App users visit dealer service departments more often: study
Mobile-application users become more frequent visitors to a dealership’s service department after they download the app, according to a study by automotive-marketing company DMEautomotive.
The study covered a mix of 307 dealerships, representing multiple brands, store sizes, and regions, all of which offer Driver Connect, DMEautomotive’s dealership-branded mobile app, to their customers. The findings suggest that mobile applications can fuse the car-ownership cycle more tightly for owners, even though many visit dealerships’ service centers less often than automakers recommend.
“Dealer apps will compete with OEM apps and general purpose apps such as “Automatic” and RepairPal from Cars.com,” said Roger Lanctot, associate director, global automotive practice, with Newton, MA-based Strategy Analytics. “More are on the way from AAA and, likely, insurance companies.”
“The success of dealer apps lies in the integration with dealer systems, the training and orientation of the customer and, perhaps, the compensation and/or discounts offered to the customer for bothering with the app in the first place,” Mr. Lanctot said.
DMEautomotive, which develops mobile apps for managing automotive-customer relationships, studied over 2.2 million consumer records between April 2013 and June 2014.
The study compared the six-month service visit frequency of consumers after installing the app, versus prior to downloading. After downloading a dealership’s mobile app, users’ six-month service visits increased 25 percent after downloading the app, according to the study.
Service-visit frequency grew 3.7 times faster than that of non-app users.
Daytona Beach, FL-based DMEautomotive estimates an annual lift of $144,000 in incremental service revenue for every 1,000 app users.
The study follows the company’s earlier research that showed that a customer with a dealership-branded mobile app is 73 percent more likely to buy a vehicle from that dealer than a customer without one.
App users spend 7 percent more on their vehicle purchase than non-app users, the study showed.
The report’s highlighting of an after-sales uplift based on observed users of their CRM apps, as opposed to just any mobile app or mobile app user, drew questions from Mr. Lanctot.
“It is possible to drive aftersales revenue via mobile apps, but there are all kinds of mobile apps that work in a variety of ways, and dealer mobile apps compete with general-purpose apps, such as Automatic, that can steer customers to third-party service options,” Mr. Lanctot said.
Auto dealerships are accelerating plans to use mobile to cater to car buyers, moving into a new stage with mobile applications and Web sites that once mainly offered tips and reviews but now increasingly hook up potential buyers with dealers.
AutoNation, the largest United States retailer of new cars, trucks and SUVs, plans to spend $100 million over two years to create a mobile application that would allow customers to buy a car mostly online. The app, which will be released later this year, aims to make the car-buying experience much more like buying an item on Amazon.com.
A dealer-branded app can build vehicle and dealer loyalty mainly through providing a way for a dealer to stay connected with owners post-sale. An app can provide vehicle owners with general information about vehicle operations, maintenance and warranty details and be used to schedule service appointments and evaluate trade-in value.
Consumers’ use of dealership apps is growing along with the overall surge in mobile commerce.
Edmunds has seen the number of visits to its mobile Web site and applications this year skyrocket 50 percent from a year earlier. It expects the boom to continue as consumers turn to mobile to peruse reviews, connect with dealers and validate purchase decisions.
“Dealers will have to give consumers compelling reasons to pay attention to the app, because in the real world, consumers simply do not visit dealers very often,” Mr. Lanctot said.
“Without integration directly to the car, I am skeptical of the efficacy of an app, alone, to drive revenue.”
Michael Barris is staff reporter with Mobile Commerce Daily, New York.