Returning customers 26% more likely to convert

We wanted to look at our data set in a different way this month and try to answer a question that is so often assumed, that returning customers convert better.

To answer this question, we completed an analysis of nearly 3 million sales leads over the past 12 months and categorised these leads by “Known” and “Unknown” customers, e.g. has the lead been generated from a customer that is already known to that retailer.

The results of this analysis showed that “Unknown” customer leads converted from Lead to Order at an average of 25.07% but leads generated from “Known” customers converted on average at 31.61%, a 26% improvement when compared to the Unknown customer leads.

Other influencing factors

In today’s omni channel environment customers have one thing above all else, choice. Used Vehicle Locators and Market Places are full of available stock and are only a few clicks away from a customer tempted to purchase a new vehicle.

So, what can retailers do to make sure customer keep on purchasing from them?

The core of this comes back to stock strategy and are you as a retailer purchasing the right vehicles that are in demand and are they being presented to customers as effectively as possible.

Stock analysis and Stock Pricing solutions allows retailers to review the rating or desirability of their stock in a single view, our data shows that vehicle stock that is highly rated not only sells faster, but generates better GPPU as well.

Using the AutoTrader Retail rating as an example, stock rated at <20 (Low Demand) takes on average 73.3 days to sell and generates an average GPPU of £782, stock rated >80 (high demand) sells on average in 36.8 days and generates on average £1374 in GPPU.

John Law, Executive Director, CitNOW Insights commented “Being able to understand the makeup of your stock mix in this way is a win, win. Retailers can see what stock is desirable and which isn’t, influencing future stock purchasing, retailers can then sell these vehicles faster and at an improved price point as a result.”

Aftersales impact on retention

Being able to present these used cars back to your customers at key times is another major factor and is where having a strong aftersales retention policy in place is key to frequent touch points and marketing opportunities with customers.

John Law continued “Key factors that influence buying decisions from consumers is professionalism, trust and transparency. Customers that have these positive experiences in the aftersales team after purchasing a vehicle from you, we believe would make them more likely to buy from that retailer again in the future.”

As part of our analysis, we wanted to look at what can influence this further.

Firstly, use of video in aftersales work, today on average 49.9% of all eVHCs includes a video of the vehicle provided by the technician, in our previous analysis we have shown that Red eVHC work that includes video converts on average 11% better than those without. This shows that where customers are provided with the right information in a clear and transparent way they will purchase from the retailer as they trust the information being provided.

Service plans and retention products are also a great way to build trust with customer, being able to freeze service costs for the life of the plan is a huge win for the customer, especially in today’s financial landscape. However, today it is estimated that on average only 1 in 4 customers are offered a service plan quote, a simple change such as a setting a KPI that every customer is given a service plan quote either at the point of vehicle sale or service would massively help to increase long term customer retention.

John Law, commented “Being able to provide a range of technology solutions such as video, or retention packages that help customers spread the cost are great ways to keep customers coming back to your retailer, these combined with proactive stocking strategies we believe would help retailers to see more of these higher converting “known” customers and as a result help to drive improved profit and efficiencies in sales teams.”

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