ST. LOUIS -

According to a new study, the average car dealership could generate an extra $106,000 each year in profit, by improving the customer experience.

Maritz Research this week released the results of its Automotive Customer Experience Payback Study, which measures the financial returns of a positive car-buying experience.

The study found that said the average dealership could generate an additional $106,315 per year in gross profit by making their customers’ experience a top priority.

“It’s always been assumed that happy customers are good for business, but this study provides hard data to back up that theory,” said Chris Travell, vice president of strategic consulting for Maritz Research. “For many dealerships, when it comes to improving the customer experience, they say, what’s in it for me? Now, customer service should be seen as a profit-generating endeavor, and we can actually calculate the payoff.”

The study examined two key profit-drivers, namely vehicle sales and service revenues. Using created models, Maritz researchers were able to estimate the impact on an average dealership’s sales and service gross profits based on a one-level increase or decrease in customer satisfaction scores.

The one-level change includes, for example, people who move from feeling “very satisfied” to “completely satisfied” with their car-buying experience.

Using 2011 statistics from the National Automobile Dealers Association for the average annual number of retail units sold and the average gross profit per vehicle retained, Maritz said its study shows that satisfied customers are much more likely to return to the dealership where they bought their previous car when it comes time to replace it.

The calculated financial benefit to the dealership is more than $64,000 each year in additional sales profits if the store can increase customers’ satisfaction by one level over the lifetime of their vehicle.

Regarding maintenance and repairs, the study used vehicle ownership data from NADA and Edmunds.com to calculate how customers’ satisfaction with their car-buying experience affects their likelihood of visiting the dealership for future maintenance and repairs.

In a similar analysis to sales, the estimated increase in service profits for the average dealership showed at $41,646 per year.

Combining the estimated additional sales profits with service profits, Maritz reported, reveals a potential incremental gross profit of $106,315 per year for the average dealership.

On the reverse side, Maritz reported that its model used to calculate the possible effects of customer satisfaction decreasing one level found a potential decrease in dealership gross profit of $191,624 per year.

“When dealerships consider investing in improvements to their customers’ car-buying experience, this model will help them understand exactly what financial benefit they can expect,” said Travell.

“This is essential in justifying the cost of customer experience improvement initiatives. It also shows what’s possible, if dealers choose to ignore this reality and change the mindset that customer service doesn’t matter that much," Travell added.