Average eVHC revenue 14% higher than 2022, but at what cost to customer retention?
Revenue performance in aftersales has been broadly flat over the past 3 months, with small fluctuations in average eVHC values and conversions identified, suggesting that for now at least, price hikes appear to have slowed down.
The small fluctuations however over the few months and even longer have always been in the same direction, with average value of Red work identified creeping up and eVHC Red work conversions falling downward.
For identified Red work this has increased from an average of £263 in January 2023 to £300 in August 2024, a 14% increase. In parallel to that, red work conversions have had the opposite trend, falling downward, where in January 2023 red work conversions sat at 48.2%, today in August 2024 they sit at 45.9% fall of 4.8%.
At a retailer level this fall in conversion is somewhat being masked by the rising prices, being seen on the bottom line as an improvement in aftersales revenue. However, we suspect the longer-term impact on customer retention rates are not being considered.
An average retailer completing 100 eVHCs a week, would in 2022 have generated approximately £313,596 in Red repair revenue annually. The same retailer in 2024 is now generating £358,430 annually, a £44,833 increase in bottom line revenue.
But, this revenue improvement is at a cost.
In 2022, 100 eVHCs per week would have been equal to approximately 2652 jobs being identified with Red work each year. The lower conversion rate now means that a number of these jobs, and the connected customers are being lost, with customers going to fast fits or independents for the work.
The fall in conversion rates from 2022 to 2024 is the equivalent of an average retailer losing 110 customers to competitors each year, and as conversion rates continue to fall this number will only increase. Food for though for retailers looking to sell them their next car or retain them for future service work.
Overall, we have estimated that for every 5% red work value increase, red work conversion falls by 2.5%.
The higher revenue may be good for now, but it does means that retailers are having to work harder to acquire more “new” customers to keep workshops full, as customers look to competitors for repair work to be completed.
If retailers are looking to retain more customers, maybe a review of repair work may be a place to start to prevent leakage to the competition…
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