If you are a customer, you might have fallen in love with a brand, made a purchase, and then heard nothing. No follow-up, check-ins, or support when you need it the most. Studies have shown that 83% of consumers dropped a brand after one bad customer service experience. That is why a good customer service experience is a critical factor in aftersales as they assure the brand image. In the automotive industry, ensuring a good brand image is particularly necessary. Good automotive aftersales provide a good experience to the customers which eventually leads to more sales and leads.
We have carefully crafted a guide to automotive aftersales for auto dealers and companies. Read till the end to find out what the future holds and the possible challenges the aftersales industry might face!
What is Automotive Aftersales?
Automotive aftersales include processes that ensure customers are satisfied with the products and services. It consists of factors such as spare parts, workshops and services, and customer care. When a customer makes a purchase, they consider the availability of genuine spare parts and well-trained mechanics in their decision-making phase. It is a must to fulfill the needs and demands of customers so that they will spread positive word of mouth, which helps in the promotion of brand products and services.
The focus on the automotive aftersales process helps increase customer satisfaction and creates brand awareness in the targeted auto market. Today, the aftersales business contributes as much as 50% to the overall profit of the auto industry, and more than 40% to the gross profit of large, full-range dealerships (despite accounting for only 10% of the dealership revenue).
Why is Aftersales Service Important?
Most automotive companies end up paying more attention to prospective customers as they want to grow their customer base. They put more time and effort into converting automotive leads and prospective buyers into customers. This results in a cycle of investing in the pre-sales experience without investing time and effort in the post-sales experience. Aftersales service is critical for the longevity of one’s business for these 4 benefits:
1) Word-of-mouth Referrals
Happy customers always refer your brand to family or friends. That is why they are valuable assets to your business. Positive word-of-mouth from satisfied customers can drive up to 50% of total sales. Also, satisfied customers have a 16% higher lifetime value. Delivering good aftersales service increases the number of customers willing to provide referrals.
2) Positive Brand Image
9 out of 10 customers read reviews before making a purchase. A negative customer review can hurt even the most well-known brand. Excellent post-purchase experiences attract positive reviews, which enhances the overall brand image. Being seen as a trustworthy brand is important to make customers stick around.
3) Customer Loyalty
The purpose of aftersales service is to increase loyalty among customers and make them your brand advocates. Engaging your customers regularly and equipping them with helpful resources enhances customer satisfaction and retention. Excellent customer service even backs an average product or brand.
4) Increase in Revenue
Existing customers spend more than new customers. If you treat your customers well, they keep returning to your brand. Most happy and satisfied customers become brand loyalists who bring in new customers, driving sales and increasing revenue.
Five Key Steps To A Successful Aftersales
A successful automotive aftersales market strategy is crucial for car dealers to hit their targets, retain customers, and attract drivers with older vehicles. Here are five main strategies that can enable aftersales departments to achieve these goals:
1) Customer Relationship Management (CRM)
A good CRM system is essential for after-sales success. It helps keep track of customer interactions, service history, and preferences, allowing for personalized communication and targeted marketing. This leads to happier, more loyal customers. Dealers should use CRM to send service reminders, special offers, and follow-up for feedback.
2) Online Booking
Online booking makes scheduling service appointments easy and convenient for customers. It allows them to book maintenance and repairs at any time without needing to call the dealership. This improves customer experience and helps manage the workshop schedule more efficiently. Dealerships should have an easy-to-use online booking system, send automated reminders, and ensure real-time availability updates.
3) Service Plans
Offering service plans can boost customer retention. These plans let customers prepay for regular maintenance at a discounted rate, ensuring they return to the dealership for service. Dealers should offer flexible service plans that fit different needs and budgets, clearly explain the benefits like cost savings, and update the plans regularly to keep them attractive.
4) Targeting Older Vehicles for Servicing
Older vehicles need more maintenance, making them a valuable target for after-sales departments. By offering specialized services and promotions for these cars, dealerships can attract more customers and increase service revenue. Automotive marketing campaigns aimed at older car owners, tailored service packages, and discounts on parts and labor can encourage regular servicing of these vehicles.
