According to J.D. Power’s recent U.S. automotive brand loyalty study, customer experience is an important retention factor, with brands that get it right commanding a 60%+ repurchase rate.
But creating frequent and impactful touchpoints can be a challenge, particularly with dealer service volume for older cars in steep decline.
Understanding the vehicle ownership experience outside the dealership is key to bringing owners back into the showroom.
A key element is matching the right support and services with each unique stage of the vehicle ownership lifecycle. The average length of vehicle ownership, currently around 8.4 years, continues to climb, with many models on the road older than 11 years.
If dealers and automakers can adapt services to this longer lifecycle, they’ll unlock new opportunities to create value-added experiences.
Vehicle Ownership Lifecycle
Vehicle ownership fits into three stages, defined by elements including condition, warranty, support, payment plans and expected maintenance.
The “new-car stage” covers the first three years, when maintenance and service are minimal and most cars are under warranty. During this period, dealers capture 88% of annual service visits.
The “middle stage” includes vehicles three to five years old, as vehicles come out of the original warranty coverage, but 80% of which are still under financing. Because only 30% opt for extended service contracts, most of these owners face out-of-pocket maintenance and repair costs.
Finally, the “golden years stage” includes vehicles five to eight-plus years old. These are typically paid off but likely to incur growing maintenance costs, and just 21% are serviced at a dealership versus an independent repair shop.
Building Customer Loyalty
Recent consumer research by Agero shows that vehicle owners value some specific features associated with vehicle ownership, including:
- Maintenance and repair discounts
- Parts and accessories discounts
- Roadside assistance
- Mechanic hotline/support
- Repair financing
- Mobile services and convenience (such as cleaning and refueling)
- Vehicle transport for scheduled maintenance
Offering some or all of these benefits can improve the ownership experience throughout the vehicle lifecycle. These interactions also create multiple touchpoints each year with the owner, keeping brands top of mind, and resulting in positive brand experiences that increase loyalty and likelihood of repurchase.
Ongoing driver engagement provides numerous benefits for manufacturers. For example, a post-warranty membership program that protects the driver with roadside assistance, support, discounts (e.g., service, maintenance, parts, and accessories) and engaging features helps create continuous positive touch points between customers and auto brands.
What’s more, customers are eager to take advantage of incentives, with 72% of consumers noting loyalty benefits such as promotions, exclusive deals and product discounts are the most valuable feature associated with mobile app consideration and engagement.
Similarly, service discount offerings, mobile convenience and transport – particularly in the “middle stage” – can be a way for dealers to differentiate from aftermarket chains/shops, to increase parts and services revenue. This creates an additional dealer touchpoint during the post-warranty period, a time when owners begin taking their car to the local garage because they believe it’s cheaper.
The “golden years stage” presents an important opportunity to engage these customers as they begin to support their vehicles and consider the tradeoffs of repair versus repurchase. Dealer financing options for repair can also be a powerful solution, boosting corporate loyalty by up to 20%.
Developing a thoughtful combination of services and support to engage customers throughout the automotive lifecycle can play a powerful role in helping customers stay engaged with – and loyal to – their auto brand.
Cathy Orrico (pictured above, left) is chief client officer for Agero, a provider of roadside assistance, accident management, consumer affairs and digital dispatch solutions.