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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Managing customer conversations in an omnichannel world
It’s good to talk. In the car retailing business, where establishing a rapport with customers is paramount, it is even better when your staff have meaningful conversations which evolve into lasting relationships.
The most recent Consumer Attitude Survey by the National Franchised Dealers Association found 33% of customers were either “very satisfied” or “fairly satisfied” with the customer service delivered by retailers when buying a car. This dropped to just 26% when asked about their customer experience of aftersales.
How car retailers communicate with customers is a driving factor in measuring satisfaction, with these results indicating room for improvement across both departments.
Research by JudgeService, the customer reviews platform for franchised retailers, identified a direct correlation between customer satisfaction and the positive attitude of showroom staff, with communication being a key feature behind these successful relationships.
Its study of over 50,000 car buyers showed how positive attitudes and good communication skills resulted in high promoter scores and increased sales.
The research concluded that customers appreciate being looked after and feeling valued and are more likely to return to make future purchases; a reminder that building relationships does not happen by accident.
Having positive and proactive customer-facing showroom staff is vital. So is having the processes in place to ensure that every customer interaction with your business is as positive as it can be – day in, day out. Leaving this to chance is not an option, there is too much at stake.
Evolving your communication channels
As a sector which has evolved to embrace omnichannel retailing across physical and digital sales, the way your business communicates remotely with customers requires personalisation.
Customers have developed more sophisticated expectations in the way they interact with retailers across non-automotive sectors and expect the same level of flexibility from car retailers. They know which communication channels work best for them and will expect you to use them.
Today an increasingly typical scenario sees showroom and aftersales staff using business mobiles to communicate with customers via WhatsApp, Facebook Messenger, email and Live Chat, or a combination of any number of them depending on customer preferences.
The convenience and immediacy of all these channels resonates with customers but, as retailers are increasingly finding to their cost, these conversations can be virtually impossible to manage within the business, especially when a member of staff is unavailable, on holiday or has left. This is where the digital trail can go cold and customer resentment builds.
CitNOW Conversations – your communications hub
Our solution to this is CitNOW Conversations, a brand new, innovative solution delivering seamless, multi-channel, two-way, customer communications across your business.
Designed specifically for automotive retailers, this powerful communication tool supports and complements the showroom experience delivered by retailers with a compelling edge.
This centralised desktop hub, accessible through a browser, consolidates all those mobile based messages and provides a single point of reference for all conversations no matter which messaging channel is used, ensuring more coordinated and streamlined communication, 24/7.
Furthermore, customers can use whichever combination of communication channels they prefer. They can switch between Live Chat, WhatsApp and email and it does not matter as all the messages are consolidated and funnelled into the CitNOW Conversations dashboard.
And if the member of staff changes during the sales or aftersales journey, the conversation history is available to the new staff member, allowing them to review what has previously been discussed, avoiding frustrating the customer by asking them to repeat a conversation.
Having one platform for all communication channels, drives efficiency whilst elevating the customer experience and delivering valuable management insights.
Also, unlike messaging via mobile phones, it is GDPR compliant with user privacy and data protection in place, ensuring personal information is handled with care and security.
Additionally, because it was developed for the unique needs of car retailers, it works seamlessly across vehicle sales and aftersales departments, especially when integrated into lead management and aftersales management systems, such as Dealerweb.
Engaging with car buyers
The platform is designed to make it easier for car buyers to start conversations and saves time by efficiently qualifying leads and speeding up your sales processes with multi-channel communication and automation.
Conversations around new and used car sales, where customers are looking for quick responses, no longer need to be dependent on a particular member of staff being in the showroom on a given day. The system ensures the baton is picked up by a colleague, so the customer is not kept waiting.
Engaging with aftersales customers
CitNOW Conversations works in the same way when customers require aftersales work.
It can also help maximise workshop productivity by driving more service bookings with automated invites and by keeping customers updated on their vehicles through notifications.
Future possibilities
Our rollout of CitNOW Conversations started towards the end of 2023 when CitNOW partnered with a leading OEM and we are already seeing how it is delivering better communications management. Find out more by reading the full BMW and MINI press release.
Retailers are also appreciating the insights being generated by the platform and the way it replaces ad hoc mobile phone communications with something smarter, more professional and GDPR compliant.
With communications at the heart of all businesses, we are already exploring how we can integrate CitNOW Conversations with other CitNOW Group products, so we will keep you posted on future developments over the coming months.
Aftersales conversion
Overall conversions across Aftersales remain consistent, with performance for Red eVHC work tracking at 46%, which is just marginally lower than the same month last year, where it tracked at 46.81% conversion, a positive sign especially when you add in that Amber conversion increased 5.5% compared to 2023, now tracking at 9% for April.
Breaking these results down by Volume and Premium vehicles has also given us a different view on performance levels.
Comparing Jan-Apr 2024 to the same period last year, for Volume brands we can see that 44.8% of retailers improved their eVHC red work conversion performance by 1% or more, with 57.3% of retailers conversion levels falling by 1% or more.
For the improved retailers, eVHC conversion increased to an average of 57.5% conversion, an average improvement of 19.7% with the minimum being a 1% improvement, to the top performing retailer trebling last year’s conversion and improving their metric by 319%, moving from 16% conversion up to 68% conversion.
On the flipside the retailers that declined in performance fell from an average of 59% to 47.2% conversion, a decline of 20% on average.
For Premium vehicles, we saw a similar story with 44.4% improving performance and 55.6% falling behind compared to last year.
The improved retailers eVHC conversion increased on average to 53.3% conversion, an average improvement of 24.4%, again with the minimum being a 1% improvement, to the top performing retailer nearly doubling last year’s conversion and improving their metric by 172%, moving from 22% conversion up to 60% conversion.
For retailers that declined in performance they fell from an average of 50% to 40.3% conversion, a fall of 19.4%.
Both these scenarios show conversions can both rise and fall, almost in equal measure. What is needed to focus to drive continual growth year on year, if that was achieved overall conversion would increase considerably.
John Law, Executive Director, CitNOW Insights commented, “Reviewing these numbers it’s interesting to see the change in performance levels for both volume and premium brands, with very similar shifts in performance for both.
The challenge for retailers is not to become complacent and allow performance to drop off, those retailers that can continue to utilise technology and people at the right stage of the eVHC process will continue to deliver the most optimal results and grow year on year.”
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