Courtesy Steve McAneney

I have been digging into the data behind something we all repeat in this industry: that it is cheaper to keep a customer than to win a new one. It is true. But almost every reason we give for it is wrong, and the way most of us act on it quietly destroys money.
Here is what I found. More importantly, here is why you should go and check your own numbers rather than take mine.

Start with what is at stake
Deloitte benchmarks more than 200 New Zealand dealers. In their latest report, parts and service together make up 44 percent of total dealership gross profit, and service alone runs at a 60 to 62 percent gross margin.
Just under half your gross profit comes out of the workshop. Most of us know that. Fewer of us market like we know it.

What does good look like?
I could not find a published New Zealand service retention benchmark, so here are the closest overseas reference points. Use them as a starting yardstick, not as gospel.
NADA in the United States sets the target at 72 percent year on year: of 100 customers who service with you this year, 72 should come back next year. Cox Automotive’s 2025 study found only 54 percent of owners of vehicles two years old or newer returned to the dealership that sold them, down from 72 percent two years earlier. That is a different measure, and it is one study, so treat it as a warning rather than a fact about your business.
The calculation is simple enough to run this week. Count your unique service customers for last year, count how many of them came back this year, and divide one by the other. If you are sitting under 60 percent, the rest of this is worth your attention.

Now the cost of keeping someone
Same Deloitte data: advertising sits at roughly $299 per new vehicle sold. A service reminder by text or email costs you cents.
So on cost per contact, retention does not win by five times, or ten. It wins by a factor of hundreds. If anything, the folklore understates it. Which is exactly where it gets dangerous.

The maths nobody runs
Take 1,000 customers due for a service. Say 30 percent would come back anyway. You send a reminder at $1.50 a head and lift that to 34 percent.
    Cost: $1,500
    Extra repair orders: 40
    Extra gross profit at NZ service margins: around $11,000
    Return: roughly seven to one
Excellent campaign. Now add the bit we always add, a 10 percent off offer to drive response. That campaign now loses about $5,800 against doing nothing at all, because the 300 people who were always coming just got 10 percent off. You paid them to do what they had already decided to do.
At these numbers, break-even is a discount of about 6.2 percent. Anything above that and you are worse off than if you had sent nothing. Retention is nearly free. Discounting is what makes it expensive.

So why do they actually leave?
This is the part I would push back on hardest, because “we cannot compete on price” is our favourite explanation and the data does not support it.
Cox Automotive’s 2025 US study found 45 percent of owners reported dissatisfaction, with unexpected costs and poor communication at the top of the list. An Australian study of 1,500 owners ranked price last among reasons for choosing a workshop: only five percent named it as their main driver, while 36 percent put the technician’s skills and training first.
Unexpected cost is not the same thing as high cost. One is a pricing problem. The other is a conversation that did not happen.

The honest barriers
Two things make this harder here than the overseas figures suggest, and I would rather say so than oversell.
First, our fleet is old. Light passenger vehicles average 15.3 years, and 43.3 percent of them are 15 years or older (Ministry of Transport). Australian research suggests owners start moving to independent workshops at around the six year mark. Put those two facts together and a large share of the New Zealand fleet is already years past the point where a franchise workshop had any realistic chance of holding onto it.
That is not an argument against retention. It is an argument about where to aim it. The overseas benchmarks come from much younger fleets, so the window where your effort can still change the outcome is narrower here, and it sits in the first six years of a vehicle’s life. Chasing the rest is mostly spending money on people who were never coming back.
Second, the WoF. From 1 November 2026, new vehicles move to their second WoF at four years instead of three, and four to fourteen year old vehicles shift to two-yearly inspections. For years the WoF has handed us appointments we never had to earn, and fewer inspections means fewer of those appointments.
From late 2026, more of your customers will need a reason of their own to book in, and everything above suggests we are not currently giving them one strong enough. That makes it a 2026 problem to work on, not a 2027 one.

What actually works
If price is not the driver, and discounts destroy margin, what is left is the part that costs nothing but attention.
• Quote the extra work before doing it, every time. “Unexpected” is the word doing the damage, not “expensive”.
• Explain why, not just what. If people are choosing on perceived competence, demonstrate it.
• Clear up the warranty confusion. Australian research found 23 percent believed dealer servicing was mandatory and 22 percent feared voiding their warranty, so some of your retention is currently running on a misunderstanding, which makes it fragile
• Ring when you say you will.
• Treat the handover as the retention event, because it is. A reminder six months later can only remind. It cannot repair a bad last visit.
None of that needs budget. It needs a Service Advisor who has been shown how, and given the time to do it properly.

Then go and check your own numbers
Most of the research above is American or Australian. Where New Zealand data confirms it, I have said so, and where it does not exist yet, I have said that too. So do not take my word for any of it. Pull your own data:
 What percentage of your gross profit comes from the workshop?
• What is your retention rate at 12, 24 and 48 months, measured against that 72 percent yardstick?
• What did your last service campaign cost per incremental repair order, not per response?
• How much discount did you hand to people who were coming regardless?
That last one is usually the uncomfortable one. If just under half your gross profit sits in aftersales, it is worth asking how many hours we spend analysing service retention compared with new vehicle marketing.
If you have run these numbers on your own dealership, I would be interested to hear what came out. I am more curious about what New Zealand data actually shows than about whether it agrees with the overseas studies.
Transparency note: the idea and the editing are mine, but the research and final draft were AI-assisted, so take this as a considered view rather than expert authority.

Steve McAneney works in Automotive Aftersales Management | Dealer Network Capability | Technical Training, Curriculum & Instructional Design | NZ Based