US automotive expert Glenn Mercer is warning dealers that customer retention is fast becoming the industry’s most important profit driver with the rise of brand competition, shifting powertrain mix and changing consumer behaviour.
Presenting findings from his study into retention strategies, Mercer said dealers must move beyond traditional notions of brand loyalty and focus instead on repeat business particularly through aftersales, used car transactions and convenience-led service models.
Starting his latest research programme last September, Mercer has examined global case studies, from Norway’s EV-led aftersales evolution to the rapid rise of mobile servicing in the United States, alongside UK developments such as Halfords’ continued investment in servicing capacity.
His central conclusion is simple: retention is more valuable than ever although many retailers are still approaching it the wrong way.
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“Loyalty is the emotional bond to the brand, but retention is behaviour,” Mercer explained at Autotrader’s latest The Road Ahead conference. “Do you actually come back and transact again. That’s what matters. That’s what rings the cash register.”
He told delegates that rather than retention being a by-product of good retailing it needs to represent a core strategy in terms of sustainable profitability for dealers willing to rethink convenience, aftersales and lifecycle engagement.
Retention is not guaranteed
Mercer’s research highlights a structural reality that limits even the best operators: retention has a natural ceiling.
“Even your most highly satisfied customers will not necessarily reach 100% retention,” he says. “They may want a vehicle you don’t offer, so they leave. There’s always an upper limit.”
That makes every retained customer more valuable and every lost one more costly. In the US, replacing a customer through conquest activity can cost $1,200 to $2,500, while retaining an existing customer is significantly cheaper and more profitable, particularly through continuing aftersales service provision.
This is reflected in dealer financials, where parts and service may account for a minority of revenue but a disproportionate share of gross profit.
The true retention engine
Mercer is convinced that retention is not won on the showroom floor but in the workshop with research consistently showing that service experience has a greater impact on repurchase intent than both the vehicle itself and the original sales process.
“More important than ‘how I was treated when I bought the car’, more important than ‘how I like the car’, is ‘how I’m treated during service’,” he said.
Yet dealers continue to lose ground. In the US, only around 30% of total maintenance and repair spend flows through franchised networks, with the majority captured by independent operators.
The same structural pressure is visible in the UK, where national chains such as Halfords which have expanded aggressively into servicing, tyres and repair, investing heavily since 2025 to capture greater share of the aftermarket.
Convenience – the real battleground
One of Mercer’s most striking findings is the shift away from price as the primary driver of defection. “Ten years ago it was price. Now the number one reason customers don’t return is inconvenience,” he said.
This shift is reshaping dealer strategy, particularly in the US where operators are experimenting with new service formats designed to remove friction from the ownership journey.
Among the most significant developments is the rapid growth of mobile servicing. US dealer groups are deploying fleets of service vans capable of carrying out routine maintenance, software updates and minor repairs at a customer’s home or workplace.
“Mobile service is on fire,” Mercer says. “It’s a huge customer satisfier. Even if it only breaks even, it drives retention and future sales.”
Some US dealer groups now operate dozens of vans, handling tens of thousands of service appointments annually. Beyond retail customers, dealers are also using mobile units to service independent used car retailers, improving utilisation and building new revenue streams.
Satellites, secondary service models
Earlier attempts to improve convenience through satellite service sites – smaller workshops located closer to customers – have delivered mixed results.
Operational complexity, territory conflicts and changing commuting patterns can limit their effectiveness.
However, a related concept is gaining traction: secondary service models aimed at older vehicles. Here, Norway, with its advanced EV adoption and ageing ICE parc, provides a useful case study.
Some dealer groups have partnered with independent aftermarket chains or created their own lower-cost service brands to retain older vehicles that would otherwise defect.
“You can’t beat the enemy, so partner with them,” Mercer noted, pointing to examples where franchised dealers direct out-of-warranty customers to affiliated centres servicing all brands.
This approach allows dealers to maintain customer relationships across the full vehicle lifecycle, rather than losing them once warranty coverage ends.
Instant cash offers for retention
Retention is not limited to aftersales. Mercer highlights the growing importance of used car acquisition as a retention tool.
Instant cash offers, often triggered during service visits, are now a core strategy in the US, with some dealer groups sourcing up to a quarter of their used stock this way.
“You cannot let the customer leave without making an offer,” he said, particularly when repair costs exceed key thresholds.
Multi-brands as defence vs defection
Mercer also points to the rise of multi-brand dealership groups as a structural response to declining brand loyalty.
“The only way to be sure you can catch a customer who wants something different is to offer multiple brands,” he says.
In the US, large dealer groups are increasingly building portfolios of franchises that allow them to retain customers within the group, even if they switch vehicle type, price point or powertrain.
Rather than losing a customer to a competitor, the sale is simply redirected internally.
Connected car: threat and opportunity
The connected car is emerging as one of the most powerful – and contested – tools in the retention battle. On the opportunity side, real-time vehicle data enables proactive engagement, from automated service reminders to predictive maintenance alerts and personalised offers.
In theory, the vehicle itself becomes a direct channel back to the retailer, prompting customers to act before issues escalate. “The connected car can be an incredible retention driver if you get it to work,” Mercer said.
However, it also introduces a significant strategic risk. OEMs, with direct access to vehicle data, have the potential to bypass retailers entirely, routeing service demand, communications and even transactions through their own platforms.
For dealers, the challenge will be to harness connected technology without losing ownership of the customer journey, ensuring it strengthens, rather than disintermediates, their role in the value chain. “You have to be very careful about how much data you’re giving away and who controls the customer relationship,” Mercer warned.
What translates – and what does not
Mercer is cautious about directly importing US strategies into the UK market.
While some initiatives, such as mobile servicing, used car cash offers and expanded aftersales propositions, are highly transferable, others, particularly advanced F&I products, are heavily shaped by local regulation and may require significant adaptation.
Despite this, Mercer repeatedly returns to the universal need to establish execution fundamentals. “If you don’t have the basics right, the right people, the right processes, consistent execution, then layering technology on top won’t fix it,” Mercer warned.