5) Future Proofing
As electric vehicles (EVs) and connected cars become more common, dealerships need to adapt. Future-proofing the aftersales department means staying updated on industry trends and technology. This includes automotive aftersales training technicians to service EVs and connected cars, keeping up with the latest diagnostic tools, and partnering with tech providers for advanced services like remote diagnostics and software updates.
How Can Data be Used to Improve the Aftersales Process for Lead Generation?
Using data effectively can greatly enhance the aftersales process, making it more efficient and customer-centric. This, in turn, can significantly improve lead generation for car dealerships by identifying and targeting potential customers more precisely. Here are some key ways in which data can be utilized to achieve these goals:
1) Clean and Structured Data
When it comes to creating a data-driven lead generation strategy, the first step is to make sure your data is clean and structured. This means having a clear understanding of your target audience, what type of information they are looking for, and what format will be most useful to them. By developing personalized content that speaks directly to your audience’s needs, such as case studies, interviews, blogs, and whitepapers, you can build trust and credibility with potential leads, build a stronger pipeline, and outperform competitors.
2) Reliable Data Source
One of the most important aspects of generating leads and acquiring clients is the source of your data. If you’re relying on inaccurate or outdated data, your entire lead generation strategy will fall apart. Therefore, it’s crucial to have a reliable data source you can trust. Engage with a reputable data provider known for accuracy, build your own first-party data through surveys and interviews, and utilize publicly available sources like government reports and industry studies to ensure data reliability.
3) Complete View of Prospects
A data-driven lead generation strategy should start with client profiling, which involves understanding who your ideal clients are, their needs, pain points, and motivations. Look at demographics, social media data, and public records to create detailed client profiles. With this understanding, you can use personalization tactics to create compelling content that appeals to them and drives action.
4) Research-backed Client Profiling
Having a complete view of your prospects means understanding not just who they are, but also their needs and wants. Access data from various sources, including demographics and client interactions, to create detailed buyer personas. These personas help you better understand your prospects and create highly targeted content and messages that resonate with them.
5) Personalized Communication
By segmenting your leads based on their specific needs and pain points, you can create a more targeted and effective lead generation strategy. Segmenting allows you to tailor your marketing and sales efforts to address the unique needs of each group, improving the effectiveness of your campaigns. Regularly evaluate and adjust your segmentation strategy to ensure it continues to meet your goals.
6) Data-driven Segmentation
Personalized communication is key to data-driven lead generation. By leveraging client data and insights, you can create targeted messages that speak directly to your target audiences, building trust and increasing engagement. Use client data to create personalized offers tailored to individual clients, which can help increase conversions and enhance your content marketing strategies.
7) Lead Scoring and Nurturing
Lead scoring and nurturing are essential components of a data-driven lead generation strategy. By using data to score and nurture your leads, you can more effectively target your car dealership marketing efforts and resources, resulting in improved ROI and increased sales. Automating your lead nurturing process helps you stay top-of-mind with prospects without extra effort.
8) Clearer Attribution
Attribution helps you understand which marketing efforts are driving results. Ensuring clear attribution in your data-driven lead generation strategy is crucial. Use different attribution models like last touch, first touch, linear, time decay, and position-based to assign credit for conversions and sales to the right touchpoints. This helps you optimize your marketing efforts for better results.
9) Prioritize Sales Readiness
Prioritizing sales readiness means focusing on generating leads that are ready and willing to buy what you are offering. Consider factors like your products or services, target market, sales cycle, and marketing budget. Create highly-targeted content that addresses your target market’s needs, communicates directly to their pain points, and keeps you ahead of competitors.
10) Improve Engagement
Improving engagement with your target audience is the first step in creating a data-driven lead-generation strategy. You can enhance engagement by creating targeted content like blog posts, infographics, and webinars that are relevant and interesting to your audience. Build a strong social media presence on the platforms your audience uses most, and develop a solid automotive email marketing strategy to regularly send out quality content.
