Working across several automotive brands, we’ve integrated customer history, service booking and invoice data, matching it with historical CX survey responses to explore customer experience prior to service retention or defection.
A quick overview of the approach
Incorporating a lookup vs. DVSA to identify sold vehicles through keeper change, we categorised every vehicle where we had a CX survey response into four groups:
- Lost (defected) – vehicle wasn’t seen the following year for annual service within the franchise network
- Retained – customer was seen again with their vehicle for next annual service
- New owner – car was sold and seen again within the network for service
- Sold – vehicle was sold and not seen again within the franchise network
Using segmentation analysis, we then evaluated how the customer’s last experience at a dealership differed for each of these key groups. This powerful analysis enabled us to directly model the impact of customer experience, captured in survey responses, on actual retention rates.
What did the analysis reveal?
The results are conclusive – customer experience is a significant driver of customer loyalty and retention. 77% of customers who scored a 9 or 10 out of ten for satisfaction with their last service experience at a franchise dealership were retained and seen again for next service.
This retention figure plummeted to just 52% for unhappy customers (those who gave a 1-6 out of ten for service satisfaction).
In addition to the 77% of customers who were retained after scoring a 9 or 10, a further 13% had sold the car (potentially being retained as a customer through new vehicle purchase) with just 10% being classified as ‘lost’.
By comparing ‘promoters’ (scoring 9 or 10) and ‘detractors’ (scoring 1-6), we’ve mapped the moments that really matter to customers at each stage of the lifecycle to identify key loyalty and defection drivers.
The value equation – perceived cost vs. benefit
Alongside customer experience, we also explored the impact of a range of other factors like drive time to dealership, time taken to complete work and overall cost of service on retention outcomes. There was a clear correlation between amount paid for service, overall satisfaction, and perception of value.
However, it’s not as simple as higher invoice costs leading to lower satisfaction. When we looked more closely into retention through advanced numerical and text analytics, it was clear that cost becomes a true driver of defection when coupled with a failure to meet franchise dealer expectations.
Just 8% of customers who defected mentioned cost in isolation when explaining poor service satisfaction scores. However, 40% of defectors mentioned the cost of the service as well as identifying that one or more of five key expectations weren’t met (communication throughout the process, cleaning the car, provision of alternative transport, quality of the work carried out and clear explanation of cost/service work).
Warranty and the value equation
The ‘value’ equation becomes increasingly important for retention outside of warranty. The customer transition from in-warranty to out-of-warranty saw key elements of the service experience become critical to retention. For example, for those manufacturers with three-year warranties, cleanliness of the car after service was five times more important in driving retention from third year to fourth year service than it was for first to second year service.
Excellent communication, provision of alternative transport and time to complete also become more important drivers for retaining those customers transitioning from in- to out-of-warranty.
Once out of warranty, customers naturally assess the perceived benefits of continuing to visit a franchise dealer for service (clean car, alternative transport, trusted advisors, good communication, enhanced convenience, speed etc.) against the cost saving they might achieve by visiting a local non-franchise garage.
If the franchise dealer fails to demonstrate these ‘value drivers’ during the final ‘in-warranty’ service, then once out of warranty, the customer is far more likely to consider the cost of taking their car to a franchise dealer as disproportionate to the benefits received, leading to defection.
With over twenty years’ experience in automotive customer satisfaction, MGS CX can help sustainably boost recommendation, conversion, and retention rates.
To find out more about this research or how we use advanced customer experience analytics to improve CX performance, please get in touch.