How car dealers are cracking the "customer retention" code

Welcome to another episode of the Car Dealership Guy Podcast.

In this episode, Brice Englert, founder and CEO of TradePending, discusses dealer competition with car buying giants like Carvana, how consumer loyalty is shifting in the age of hybrids, and the strategies they are using to secure more valuable trade-ins.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. Brice’s start in the automotive business.

Before entering the automotive space, Brice managed software programs in the Air Force during the 90s. After leaving the armed forces, he went back to school to earn a degree in finance. He found a job at a business called Dominion Enterprises in 2006, where he met a variety of automotive pioneers and entrepreneurs. Brice founded TradePending in 2014 and has remained at the helm of the company ever since.

2. Predicting the future of sales technology.

Brice notes that the average number of cars a salesperson sells in a month has remained at 12 since the 1950s. This means that despite the advancements in technology made over the last seven decades, individual dealership staff are selling at the same pace as before. Brice believes that artificial intelligence will help push the envelope in terms of what retailers can achieve. Not only can AI help salespeople become more efficient, but it can also help dealers save money by cutting down on staffing.

3. Automakers are becoming ingrained in the sales process.

Brice also notes that manufacturers are setting more standards across their franchises, resulting in a more communized approach to sales. While dealers may not want to work more closely with car brands, he believes that bigger companies have access to more data and can deliver unified experiences across storefronts. He predicts that automakers will continue to be more involved in the sales process as the years go on.

4. Resolving friction in the trade-in process.

Consumers and dealers value vehicles in vastly different ways, which can result in confusion and frustration during the trade-in process. Data serves to bridge the gap between both parties, giving retailers a better idea of what customers are looking for while giving customers a realistic valuation methodology. This knowledge not only helps educate the consumer but also helps them find the best market for trading in their vehicle.

‪TradePending‬ - TradePending makes dealers' websites convert better with their trade-in tool and payment calculator on steroids, makes it easier for sales teams to sell with video and digital vehicle brochures, and helps grow your service business with video for service departments and service offers management that turns your website into a service marketing machine. And they do it all under one roof. Check ‘em out in Booth 851 at NADA! Learn more at tradepending.com.

‪Tax Max‬ - The Tax Max “File and Drive” Sales Event is a simple tax season program that will help your dealership boost down payments and get more customers approved. Tax Max files the customer’s tax return, the dealer gets the down payment and the customer gets the car. Use coupon code: CARGUY and receive 25% off the Tax Max VIP package. Learn more at taxmax.com.

DLRdmv - With DLR50, your dealership now has 24/7 portal access to calculations, pre-filled forms, checklists, inquiries, plus white glove processing and specialist support. You can even acquire duplicate titles in all 50 states directly through the DLR50 platform! Learn more at dlr50.com.

5. Retention is key to long-term success.

Brice believes that retention will be the most important factor in dealership success in the years to come.

Retention not only translates into more sales down the line but also provides dealers with a means of obtaining used car inventory through trade-ins. But in order to retain customers, retailers must first differentiate themselves from the competition.

6. How marketing helps dealers stand out from the crowd.

Certain marketing strategies can help dealers differentiate their stores from a competitor’s and ensure buyers keep their brand in mind when shopping for their next car. Being more transparent when it comes to trade-in values is a strong tactic that sets your storefront apart from others. Using personalized communication channels to stay in touch with customers is another. The ultimate goal, Brice explains, is to condition the buyer to shop at your own dealership.

7. Retention is going to get harder.

Dealers will face a difficult battle in the years ahead to retain their customers. In 2023, roughly 80% of used cars sold by franchised dealers were sourced from consumers. However, other retailers, such as Carvana and CarMax, are becoming more prevalent, making it more difficult for dealers to establish relationships with buyers through trade-ins. To make matters worse, franchised dealers are also losing ground on the service side to independent shops, going from owning 50% of the service market to 30% as of last year. Without the opportunity to retain service customers, dealers are losing out on another vital source of inventory.

8. Digital retailing continues to rise.

Brice notes that digital retailing adoption spiked during the pandemic, with both dealers and consumers showing more interest in e-commerce solutions. While demand has since died down, he adds that as more retailers add the option, more buyers will shift to using the internet to purchase their vehicles.

9. Digital retailing is an entry point for manufacturers.

Brice believes that manufacturer involvement in the digital retail process is likely unavoidable. While dealers want to deliver a unique but standardized experience across their different stores, he notes that automakers are becoming more aggressive in obtaining data and directing customers to their own digital retailing experiences.

10. Using data to sell used vehicles.

Selling used vehicles can be more difficult for sales staff than it is for new cars. While new vehicles come with a wealth of data to highlight their safety and performance, the only information a salesperson is likely to have when it comes to a preowned vehicle is its condition and mileage. Brice notes that sales employees should have access to relevant information that highlights the model’s strengths, such as any awards it won upon release.

You can stream the full episode now on YouTube, Spotify, or Apple.

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