Dealers lose $380K over missed service opportunities with Gen Y


Dealerships are losing an average $380,000 annually in service revenue as a result of missed opportunities to digitally engage with and retain millennial car buyers, according to a study released by AutoLoop on Tuesday.

As the purchasing power of this key demographic expands, modifications to digital engagement strategies will be required to increase low millennial retention rates, says the provider of auto industry marketing and customer relationship management solutions.

AutoLoop's 2016 Digital Engagement study suggests that significant gaps in dealership service experience has resulted in a service customer retention rate 12 percent lower than previous generations, as well as a customer referral rate 50 percent lower.

"By 2020, millennials will command $1.4 trillion annually in purchasing power and represent 30 percent of total retail sales, so it's important that dealerships know how to win their business," Doug Van Sach, AutoLoop vice president of analytics and data services, said in a news release. "Although millennials as a whole are more brand-fickle than other generations, it's a mistake to believe they are incapable of becoming loyal customers. Our research uncovered opportunities in several key areas for dealers to better cater to this elusive demographic."

The survey revealed that dealers have notable shortcomings in three key areas, according to AutoLoop.

  1. Insufficient online presence for service department

  2. Lack of digital engagement (with tools such as online scheduling, mobile apps, SMS/text notifications and eCommerce)

  3. The in-store service experience

"Dealers need to dramatically increase digital and mobile advertising for their service business, particularly on third-party websites," said Van Sach. "If they don't, they risk losing millennial shoppers to competitors, especially tire retailers and quick lube chains."

Millennials are seven times more likely than other generations to be swayed by a digital ad, according to AutoLoop.

The company found that 41 percent of millennials were influenced by a digital ad before their last service visit and that 75 percent of millennials are highly influenced by online reviews, compared to 56 percent of Gen X-ers and 32 percent of baby boomers.

Thirty-seven percent of millennials prefer to make service appointments via a website or a mobile app, compared to 25 percent of Gen X-ers and 17 percent of baby boomers. But in spite of their preference, they are particularly less likely to make an appointment, according to AutoLoop.

"These results indicate that many dealerships are still not using online scheduling tools and, in particular, mobile scheduling," Van Sach said. "It's critical that dealerships integrate their marketing and appointment programs so they can convert more millennial service shoppers into customers."

According to AutoLoop, only 48 percent of millennials always make an appointment, whereas 57 percent of Gen X-ers and 69 percent of baby boomers.

“Despite the high level of digital research by millennials, dealers are routinely outspent by aftermarket companies in digital advertising — if they are visible at all,” AutoLoop said.

Millennial shoppers also prefer SMS communications from the dealers far more, according to the study. Sixty-six percent favor SMS/text notifications, while only 46 percent of Gen X-ers and 21 percent of baby boomers.

"Most dealers still don’t use SMS to keep customers informed throughout a service visit, and very few dealers have eCommerce options," said Van Sach. "Given these gaps in the digital experience, the lower service retention rates among millennials are no surprise."

Sixty-three percent of millennials said they would like to pay by phone, compared to 51 percent of Gen X-ers and 24 percent of baby boomers, according to the study.

Millennial respondents who participated in the study cited the following three reasons as to why they prefer to pay by phone:

  1. Getting their vehicle faster (49 percent)

  2. Avoiding the checkout process (35 percent)

  3. Avoiding the service advisor (16 percent)

Another in-store experience gap AutoLoop points to is the presentation of inspection results.

Millennials lack of understanding of their inspection results has had a significant negative impact on referral rates.

Only 51 percent of millennials understand their inspection results, compared to 58 percent of Gen X-ers and 63 percent of baby boomers.

"Dealers need to focus on improving their in-store experience if they want to retain millennials' business and get more referrals," Van Sach said. "We recommend monitoring service advisors for process compliance and implementing technology that educates consumers and offers more choices, such as mobile tablets, service repair videos and pricing and financing options."

Additionally, AutoLoop’s findings suggest that millennials chose a service center for price and financing options far more often.

“This generation values being presented with different price and financing options for services,” AutoLoop said.

Thirty-two percent of millennials were found to choose a service center because of price and financing options — which is two times more than non-millennials — who are most likely to select a store due to their use of OEM parts and the expertise of technicians.

The 2016 AutoLoop Digital Engagement study surveyed 1,000 auto consumers and analyzed the purchase behavior of more than four million customers representing 1,000 dealerships throughout the U.S.

To view the study visit,

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