Employee and Customer Retention: The Twin Pillars of Dealership Success

After 35 years in the automotive industry, I've learned one undeniable truth: a dealership's success hinges on its ability to retain both its employees and customers. These two elements are inextricably linked, creating a symbiotic relationship that drives sustainable growth and profitability.

The Employee Retention Challenge

Let's face it – our industry has traditionally struggled with employee turnover. The average dealership turnover rate hovers around 46%, which is significantly higher than the national average across industries. 

Why Employee Retention Matters

When we retain experienced staff, we preserve:

  • Employee Security
  • Deep product knowledge
  • Established customer relationships
  • Efficient operational processes
  • Team cohesion

These 3 strategies will dramatically reduce turnover:

  1. Career Development Paths
    • Clear advancement opportunities
    • Regular skills training
    • Leadership development programs
  2. Compensation Innovation
    • Base pay plus performance incentives
    • Benefits packages that are financially beneficial and obtainable
    • Work life balance initiatives
  3. Culture Building
    • Regular team meetings and feedback sessions
    • Recognition programs
    • Mentorship opportunities

The Customer Retention Connection

Here's where it gets interesting: dealerships with higher employee retention rates typically see 20-25% higher customer retention rates. This isn't coincidental.

The Numbers Don't Lie

  • Increasing customer retention will increase profits
  • It costs more to acquire a new customer than to retain an existing one
  • Repeat customers spend more than new customers

Building Customer Loyalty

The key to customer retention lies in:

  1. Consistent Service Experience
    • Well trained, familiar faces
    • Standardized processes
    • Personalized attention
  2. Communication Excellence
    • Regular service reminders
    • Transparent pricing
    • Multi channel engagement
  3. Value Added Services
    • Loyalty programs
    • Service packages
    • Educational workshops (New car clinics, website videos)

The Synergy Effect

When we maintain high employee retention, we create a virtuous cycle:

  1. Experienced employees provide better service
  2. Better service leads to satisfied customers
  3. Satisfied customers become loyal customers
  4. Loyal customers create a stable business environment
  5. A stable environment supports employee satisfaction
  6. The cycle continues

Implementation Strategy

To improve both employee and customer retention, I recommend:

  1. Measure and Monitor
    • Track employee turnover rates by each department and the reasons
    • Monitor customer retention metrics
    • Conduct regular satisfaction surveys for both groups
  2. Invest in Technology
    • Are you utilizing the CRM system effectively 
    • Employee development tracking
    • Performance analytics
  3. Create Accountability
    • Set clear retention goals
    • Tie management bonuses to retention metrics
    • Regular performance reviews

The Bottom Line

In today's competitive automotive market, dealerships can't afford to ignore either employee or customer retention. They are the twin pillars that support sustainable growth and profitability. By focusing on both elements simultaneously, dealerships can create a stable, growing operation that benefits everyone involved – employees, customers, and the bottom line.

Remember: Your most valuable assets walk out the door every evening. Your job is to make sure they want to walk back in the next morning, and that they're greeted by happy customers when they do. For a
consultation please schedule a call at robertvillanueba.com 

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