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Building customer loyalty and retention in the automotive industry

The growing importance of aftersales in building a brand’s reputation, maintaining customer loyalty and trust, and generating positive word of mouth

Building customer loyalty and trust by having a direct relationship with the customer Great aftersales services will drive higher revenue brands can attract buyers by creating an edge over competitors through offering new features and designs in every model launched

Jeff Stagg, Head of Aftersales, Audi Abu Dhabi and Al Ain

The automotive industry is undergoing dramatic changes, particularly in the wake of COVID-19 developments, with evolving customer expectations and the acceleration of technological innovation and adoption. In the past quarter we have seen many brands launch online sales platforms across the region to remotely assist customers during movement restrictions and social distancing protocols, with the sales team on hand to handle enquires and support with the car purchasing journey. But what does this mean for aftersales? 

While brands can attract buyers by creating an edge over competitors through offering new features and designs in every model launched, the aftersales service through authorized brand dealerships can make or break a relationship with customers. The purchasing journey should not end once a product has been bought – after all, a car will likely be the second most expensive thing a customer invests in after a house. With an imminent shift in consumer behaviour to online purchasing, aftersales is more important than ever to building a brand’s reputation, maintaining customer loyalty and trust, and generating positive word of mouth. 

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Building positive brand perception

There is nothing like driving out of a showroom in a brand-new car following a positive experience with the sales team. From that point onwards, the customer’s relationship with the brand will be held with the aftersales team and the expectations for a continuation of the positive brand experience will be high.

Many of the premium and luxury car brands have a strong global track record of excellent customer service, and to maintain this positive brand perception among local customers, dealers need to provide a seamless experience at every touchpoint beyond the purchase. Getting this right by providing timely delivery, convenient service at a pocket-friendly price point and creating unique, customer-focused benefits is critical to building a positive brand experience. 

Added value initiatives such as 24hr Roadside Assistance, complimentary pick up and drop off services, and complimentary sanitization and fumigation of a vehicle ahead of returning it to the owner contributes towards a more satisfied and loyal customer base. 

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Building customer loyalty and trust

Innovations in automotive technology are being implemented in models across brands, and a high level of industry standardisation in quality levels and features means that customers are spoilt for choice. This makes the overall brand experience and aftersales support a key differentiator between brands.  

Positive engagements with customers lead to trust, so having knowledgeable, friendly staff and technicians notably affects the overall experience. According to the 2019 JD Power Customer Service Index, owners who had a delightful experience say they were greeted immediately by a service advisor 87% of the time; that the service advisor was completely focused on his/her needs 97% of the time; and that they received helpful advice 94% of the time.

Dealers can also optimize the role of aftersales to gain trust by ensuring the customer service delivered is at the same, or a higher level than the competition, to meet growing expectations. Offering genuine OEM (original equipment manufacturer) products at good prices and delivering effective customer service in a timely and convenient fashion will not only drive a positive customer experience, but will also build a high level of confidence in an industry that is often distrusted.

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Generating word of mouth

A satisfied customer is more likely to encourage friends, family and colleagues to use the same service following a good brand experience. This in turn means more revenues for the organisation over time. In fact, research from Bain[1] showed that those who had a positive brand experience (promoters) are nearly 10 times more likely than those who didn’t (detractors) to repurchase or lease a vehicle of the same make or brand as their current one. Promoters are far more likely to recommend their vehicle brand to a friend; and each promoter provides nearly five purchase referrals, while each detractor dissuades two prospective buyers. 

Conversely, in another study commissioned by Lithium Technologies, 65% of respondents reported that a single bad customer experience is enough for them to swear off a brand, even if they really value its products, while 57% would advise friends and family not to purchase from that brand. 

This is highly applicable in the automotive industry — whether during or after sales, car companies should pay more attention to the full spectrum of good services that they can provide to satisfy their clients, 

The future of aftersales and driving revenue

We have now established that aftersales service plays a pivotal role in strengthening the bond between the brand and its customers. 

In today’s automotive market, new car sales are declining and there is a trend for people to keep their cars for longer – for example, in the last 2 years, the growth of customers owning Audi models of 4 years or more has grown from 39% to 53% of the Audi Abu Dhabi customer base. This means that after-sales revenue is becoming increasingly important for car dealerships, especially in mature markets. To optimize this revenue stream it’s critical that service facilities not only run an efficient aftersales management process, but equally invest in staff training and certification programmes and adopt the latest in-house technology and equipment to best service all Audi vehicles and meet customer expectations.

However, the new dawn of e-mobility will have an impact on the after sales business as electric vehicles incur fewer maintenance costs. Electric cars have fewer parts than internal combustion engines – only 3,000 instead of 4,000 – and therefore require less service than internal combustion engines. Electric vehicles also eliminate the use of some fluids, such as transmission oil, so the replacement of these fluids is completely eliminated. 

With people driving their cars for longer and with the increasing popularity of e-mobility, it is crucial for automotive brands to put customers at the heart of what they do and to think smartly about how to attract and retain them. Thus, championing the aftersales service and ensuring the loyalty of customers should be key to any automotive brand’s strategy. 

Customers are important intangible assets of every business, and now more than ever, brands must place a strong focus on customer service to maintain a competitive position in the market.