The majority of customers want to test drive before they purchase. This means the test drive is a pivotal visit, especially as the average number of customer visits to dealers prior to purchasing a vehicle has dropped from 5 to only 1 in some areas.

McKinsey & Company’s Innovating Automotive Retail report reveals a silver lining: when consumers are buying a vehicle, they still rely on dealers even though the interaction is shrinking. The F&I department has a big opportunity to capitalize on this and to route car buyers back to the showroom for a test drive. They can play a pivotal role in customer retention. This is why.

Young buyers are not as loyal or as responsive.

A key driver behind the current increase in automotive sales is the single largest generation, Gen Y, or 20 to 37 year olds. Experts predict Gen Y will account for more U.S. sales than any other generation. Think about that data point — more buying power than the Boomers. J. D. Power found that this new generation is not loyal to car brands and dealers. Further more, today’s consumers are growing less responsive to mass marketing messages. Internet technology, social media and mobile are disrupting the marketing model. Integrating your marketing messages with consumers’ finance communications is far more effective.

Car loans are longer than the warranty period.

While experts debate whether or not the marketing funnel is outdated, it’s been proven that managing the entire life cycle experience of customers of any age is a better way to increase profits. Especially when 36 percent of vehicle owners say that after the vehicle warranty expires, they will not return to the dealership for service. The average new car auto loan is more than five years in length, often outlasting the warranty period by several years. That means the F&I department has more time to interact with and steer prospects to the dealership.

Consumer adoption of online bill paying is growing and is an untapped opportunity.

Consumer online account management is a trusted channel where people are paying attention; and 56 percent of  adults in the U.S. pay their bills online. Yet the typical F&I department does not leverage communications around the loan or lease to strengthen the customer relationship.

Besides the length of the loan, the lease and loan contracts offer the finance department 2 other big advantages:

  • Every month, a customer gets a statement. Unlike direct mail, customers want this interaction.
  • The lender finance department knows when the lease or loan contract is going to end.

These advantages are a huge edge when it comes to driving customer retention, reducing marketing costs and increasing customer satisfaction.

Until recently, lenders have been primarily cross-selling their own products — such as insurance, rewards programs or home loans — in the customers’ online accounts. However, that is changing. Dealers have an opportunity to negotiate for a slice of the screen real estate that customers view when transacting business in their online account.

Here are 5 ways the finance department can team up with lenders to coordinate monthly customer communications and promote relevant marketing messages via the auto or lease account.

    1. Send a welcome message when the customer lease or loan is funded. Customers are 5 times more likely to engage in the first 90 to 100 days than at any other point. So it’s very important to dialogue with them in the beginning — not just at the lease or loan end. Regardless of what a dealer wants to sell (vehicle service contracts, tire and wheel coverage, another car), it is important to start the pitch early in the relationship.
    2. Integrate service messages with lender messaging and monthly statements. Some dealers are already using targeted email or direct mail to send oil change reminders and other service-related offers. Incorporate these types of reminders into customers’ account communications. Every month is an opportunity to keep them coming back, even after the warranty has expired.
    3. Remind customers about exclusive or VIP treatment. Dealers know that people respond to perks such as free Wi-Fi, coffee or a loaner car. Remind customers about any extra benefits you provide beyond vehicle service. A call to action embedded into their online account can serve double duty promoting both service and perks: Need an oil change? Use our free Wi-Fi to work while you wait.
    4. Start providing special incentives to buy or lease a new vehicle 12 months before the lease or loan ends. Provide offers in conjunction with test drives and provide links to landing pages with education, online credit applications, a video walk-through, inventory, a repair calculator and more. Let customers know your dealer website is the go-to source for information on turning in their lease or buying a new car.
    5. Negotiate for more than screen real estate. Ask your lender partner to include analytic reports so you can understand how to improve your offers and promotions. It is important to understand and track what works and what doesn’t so you can improve your results.

Younger car buyers are known for their skeptical and demanding attitude. It is critical that F&I departments step up and combine the power of the online world and data about leases and loans to own the customer relationship for their dealership. In today’s competitive environment, it is not enough to rely on service and repairs to hold on to customers.

This article originally appeared in the Dealer Communications ezine on November 22, 2014.