Strengthen Relationships With Estranged Customers

Carfax needed a CRM solution that could help convert inactive dealers into loyal users of its vehicle report history service. Oncontact Software helped Carfax achieve its primary goal to strengthen its relationship with estranged customers. The increased revenue was just an added bonus.

Carfax - The Customer
Carfax has revolutionized the used car industry with its Vehicle History Reports. The reports reveal background information and unearth "hidden problems" in a car's past that may affect its resale value and safety. Thanks to Carfax, used car buyers can regard their purchase as a solid investment rather than a crapshoot.

Our Challenge
Carfax's primary customer is the car dealership.

Carfax is a driven company with an ambitious business model. So when Carfax discovered that its low customer retention numbers were weighing on its growth potential, the company made customer loyalty a top priority. After all, acquiring a car dealership as a customer is no small task for Carfax and the process is extremely costly. Keeping a dealership a customer, of course, is a lot less costly but Carfax did not have a good system in place to ensure customer loyalty.

Determined to uncover the factors that were hampering customer retention, Carfax studied the history of its customers and found that a major indicator of customer longevity was usage. Those who subscribed to the service but did not use it at a certain level were the most likely to unsubscribe. A customer who regularly uses the service is worth approximately 550% more per year than a non-user because an active customers pay a fee each time it accesses a report, while the inactive customer only pays a monthly subscription fee.

Carfax found that once a customer gained experience with the service, they used it more often and remained customers for longer. That's when Carfax decided to employ a solution that could revolutionize the company's customer service approach and, in turn, develop solid relationships with its dealer customers. Carfax's logic was that, by sustaining sound relationships and regular contact with dealers, it could greatly boost customer retention numbers. They were right.

How We Helped
Carfax uses CMS to cultivate relationships with the car dealers who are its customers. Having one comprehensive system that allows all users to share customer contact and usage information, comments from interactions, customer demographics and marketing collateral helps Carfax communicate better internally, build strong bonds with dealers and provide top-notch customer service. The data Carfax captures in CMS really lets the company get to know the customer and thus be able to accurately gauge their wants and needs.

Carfax has customized CMS to track basic demographics, state auto dealer association affiliations, franchises carried (i.e. Ford, Honda, Subaru), affiliations with large dealer groups (i.e. Carmax, AutoNation, Sonic), call history and number of vehicle history reports run in current, most recent and all previous months. This process helps Carfax identify at-risk customers and develop strategies to increase their usage of and satisfaction with their Carfax subscription. CMS also creates a complete history of every account to track each customer interaction, purchase and support incident. Carfax's users report their findings directly in CMS, which allows Carfax's marketing information group to immediately aggregate and analyze the data, then advise the customer service team how to act on it.

CMS helps Carfax execute proactive customer service. Carfax has set up CMS to remind customer service reps to routinely call contract signers and users to outline new service elements that they might not know about, such as 24-hour phone-in service, reduced access fees for new customers and co-op advertising opportunities.

Carfax has also programmed CMS to let customer service reps know when an at-risk customer runs a Carfax report revealing a problem with the vehicle the customer is considering, thereby rescuing that customer from buying a vehicle with hidden problems. This alert allows the rep to contact the dealer right away to reiterate the value of the service and the importance of using it on a regular basis. The dealer benefits because it is more likely to use the service in the future and thus "save" itself from investing in faulty vehicles. The call positions Carfax as a company that cares about its customers and is very much in touch with their business. This could explain why 21% of formerly at-risk customers today are satisfied Carfax subscribers.

The Payoff
After only a year of use, Carfax's customer retention was up 3.2 percent. Although 3.2 percent might not sound like much, to Carfax every six-tenths of a percent difference in customer retention adds up to a significant boost in annualized revenue. CMS has boosted productivity among Carfax's customer service reps. The same 10 reps now service 33 percent more customers than they could a year ago. By increasing the ground the customer service reps can cover, CMS is helping Carfax convert more and more at-risk customers into happy users. As we mentioned earlier, 21% of formerly at-risk customers are now satisfied Carfax subscribers.