Top Strategies for Dealers to Recapture Customers Who Have Defected

If there’s one scenario that just burns any organization’s leadership, it’s losing customers.  Take into account the escalating customer acquisition costs and the significant revenue that comes from longterm relationships with loyal customers, there’s just no excusing the hole in the bucket.  For the auto industry, customer churn also creates a massive gap in the lifecycle that supports ongoing vehicle purchases and servicing.  Of course, the OEMs are concerned with the dip in brand loyalty, but dealerships appear to have come to terms with once-loyal customers packing up for greener pastures.  This is your wake up call – there are strategies you can deploy to recapture customers who have defected.

Today’s servicing landscape is more competitive than ever.  Layer in the pandemic and supply shortages from a few years ago and new vehicle sales are funneling into the dealership service department at a concerning pace.  There’s no relief in the immediate future.  Current interest rates, vehicle pricing, rising insurance costs and vehicle owners holding onto vehicles for a longer period of time will also affect vehicle servicing patterns for the next 4 to 5 years.  Those factors also lend to the importance of customer retention.

Losing once-loyal customers can have a significant impact on a business’s bottom line. However, research shows that a thoughtful approach to re-engagement can often win back former customers, which is crucial because reacquiring lost customers can be far more cost-effective than attracting new ones. According to a study by the Harvard Business Review, companies that focus on reacquiring customers see a 60-70% higher likelihood of conversion compared to efforts to acquire brand-new customers.

So, what does it take for dealerships to win back lost customers? The key lies in understanding why they left and crafting targeted strategies to address their needs and concerns. Here are some effective tactics:

1. Recalls Are the Lowest Hanging Fruit: The high cost of recalls is a burden to manufacturers, but dealerships can help restore the OEM’s brand integrity by being responsive to dangerous recalls.  It also turns out to be a big boost to warranty revenue and a chance to reinvite owners back to the dealership for a heightened servicing experience – all at no cost to the vehicle owner.  Recall Masters’ data also suggest that 54% of these consumers will also opt in for additional CP work.
2. Offer Personalized Incentives: Personalization has been shown to be a powerful draw. A recent Salesforce study found that 76% of consumers are more likely to engage with brands that offer personalized experiences. This might include tailored discounts, exclusive promotions, or loyalty rewards. For example, telecommunications company T-Mobile saw positive results by offering custom loyalty programs and discounts to previous customers, which led to a 12% increase in reacquisition rates.
3. Leverage Feedback and Address Issues: Customers often leave due to poor experiences. Re-engagement campaigns that address common complaints can be effective. For instance, Adobe conducted an analysis of past customers who canceled subscriptions, then ran campaigns that directly addressed those concerns, resulting in a 25% success rate in reacquiring lost customers.
4. Showcase New Value Propositions: Dealerships can lure back former customers by promoting new features or services added since the customer’s departure. Starbucks, for example, introduced a new line of customizable drinks and a revamped rewards program, specifically aimed at winning back former customers. These efforts contributed to a notable increase in reactivated memberships within just six months. Dealerships can also appeal to consumers through social causes – community support for non-profits or other environmental initiatives. According to a report by First Insight, 73% of Generation Z are willing to pay an extra 10% for products that align with their values and political beliefs.
5. Re-engage Digitally with Targeted Communications: Recall Masters deploys R+ retention solutions to direct mail customers, offering a gift card that incentivizes customers to visit the dealership for sales, service and/or parts/accessories promotions.  Digital re-engagement has also proven successful for companies in retail, e-commerce, and service industries. Facebook, Instagram, and email re-targeting are powerful tools for reminding previous customers of new offerings, discounts, or improvements.
6. Do Something While You Can: Customer defection is a journey, no different than the journey a customer takes on the path to a vehicle purchase.  Sold-Not-Service (SNS) customers and those with a profile of no return visits in 60/90/180 days also signal when a vehicle owner slips from disinterested to lost.  The incentives you offer should reflect where these customers are in that timeline, escalating incentives as they mature.
7. Start Teaching, Stop Selling: Today’s consumers, especially younger demographics, are making decisions based on information and data readily accessible on the internet.  As such, more informed consumers are distrustful of dealerships who are using heavy-handed persuasion techniques that promote an adversarial relationship.  Instead, dealership staff should focus on helpful guidance that may not be easy to find on the internet, building a profile of trust and product mastery.

Re-engagement efforts can strengthen brand loyalty and boost lifetime value, as a reacquired customer often remains loyal longer than new ones. Dealerships that prioritize winning back lost customers can create a cyclical relationship, increasing revenue, and fostering loyalty. In an era where customer retention is critical, focusing on reacquisition is a valuable strategy for sustainable growth.

Companies worldwide are eager to invest in a customer win-back strategy because it is proving to be a more cost-effective method than customer acquisition. In fact, research indicates that boosting customer retention rates by a mere 5% can lead to a significant profit increase ranging from 25% to 95%.  Winning back these customers also reassembles the owner lifecycle, boosting vehicle sales. The chances of making a sale with a current customer range from 60% to 70%, whereas the likelihood of selling to a potential new customer falls between 5% and 20%.

There’s too much at stake for dealers to give up on customers who have walked away.  However, there’s no reason for customers to come back if nothing has changed from the conditions that allowed them to walk in the first place.  Chart a course for customer re-engagement and never look back.

About the Author

Sean Reyes Chief Marketing Officer sean@recallmasters.com

Sean Reyes oversees all marketing efforts at Recall Masters as Chief Marketing Officer. Sean also serves as the host of the FixedOps UX, a “minicast” that revolves around the fixed operations ecosystem and the tactics that build a better user experience for customers, dealership staff and other stakeholders. Sean’s experience spans more than 35 years of business development and strategic marketing experience, having developed go-to-market products and solutions for the automotive, healthcare, insurance, finance and technology industries to serve Fortune 1000 clients like American Express, Toshiba, Western Digital, Cox Communications, Novartis, Microsoft, IBM, Compaq, HP, National General Insurance, MyCustomer Data, DigniFi and several automotive affiliates and dealerships. Sean lives in Napa, CA with his wife Kathryn and spends his free time hiking, kayaking, playing guitar, going to concerts, rebuilding project cars and helping his kids embark on adulthood.