Recurring revenue is the greatest source of income your dealership can generate. What does it take to maximize the earning potential at your dealership through recurring revenue?
The most successful companies follow a recurring revenue model, whether this is through membership programs, subscriptions, or loyalty rewards.
Yet, unlike gyms, magazines, or grocery stores, dealerships must be resourceful when developing regular income streams. Here’s what your dealership should be doing to generate this type of revenue.
10 Ways Your Dealership Can Generate Recurring Revenue
There are multiple advantages to recurring revenue in the auto sales industry. Several methods include incentivizing repeat business and other loyalty programs. Marketing strategies also impact how your dealership generates recurring revenue. Effective training programs are another.
How exactly can you optimize these strategies to generate recurring revenue? These ten methods are the best ways to establish regular income streams.
1. Repeat Customers
Customer loyalty should be one of your top priorities. A dealership spends five times more to gain a new customer than to retain one. Offer incentives that encourage customers to purchase their next vehicle from your dealership.
2. Referral Programs
Incentivizing friend and family referrals is another way to increase sales. People who have a positive sales experience are likely to tell people about their experience. That is why happy customers equal recurring revenue growth opportunities.
There are several ways to offer this type of program. You can offer rewards for products and services (like a free oil change or tire rotation).
Your dealership could offer discounts on products and services or points towards a down payment on their next new car. You could also pay them for referrals with either cash or gift cards.
There are so many ways you can maximize recurring revenue from referral programs. Try various methods to offer these programs to see which one works best with your customer base.
3. Incentive Programs
Not only can you incentivize referrals, but you can also encourage customers to consider other products and services. Offer incentives for purchasing upgrades like an automotive service contract.
The vehicle service and maintenance market size is over $500 billion. Industry experts expect it to grow to $818 billion by 2026. The service department generates most of a dealership’s revenue and why your dealership should focus on offering service-related upgrades.
An automotive service contract keeps your customer returning for services. You can even take those opportunities to advertise upgraded accessories, like all-weather floor liners, body side moldings, or environmental sealants.
4. SMS Marketing
Text message (SMS) marketing is an often under-utilized form of digital marketing. Yet, 82% of customers opened test messages they received from businesses using the following methods:
- Keeping messages short
- Utilizing a call-to-action
- Personalizing the message
- Responding promptly
Reps are not the only way your dealership should be sending SMS messages. Your dealership can invest in a text message marketing tool to boost recurring sales. You can set these programs to generate a text message automatically to your existing customers.
For instance, you can send messages about their scheduled maintenance. You can also set these programs to generate customer satisfaction surveys. These surveys help to highlight your top performers and offers feedback so you can evaluative the effectiveness of the sales process.
5. Email Marketing
Contacting customers regarding their vehicle maintenance schedule will increase revenue. Programs are available that will send emails to help customers schedule these appointments conveniently. The emails can prompt them to call the service department or provide a link for them to schedule online.
The average American household has two vehicles, and more than one-third (35%) own three or more automobiles. By sending out email offers to existing customers, you generate recurring revenue when those customers look to replace one of their other vehicles.
6. Social Media Marketing
You will want to ensure that you include social media marketing strategies. These include posts, video reels, and images of your inventory. You should include any deals they can receive my referencing the social media add. You can use this data to determine which marketing strategies works best to generate recurring revenue.
You’ll want to update your content frequently. Promote your content by encouraging followers on your social media to like, comment, share, repost, or retweet your offers. It’s best to include an incentive for sharing your business posts.
Other ways to use social media marketing to generate recurring revenue:
- Generates leads
- Advertises your dealership
- Builds loyalty and trust
Social media platforms offer tools to help with sales forecasting and simplify the tracking process using marketing analytics. Several SMS and email marketing tools deliver the same data analytics.
7. Loaner Programs
Loaner programs allow you to offer loaner vehicles to customers who come into the dealership to have their vehicles serviced. Most often the dealership bills the service contract provider the cost of the loaner vehicle fees.
Your sales department is the heart of your dealership. A well-trained sales rep will outperform those with less experience and knowledge.
Accelerate the performance of your team by providing automotive sales training. This training will teach them the steps of the sales process, how to achieve sales goals, and overcoming objectives. Reps will also learn:
- Closing techniques
- Prospecting
- Follow-up opportunities
- Increasing CSI scores
Training seminars are available that specialize in teaching your reps the skills to capitalize on every sales opportunity. These courses will also instruct them on everything they need to know about maximizing the recurring revenue in the F&I department.
9. Auto Finance Training
Courses are available for finance managers and sales reps that will teach them the ins and outs of the F&I department. Managers obtain the skills to run the department, and sales reps learn how to maximize the recurring revenue of the F&I department.
10. Automobile Compliance Training
Compliance issues can be costly for dealerships. Automotive compliance training can ensure that your reps adhere to the regulations that govern this industry.
Automotive compliance training focuses on developing the skills needed for the most significant compliance issues you and your staff face. These include:
- Personal data security
- Credit and financing laws
- Truth in lending
- Truth in advertising
- Marketing opt-outs (i.e., “stop” and “unsubscribe” features)
- Payment reporting
Where to Get the Tools to Generate Recurring Revenue
Your service center and F&I department are the leading areas of your dealership that will generate the most recurring revenue. Your dealership can maximize revenue potential by working with an automotive consulting team that specializes in F&I service offerings.
The ACE Group has the tools your dealership needs to generate recurring revenue. We make it easy to automate your sales and service process, deliver industry-leading F&I services, and optimize your training programs.
We are also your leading compliance partners to ensure your dealership remains compliant with all industry rules, regulations, and requirements. We work with the best in the business to cover you in an ever-changing compliance field.
At the ACE Group, we are also constantly looking for new ways to help dealerships improve their processes. We vet new niche products so that you can tailor sales systems and product offerings to meet your dealership’s specific needs.
Are you looking for ways to generate recurring revenue for your dealership? Reach out to us here at the ACE Group. We offer a free analysis to help you maximize your dealership’s earning potential.