Car Sales and Automotive Aftermarket in 2035
The future of automotive sales and aftersales is poised for significant transformation driven by technological advancements. By 2035, the following developments will not only alter consumer behaviors but also revolutionize industry standards and business strategies on a global scale:
Connectivity
By 2035, we expect that every car will have basic connectivity features, with about one-third being fully connected. This means cars will be more integrated with the internet and smart technology. Consumers will value these connected services more, leading to a significant shift towards buying cars online and using digital platforms for sales and after-sales services.
Alternative drivetrains
In the future of automotive industry, different types of vehicle power systems will exist together, with battery-electric vehicles (BEVs) becoming the most popular. The rise of alternative drivetrains will vary by region and will be influenced by lower production costs, new regulations, better-charging infrastructure, and improved vehicle performance. These factors will drive the transition from traditional internal combustion engines to electric and other alternative power sources.
Shared mobility
The concept of shared mobility is set to grow, where people will increasingly use shared vehicles instead of owning them. This will increase the use of each vehicle and shift ownership from private individuals to fleet operators, such as ride-sharing companies. As autonomous driving technology develops, mobility services will expand even faster, making it easier and more convenient for people to use shared vehicles.
Autonomous driving
Autonomous driving technology will continue to advance, but the biggest challenge will be moving from level 3 (where the driver must be ready to take control) to level 4 (where the car can handle most driving tasks on its own). By 2035, level 4 and higher autonomous vehicles will likely be used in specific scenarios, such as within certain city areas or for specific services. In a more disruptive scenario, we could see a large number of fully autonomous vehicles being used widely across all regions.
Key Findings of the Study: The Future of the Markets of Euro5, China, Japan, and the United States
According to the study, the compound annual revenue growth rate of the proxy OEM is expected to remain stable at 3% from 2018 to 2035 in the base case scenario. Among the automotive aftersales markets that were studied, China is projected to contribute the most to overall growth, while the EU5 and Japan are forecasted to show only modest or minor increases, with declines in traditional business segments that may only be offset by growth in new areas. Despite optimistic global revenue trends, profitability concerns persist unless significant transformation occurs within OEMs.
In terms of vehicle sales, the study forecasts a 25% growth for the proxy OEM in the base case scenario, driven primarily by China and to a lesser extent, the United States. Conversely, both new and used car revenues are expected to decline in the EU5 and Japan. Across all markets, there is a significant shift from private vehicle ownership to fleet usage and from traditional showroom sales to online channels, underscoring the critical importance of mastering omnichannel and direct sales strategies.
Looking forward to 2035, the study predicts an 11% decline in automotive aftersales business for the proxy OEM, even in the base case scenario. More disruptive scenarios could lead to even sharper declines. Emerging industry trends, particularly the adoption of alternative drivetrains, pose a significant risk to current aftersales profitability among OEMs. China stands out as the only market where the aftersales business is expected to grow, fueled by increased vehicle aftersales despite a strong shift towards alternative drivetrain technologies.
Challenges Ahead in Automotive Aftersales
The landscape of automotive aftersales services is undergoing significant transformation, driven by technological advancements and shifting consumer preferences. Automakers and dealerships have invested heavily in enhancing customer satisfaction and expanding service offerings for dealership profitability. However, amidst these advancements, several challenges loom on the horizon. Following are the possible key challenges in the future of automotive aftersales:
1) Reduced Service Demand: As vehicle quality improves and manufacturers focus on managing warranty costs efficiently, there could be a decline in the frequency of service visits per vehicle across most markets.
2) Impact of Connected Vehicles: The rise of connected vehicles allows for remote diagnostics and services. This shift may lead to a decrease in revenue from traditional in-person services and parts as more maintenance tasks can be performed remotely.
3) Declining Customer Retention: Automakers are struggling to retain customer loyalty, especially among owners of older vehicles. Many of these customers are opting for independent service providers that often offer more affordable servicing options.
4) Competition from Independent Service Stations: Independent service stations are becoming more competitive by offering lower-priced services compared to manufacturer-owned workshops. This trend is diverting business away from automaker service centers.
