Percentage of Sales From Repeat Customers

[BillKVMotorCo]

A vendor partner asked me recently whether I thought the percentage of sales we have from repeat customers is standard, high, or low. I honestly couldn't answer that question. What do you guys think is the average percentage of sales that should come from repeat customers so that you know you are doing a good job?

 

[Richie K]

My two cents worth, which is about all my brain can manage right now. It being Monday and all. (It’s actually Tuesday, but based on my day, it feels like Monday)

How do we quantify what percentage makes us feel good about the services we provide?

We love repeat business because it means we did something right, and that customer wants & trusts us to provide them with service again. Plus, that customer is likely to send us referrals who will hopefully become repeats as well. So, any repeat business is better than zero repeat business. Right?

Where do we get the comparisons from? No two dealerships are the same. Some are similar though.

Is there an industry standard? I haven’t researched to see for myself.

OEM’s may offer some analytics for sales leads close rates based on Region, Zone, District, etc., but I don’t know about repeats. I’m not sure how to compare apples to bananas and all dealerships vary in sales. Some similar sized dealerships might have similar inventory amounts & sales amounts, but still, how can you compare the two. What’s good for us might be terrible for you.

So, what is the average? Heck if I know, but I will add that to my monthly analytics reports and see what my dealership is doing.

In closing, I will refer to my earlier comment - any is better than none. We should be happy with what we get, but there is always room for improvement & growth so let us not be complacent. Also, let's try to keep what we get.

Ya'll just got a peek into the interworkings of my brain when it's not braining. Good luck making it make sense!

I am interested to see what others have to say about this topic.

 

[Alex Snyder]

We wrote a white paper on this not too long ago. And you all know FRIKINtech mines DMS data from past sold and service to deliver offers that bring these customers back to your dealership. So, we keep an eye on this kind of thing

Long story short... 35% of your monthly sales should have spent a dollar with you before. That hasn't been the case for the past few years because of inventory shortages, but that should be the goal moving forward.

Here's the white paper. Take a look at page 5.

 

[BillKVMotorCo]

We wrote a white paper on this not too long ago. And you all know FRIKINtech mines DMS data from past sold and service to deliver offers that bring these customers back to your dealership. So, we keep an eye on this kind of thing

Long story short... 35% of your monthly sales should have spent a dollar with you before. That hasn't been the case for the past few years because of inventory shortages, but that should be the goal moving forward.

Here's the white paper. Take a look at page 5.

View attachment 9041

This is awesome. Thanks!

 

[levin233]

Thanks for sharing your thoughts, Richie K! I think you're right that any repeat business is better than none, and it's a great indicator that we're doing something right. Alex Snyder's white paper is really helpful in providing a benchmark - 35% of monthly sales from repeat customers is a great goal to strive for. I'm curious, has anyone else implemented strategies to increase repeat business, such as loyalty programs or targeted marketing campaigns? What's worked well for you?

 

[Tallcool1]

Month in and Month out, our number hovers right around that 60%-70% repeat customers. That includes family members of previous customers where the family member is brought in by the previous customer. That means kids, siblings, etc..

We seen to do a good job of hanging on to a customer when we get one, and a bad job of finding a new one.

All stores are different. We can build a today business or a forever business. We all know how to do both, but one is a long play for sure.

 

[BillKVMotorCo]

Month in and Month out, our number hovers right around that 60%-70% repeat customers. That includes family members of previous customers where the family member is brought in by the previous customer. That means kids, siblings, etc..

We seen to do a good job of hanging on to a customer when we get one, and a bad job of finding a new one.

All stores are different. We can build a today business or a forever business. We all know how to do both, but one is a long play for sure.

When you're a volume store like we are, you HAVE to have those repeat customers.

 

[Carsten]

I was a 3 time buyer at a Chevy dealer. I bought used from them.
Sorry, the dealer was not my reason. It was the sales person.
I clicked with the guy. I liked his sales technique and he was more than willing to run all the slow process work in his free time while I was at home watching Netflix or working. I didn't have to sit for hours dealing with the normal drag.
I may be a special case ...

There is another dealership that I did check over and over again and that was because the Toyota shop was efficient, had cafe lattes on tap, great chairs to sit in and over all not a bad place to hang out while waiting.

Today ... not sure what I'll do since I moved. However, I will definitely consider driving 3 hours to visit my sales guy who has moved on to another store.

Is it your sales person the reason or the dealership? Is it just brand loyalty?

I would say a deeper look at why repeat buyers are happening or not. This would be beneficial to your overall sales strategy.

 

[TScheer]

A vendor partner asked me recently whether I thought the percentage of sales we have from repeat customers is standard, high, or low. I honestly couldn't answer that question. What do you guys think is the average percentage of sales that should come from repeat customers so that you know you are doing a good job?

Bill,

Ironically, I was doing some research on this very topic. Here is what I dug up:

1. Current Repeat Customer Sales: On average, repeat customers account for about 20% of sales in some dealerships, with some seeing as high as 29% or even 34%. This indicates a significant portion of sales can come from repeat customers, though it varies by dealership.
2. Profitability of Repeat Customers: Repeat customers are more profitable over their lifetime compared to first-time buyers. For every 100 deals from repeat customers, dealers gain 10 more vehicle purchases and $2,660 more in gross profit than from first-time buyers . This highlights the financial benefits of focusing on repeat customers.
3. Cost Efficiency: Acquiring new customers is significantly more expensive than retaining existing ones. It can cost five times more to earn the business of a new customer compared to a repeat purchase from a returning customer. This cost efficiency underscores the importance of investing in customer retention.
4. Revenue Contribution: A small percentage of loyal customers can contribute a large portion of revenue. For instance, 8% of customers can generate 40% of the revenue for an online parts department . This suggests that a focused effort on retaining high-value customers can yield substantial financial returns.

And the data that I found to compile this is already a couple of years old, but I would imagine it's pretty accurate.

 

[BillKVMotorCo]

Bill,

Ironically, I was doing some research on this very topic. Here is what I dug up:

1. Current Repeat Customer Sales: On average, repeat customers account for about 20% of sales in some dealerships, with some seeing as high as 29% or even 34%. This indicates a significant portion of sales can come from repeat customers, though it varies by dealership.
2. Profitability of Repeat Customers: Repeat customers are more profitable over their lifetime compared to first-time buyers. For every 100 deals from repeat customers, dealers gain 10 more vehicle purchases and $2,660 more in gross profit than from first-time buyers . This highlights the financial benefits of focusing on repeat customers.
3. Cost Efficiency: Acquiring new customers is significantly more expensive than retaining existing ones. It can cost five times more to earn the business of a new customer compared to a repeat purchase from a returning customer. This cost efficiency underscores the importance of investing in customer retention.
4. Revenue Contribution: A small percentage of loyal customers can contribute a large portion of revenue. For instance, 8% of customers can generate 40% of the revenue for an online parts department . This suggests that a focused effort on retaining high-value customers can yield substantial financial returns.

And the data that I found to compile this is already a couple of years old, but I would imagine it's pretty accurate.

Great info. Thanks for sharing.