they are disciplined about coming for service at regular intervals.

In this research, three different types of databases are overlaid – vehicle details, customer details & service details. Once the variables are reviewed and missing data is identified, then we merge the databases and extract it for analysis. Most important is we have to define loyalty and attrition criteria. This criteria varies from one manufacturer to the other, hence arriving at it is important. Once the criteria is set, then we analyze the database in an iterative process, & profile the customers.

In terms of customer profiling based on their service retention behaviour, three distinct groups are made:

• Loyal: meaning they are most regular about servicing their vehicle
• Semi-loyal: meaning those that were regular, but of late have slipped off
• Non-loyal: meaning those that never visit the dealership at all for servicing

Hence the job of the manufacturer and the dealer is to convert all those who are semi-loyal and non-loyal to loyal, through CRM activities. And this in turn leads to tremendous added revenue; sometimes in the region of millions of dollars!