5) Digital Platform Entry: Major digital players like eBay, Amazon, Alibaba, and Tencent are entering the aftermarket spare parts business. Their entry into the market could potentially reduce profit margins for automakers and traditional parts suppliers.
6) Rise of Independent Dealerships and Mobile Services: Independent dealerships and mobile service providers, such as CarShop, CarSense, and ClickMechanic, are gaining popularity. They offer customers convenient, cost-effective, and digitally-driven service options, further challenging traditional dealership models.
7) Challenges in Building Customer Loyalty: Despite efforts to integrate sales and service experiences, many automakers have struggled to create strong customer loyalty that translates into repeat vehicle purchases. This was a key expectation behind establishing combined sales and service outlets, but achieving this synergy has often proven difficult.
The Role of Augmented Reality (AR) in Aftersales Services
Several automotive brands are embracing Augmented Reality (AR) to tackle challenges in their automotive aftersales services. AR has the potential to transform how services are delivered by improving communication and collaboration, enhancing customer experiences, and increasing dealer profitability.
For example, Volkswagen Group UK is using AR Remote Assistance to support the maintenance of electric vehicles. Through the Atheer platform, Volkswagen technicians can receive instant guidance from experts who are not on-site. This approach saves time and money while elevating the overall quality of service provided.
Similarly, Porsche USA has implemented the Tech Live Look program, also powered by Atheer. This initiative allows technicians to connect with remote experts in real time, enabling them to troubleshoot issues and provide guidance effectively. The program has proven successful in enhancing operational efficiency and delivering superior customer service.
The Benefits of AR in Service Operations
Integrating Augmented Reality (AR) into service operations has boosted efficiency and improved overall customer satisfaction. By resolving issues faster and enhancing service quality, customers experience minimal disruption and get back on the road swiftly.
Impact on Dealer Profitability
This commitment to customer satisfaction has established Volkswagen and Porsche as leaders in the industry. They’ve grown their customer base and increased dealer profitability as a result.
Navigating an Unprecedented Period of Change
The automotive sector has seen more innovation in the past two decades than in the previous half-century. With the rise of electric and connected vehicles, the industry is gearing up for a comprehensive shift towards electric mobility.
A Case for Change
The automotive industry is entering a new era defined by five significant trends: connected cars, autonomous vehicles, car sharing, electric vehicles, and sustainable transportation. These trends are reshaping the industry, necessitating new technologies, skills, and business strategies.
Addressing Skills Shortages
Adopting AR technology can help tackle the ongoing shortage of skilled automotive technicians. This technology equips technicians with real-time access to information, boosting their productivity and efficiency.
Adapting to New Business Models
AR technology also supports the emergence of fresh business models in the automotive sector. With vehicles becoming smarter and more connected, remote service teams can diagnose problems remotely, leading to faster service and happier customers.
How Does the Man-machine Complementarity Enter The Scenario?
Even with advanced automotive CRM systems, relying solely on software to manage customer relations is not ideal. While these systems simplify customer management, human involvement remains crucial.
Automotive dealerships use software data to make informed decisions and take necessary actions. It’s important to engage the sales team around this fact: just like selling new and used vehicles, aftersales service plays a critical role in generating revenue and fostering customer loyalty.
A well-implemented CRM system can potentially boost business by 20% to 30%. However, these tools must be user-friendly so that all staff can effectively use them. Larger automotive dealership networks usually have skilled personnel to operate CRMs, but this may not be the case for smaller independent dealerships or workshops. Developers continually refine software to be user-friendly, intuitive, and capable of automating routine tasks. These systems manage everything from after-sales service and billing to marketing and communication.
The bottom line is clear: aftersales services are crucial. Dealerships must train their staff not only to sell vehicles but also to provide top-notch aftersales support to prevent customer dissatisfaction.
Conclusion
Automotive aftersales is an important aspect of customer satisfaction and business success. It’s not just about selling cars; it’s about providing reliable service that keeps customers coming back. Utilizing tools like CRM systems can significantly enhance efficiency and customer relationships, whether you operate a large dealership or a smaller workshop. You can ensure lasting customer loyalty and business growth by prioritizing after-sales support and providing a good experience.
