Driving brand loyalty: how the automotive industry can retain customers

Loyal customers are important for car manufacturers, but loyalty in the automotive industry isn't an easy feat to achieve.

A 2022 S&P Global study shows that car brand loyalty is in decline.
 

Brand loyalty - measured by the % of buyers who choose the same brand for their next vehicle purchase - is falling across the luxury car market. 
 

What is customer loyalty in automotive industry?

Loyalty in the automotive industry refers to the strategic initiatives and programs implemented by brands to foster enduring customer relationships and maximise customer lifetime value. These loyalty programs are designed to enhance customer retention by offering tailored incentives, rewards, and personalised experiences. 

By customising each loyalty program to align with specific key performance indicators (KPIs) and the unique needs of their brand, automotive companies can achieve the most satisfying results. 

Successful loyalty strategies in the automotive industry not only drive customer loyalty but also boost brand advocacy, increase customer referrals, and contribute to long-term business growth

What can car brands do to drive better brand loyalty?

This article explores the challenges faced by the automotive industry and their potential solutions.

- A complex buying journey

The car purchasing journey is complicated for a few reasons. 
 

• It's a rare and expensive purchase. Customers are understandably apprehensive about spending so much money on something they will have for a long time. 
   
• Customers have access to many different sources when it comes to researching car brands. Many people find information online, speak to family and friends, or even car mechanics and specialists. 
   
• And then there's choosing a model. An SUV or a hatchback? Or an electric vehicle? What about price range, fuel efficiency, safety features, and so on?
   

The car purchasing journey is a complex, multi-touchpoint process - from the first time a customer sees a car ad, to their decision to purchase, to their experience with the brand and their choice to switch or stay.

There are many points at which customers can become confused, lost, or frustrated by the process. Consumers might not understand what exactly they’re looking for and become overwhelmed by all the options available. 
 

- Not enough customer data and insights

Many vehicle brands aren't collecting enough data. Without data, it's impossible to know how to retain customers.
 

But it's not enough to just collect data. And relying on information from third-parties such as comparison websites, dealerships and garages won't provide the level of detail required to influence customers. 
 

Brands need insightful customer data that can uncover customer needs, wants, values and preferences. 
 

- Lack of direct influence

Since most research takes place online, at a dealership or amongst peers, car brands are not in a position of power when it comes to influencing customers. 
 

Brands can make use of advertising campaigns - but these only work if customers are receptive to the message. 
 

The issue is, car companies don't have access to enough customer touchpoints. Cars are not a regular purchase - so there's less opportunities to engage customers. 
 

Without direct influence, car brands can't do much to stop their customers from switching…

So, how can car brands retain customers?

There’s a huge opportunity in the car purchasing journey - almost half (48%) of new car buyers have not yet decided if they will choose the same car brand next time. 
 

Let's take a look at some of the solutions that technology can provide.

- A personalised, omnichannel buying journey

To make the purchasing journey easier, brands should be able to personalise.
 

Personalisation is all about giving customers what they want, when they want it. In the automotive industry, this means helping customers find the perfect car for their needs and budget.
 

Loyalty programs play an important role in creating customised experiences by making it easy for companies to collect customer data at scale. Existing customers can sign up to a loyalty program and input their details, such as personal information and product preferences. The loyalty program can then be used to track all customer activity - from online interactions to in-store transactions.
 

With a bank of customer data, loyalty programs help create a personalised experience across the entire purchasing journey. 
 

Brands can also integrate existing customer data platforms - such as a CRM or ERP - into a loyalty program. 
 

With detailed customer profiles, car companies can personalise marketing to customers, rather than using generic communications. 
 

Real-time interactions also help brands respond faster, reducing the likelihood of a customer becoming disengaged in the buying journey.
 

In an industry where data is fragmented, a loyalty program is an innovative solution to connecting all the customer touchpoints.
 

Put all your data in one place and get a 360 view of your customers.

- A deep customer understanding with AI insights

Customer data collected through a loyalty program becomes even more powerful when paired with AI technology. Loyalty software can use machine learning to identify customer lifetime value, predict churn and uncover micro audiences. 
 

By uncovering the value of each customer, and the likelihood of them churning, brands can build proactive retention strategies. that are key to the success of car brand loyalty.
 

Loyalty technology that integrates AI will also improve a car brand's ability to understand what is most important to their customers. Then, they can anticipate customer needs - something that will make them stand out from competitors. 

- Reward existing customers to drive behaviours

Existing customers often feel that only new customers get rewarded with the best offers. This drives them to shop around, looking for brands that offer great ‘new customer’ packages. That’s why it’s vital to reward and recognise existing customers. 

Customers should get more value from staying with your car brand vs switching to another.

We know from our loyalty experience that customers want to encounter ‘surprise and delight’ moments. With a flexible loyalty program, car brands can offer personalised rewards that their customers truly value. 

For example, a brand can reward existing customers for purchasing branded car parts and accessories. Customers could earn points every time they service their car at a branded garage. And rewards get even better if a customer chooses the same brand for their next car. Each time a customer interacts, the brand gets a deeper understanding of their behaviour. They can use this understanding to offer personalised rewards at key touchpoints across the customer journey. 

 

Rewarding customers for sticking with your brand helps build a relationship and is the key to the success of automotive loyalty programs. If a car brand has built a relationship with a customer, they are more likely to win that customer over when it comes to their next car purchase. 

Key takeaways

To retain customers, car brands need to make the buying journey easier with personalisation. 
 

Use data capture and AI insights to know exactly how customers behave, and what their preferences are. 
 

Reward customers for their loyalty by giving them something that is not available to new customers. 

Loyalty technology can help automotive brands create targeted retention strategies to predict loyalty and retain customers. 

Are you in the automotive industry and looking to retain your customers? Ask yourself the following questions:
 

What strategies am I using to influence customers before they make a purchase decision?
 

Am I matching the messaging I use with customers based on their personal profiles and preferences?
 

How can I create engaging reward experiences for loyal customers?