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ldquoDealers must figure out how to market to these crazy kidsrdquo DMEautomotiversquos Mike Martinez says
<p> <strong>&ldquo;Dealers must figure out how to market to these crazy kids,&rdquo; DMEautomotive&rsquo;s Mike Martinez says.</strong></p>

Study: Dealers Risk Losing Young Service Customers

Dealership loyalists represent the oldest service customer. Aftermarket chains are grabbing business from dealerships and independent shops, and are best at capturing the young wave of vehicle owners.

Age plays a big role in whether someone faithfully takes their car to a dealership or an aftermarket chain for service, according to a new study by DMEautomotive.

About half of aftermarket-chain loyalists are under 34, while half of dealer loyalists are 50 and over. Demographically, the chain stores are winning. The study refers to “forces of graying” threatening dealership fixed operations.

The report says the dealership service department is becoming a “senior center,” as younger consumers gravitate toward aftermarket chains such as repair shops, tire-and-alignment stores and quick-oil-change outlets.

It’s not just about aging people. The study indicates that as vehicles age, their owners are more likely to take them somewhere other than dealerships for work such as brake repairs, oil changes, new-battery installments as well as tire rotation, balance and replacements.

Dealers lose 47% of that bread-and-butter service business when vehicles reach three to six years.

“The conventional wisdom has been that dealers’ primary competition is independent repair shops,” DME’s Chief Marketing Officer Mike Martinez tells WardsAuto.

“That turns out not to be the case. They aren’t so much competing with the local guy as with chain stores run by corporations that are large, organized and going after every dollar that’s available.” 

DME calls its white paper, “The Changing Service Loyalty Landscape,” the most comprehensive study of the $215 billion U.S. auto service market to date and the first-ever analysis of consumer service loyalty rates at dealerships, independent stores and aftermarket chains. The study is based on surveys of 4,000 U.S. vehicle owners.

DME is a data-based automotive marketer. Clients range from major dealership groups, such as AutoNation and Lithia Motors, to large aftermarket companies.

The white paper identifies three levels of loyalty for service-center customers:

  • Loyalists who both visit and spend most at a particular store type.
  • Swing loyalists who either visit or spend most at a store type, but not both.
  • Disloyalists who neither visit nor spend most at a store type.

Dealership loyalists represent the oldest service customer. Aftermarket chains

are grabbing business from dealerships and independent shops, and are best at capturing the young wave of vehicle owners.

The report says dealership loyalists are more likely to be over 60 years of age than any other loyalist group. Roughly half (47%) of aftermarket loyalists are under 34, while nearly half (46%) of dealer loyalists are 50 or over. 

More than a third of those most likely to be disloyal to a dealership service center are ages 25-34.

“Dealer loyalists are older and more affluent but tend to drive less and spend less than aftermarket loyalists,” Martinez says. “The aftermarket chains are capturing those that spend the most and drive the most.”

The automotive service business will fundamentally change if dealerships don’t replace their aging loyalists and aftermarket stores retain their young loyalists as they enter their prime spending years, says Doug Van Sach, DEM’s vice president-strategy and analytics.

“A sea change is looming that would greatly favor aftermarket stores, while eroding dealerships’ lifeline service profits,” he says.

To attract the new generation to their service departments, dealers must realize those young consumers are price-sensitive and speed-conscious, Martinez says.

He is not suggesting dealers graft a Jiffy Lube-like process on their back ends, “but dealers must realize young customers want speed, value and convenience.”

Aftermarket chains have mastered the art of speed, convenience and upselling, Martinez says. “They use evidence-based selling by showing a customer what is wrong and needs repair work. It is a matter of incrementally building, working with a customer and moving them along.”

Dealers need to develop a battle plan to “overcome price perceptions,” he says. “And they need to deal with operational deficiencies in the service department that wouldn’t be tolerated on the variable-operations side.”

Marketing strategies aimed at young spenders should take into account that they are digital-oriented and “need to constantly be wooed, not just reminded once in a while that their car needs servicing,” Martinez says. “Dealers must also figure out how to market to these crazy kids.”  

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