Chicago Automobile Trade Association

Developing and retaining loyal customers

November 17, 2010

It’s one thing to have satisfied customers; it’s quite another to have loyal customers. This month’s NADA Management Education article shares some thoughts on how to develop the kind of loyalty that keeps your customers coming back to you.


satisfied customer will shop at any dealership that sells the new- or used-vehicle he or she wants, assuming approximate price parity and reasonably pleasant service. A loyal customer will buy only from you. 

Customer retention is arguably the single most important driver of your dealership’s value, and the key to growing your business. Retained customers return to your dealership each time they buy or lease vehicles; they won’t deal with anyone else. Retained customers talk to their families, their friends, and their colleagues about how well you treat them, and these people become your customers, too. All those customers together constitute a strong base of customers whose loyalty is worth millions—literally.


Long before manufacturers required CSI surveys and "customer satisfaction" became a mantra, dealers were well aware of its importance. They measured customer satisfaction by the number of times their customers returned to buy vehicles, and/or brought their vehicles in for service, and/or referred prospects. Dealers knew their customers and stayed in touch with them because dealers understood the benefits of retaining their customer base. 

Today, dealerships keep in touch with their customers using a sophisticated business model supported by equally sophisticated technology. Customer Relationship Management (CRM) is a way of documenting, tracking, analyzing, and building upon each customer’s every contact with the dealership, regardless of the point or method of contact. A contact may happen in the form of a showroom visit, an incoming or outgoing telephone call, or any means of written communication (mail, fax, or the Internet, including e-mail). Over time, and with the input of each dealership employee who interacts with each customer, the dealership builds detailed, individualized customer portraits, which then provide the information needed to maximize sales opportunities and strengthen the ties between customers and dealership.


Your dealership’s relationship with customers is what differentiates your store from all the other stores in your marketplace. You need to be extremely sophisticated about customers because you need them more than they need you. You need to earn their business. They need reasons more compelling than price, convenience, or product to give you their business. They’ll choose you if you provide the individualized customer service that the other stores don’t. They’ll be loyal to you if you take the steps to earn their loyalty. For customers, good service for loyalty is quid pro quo. For you, what you give comes back to you times ten:


It costs ten times more to bring in a new customer than it does to retain an old one.


This article is adapted from "A Dealer Guide to Taking Charge of New-Vehicle Sales" (SL35). For this and other helpful resources, visit NADA Management Education online at or call 800-252-NADA, ext. 2



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