ADS (Auto Data Solutions) has revealed that losing touch with just one customer can mean losing around £5,800 in future profit.
Half of all records in the typical dealer customer database contain errors leading to loss of contact.
Jon Sheard, operations director of ADS, said: “It’s tempting to see every customer contact moment in isolation, in terms of revenue gained or lost, but that’s misleading.
“When losing touch through inaccurate contact details means a customer going elsewhere for an MOT or service, the dealer is typically losing all future profit, ranging from servicing and repairs over time to eventual car replacement.
“To really understand the cost of an inaccurate contact database, dealers should revise their interpretation upward from the immediate loss of something like a missed service to account for every future opportunity lost.
“Our analysis shows that this realistically represents £5,800 of profit from the three-year point onward.”
This assumes a four-year ownership cycle and includes the potential value of retaining the customer into their next vehicle purchase.
One customer drives profit of between £6,020 and £9,420 over the ownership period of one car. ADS says this means that seeing the first missed service appointment as just £250 – £350 in lost revenue is a mistake.
Taking into account future sales and finance margins, ADS calculated that losing contact at the three-year point means missing a potential £5,800 in future profit.
Data shows that by the three year point only around one in three customers remain with the original supplying dealer as service customers. Many make their own arrangements when the dealer stops communicating, often due to outdated contact details.
Sheard said: “With the typical dealer group’s contact database containing tens of thousands of customers, the scale of commonplace errors adds up to millions of pounds each year.
“Our bespoke analysis of dealer client databases, before cleansing and updating, typically reveals error rates of around 50%, leading to lost contact. Our latest analysis shows for the first time that the true cost to dealers is exponentially more than just a few missed service appointments.”
