Dealer Service Retention Strategies for 2023

Written By Carol Marshall

Your service department makes a lot of money for your dealership.

In fact, that's true for most car dealers (with a service department).

Due to the continued need for regular maintenance, oil changes, and whatever other vehicle service you can think of, your service bays are a constant source of repeat business for a car dealership and is no small part of the profit backbone alongside vehicle sales.

Not to mention, with inventory levels still being iffy in the retail automotive industry at large, getting your service operation optimized is a reliable way to make more money while new cars continue to be scarce and pricing is high.

The inventory shortage, and the wake of it, is prime time for you to review your service experience and reviewing processes to maximize customer satisfaction and, in turn, boost customer retention.

Keeping Existing Customers is the Key to Maintaining Higher Profits

While getting shiny new customers is (or should be) part of your service experience, it's essential not to ignore retaining existing customers. Your service customers are reliable sources of continued revenue, and keeping them on the hook ensures that that revenue stream continues!

According to the Harvard Business Review:

"...acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one."

And, from a research study by Frederick Reicheld of Bain & Company from that same HBR piece:

"...increasing customer retention rates by 5% increases profits by 25% to 95%."

Let's think about ways to turn existing customers into truly loyal customers!

dealer service retention relies on excellent customer experiences

3 Ways to Increase Service Customer Retention and Customer Loyalty

Incentivize Loyalty.

This can be done in a number of ways, but let's focus on a few tried-and-true customer retention strategies to encourage loyalty.

Customer loyalty programs. Seems obvious, but it can be overlooked. Your most frequent existing customers already trust your service department again and again, so why not reward them for rewarding you with their repeat business?

Exclusive incentives, points towards free minor services - whatever keeps your existing customers rarin' to return to your service department. Basically, ensuring long term relationships ensures future revenue!

Referrals. Referral bonuses can be an easy way to increase your network of loyal customers. A happy customer loves telling people close to them that they are a happy customer!

Everyone knows someone with a car, and if that person can be rewarded for enlisting new customers, they'll make the attempt to help get you more customers and more referral business.

Include More Service Goodies with Car Purchases.

Not having to worry about your first handful of service appointments after getting a new car can be very attractive. Car buyers just went through an emotional and expensive process.

This will take some cross-department coordination with sales, but consider offering a service package on new AND pre owned vehicles to promote a long term customer relationship.

It eliminates the need to find a local shop (they will just keep coming back to you!), and it centers your dealership as their place to go when it comes to all things car-related - future sales included.

According to automotiveMastermind:

"...Customers who service at a dealership are 2.5x more likely to make their next purchase from that dealer..."

If your service process is amazing, customers would have no problems getting service at the same dealership they bought their vehicle through. Your service department is a customer loyalty powerhouse just waiting to be tapped! Focus on the customer!

Focus on Reputation Management

Customers pay attention to online reviews - a LOT.

Not to mention, they can be especially wary of service advisors who they feel try to add on too much or create problems to add to the repair bill.

Encourage good reviews by making leaving feedback easy (you might even want to incentivize leaving positive reviews, it can all feed back into retaining customers through your other programs.)

Post positive experience content on your social media accounts. Make your online perception a real selling point for those that find you organically online.

Punctuate a customer's service visits with an easy and rewarding way to leave feedback, and work on building up your dealership's reputation through an excellent customer experience.

Provide frequent follow up after the service is done, even on unrelated matters to service! Building a relationship is the name of the game, and will keep you top of mind

The Existing Customer is Your Best Bet for Maintained Profits

The entire customer journey doesn't begin and end for car buyers and vehicle sales.

Your service customers have your highest profit potential, and working with your sales team to funnel those customers to your service bays is going to give you a huge return in the long run, and secure a high customer retention rate.

Boost Your Dealer Service Retention with ActivEngage

ActivEngage helps dealerships and dealer groups reach their dealer service retention potential through our deep integrations with the top service scheduling software providers. 

It's called ServiceConnect, and we integrate with: 


Ready to discover how ActivEngage helps your dealership succeed?