How CPO affects consumer loyalty


Loyalty. A strong feeling of support or allegiance. Loyalty is devotion and faithfulness to a cause, country, group or person.

Book after book has been written on the topic of loyalty. But what is loyalty and what does it mean to you? 

Keeping customers makes good business sense, but it’s not easy to do.

We spend much of our time prospecting new customers; getting them into the store, selling them the car they want and what they can afford. Selling them on your store and on you! So, now that you’ve got those customers, how do you keep them?

The downfall of many dealerships is that they don’t know how to keep customers. This is where there is money to be made — whether in F&I, service, body or parts — yet so few dealerships cultivate this market in order to capture repeat business. Why bother? What are the real advantages of customer retention?

Studies across numerous industries have shown that the cost of keeping a customer is about 10 percent of the cost of acquiring a new one. So, economically it makes good sense. Putting together a good retention strategy will also lead to increased customer profitability, since longer relationships are likely to produce lower account maintenance costs. 

So, how does a certified pre-owned program affect consumer loyalty? Some will say that CPO programs in their stores do not drive repeat business and loyalty; arguing that it is the relationship with sales and service which keeps customers coming back.

Those relationships are indeed a piece of the equation. A CPO program offers your dealership a key differentiator over and above the sales and service relationship and another way to drive repeat business.

According to the 2015 Autotrader CPO study, 74 percent of CPO owners are likely to purchase the same brand, and 80 percent are likely to purchase from the same dealership again; 49 percent of CPO owners are likely to purchase a new vehicle in the same brand.

Jared Dively, general manager, Lakeland Volkswagen in Lakeland, Florida, said: “CPO is a smart choice for us. Not so much on gross but on service. When consumers come back to me, half come back for new. Our loyalty is 55-60 percent from certified customers which is higher for us than on new customers.”

Autotrader’s Car Buyer of The Future Study shows that CPO programs support business across several revenue centers at the dealership, especially the F&I department and service center, which reinforces the brand’s value by letting customers know they can buy with confidence and visiting your dealership for help and service. Doing this also increases your touch points on that consumer while driving incremental revenue.

Jay Ward, finance manager at Continental Nissan in Countryside, Illinois, said via Facebook, “The key to CPO is the wrap protection that is available. We do really well with CPO. Vehicle service contract penetration is high and the loyalty to the service department is great for brand retention.”

Finally, the Autotrader CPO study revealed that many consumers, particularly Millennials, aspire to luxury brands, but many can't yet afford the cost of a new car. CPO vehicles are a bridge that allows consumers to crossover into the brands they want to drive sooner.

Dively said, “CPO allows us to shorten the sales cycle on a consumer, to bring them back a year sooner, help them build their credit and then bring them back in.”

CPO vehicles offer many of the same benefits of a new car without the higher price tag and steep depreciation. Each vehicle undergoes an extensive inspection defined by the manufacturer or administrator of the program and must meet a variety of guidelines from age to mileage. Once certified, these vehicles come with a comprehensive warranty, giving buyers the confidence they desire when purchasing a pre-owned vehicle. In fact, 64 percent of shoppers say that the certification process and warranty give them peace of mind.

By cultivating customer loyalty, businesses are creating an army of strong promoters that can outshine their best marketing efforts. These net promoters can help save huge advertising and marketing costs for dealerships as word-of-mouth is a powerful and cost-effective marketing tool. Building loyalty forms a solid customer base helping the business to grow exponentially.

People buy from people they trust. By showing transparency in inspections and repairs and adding the safety and security of a warranty, it builds a high level of trust that brings customers back into your dealership time and time again. 

Loyal customers, almost by definition, will purchase your vehicles and services again and again over time. In some types of business, you may end up selling more to one loyal customer in a year than you might to even 10 first time customers.

So what is loyalty? Simply put, it is the most powerful and cost-effective way of building your business.

And as we see it, certified pre-owned programs are a way of acquiring new consumers, keeping their business through several different departments at the dealership and are a strong indicator of repeat business.

For more information on shopper insights and buyer behavior, visit


Rob Christman is the fixed operations director of sales at Cox Automotive.

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