Dealerships, Management Workshop , , ,

EVERY dollar we spend in our business is in the pursuit of one thing: the customer. But in many cases the customers are the least-managed and least-measured asset in the business.

This is because the measurement of dealer performance has always been financial. So dealers use the metrics and the KPIs created by accountants and accounting systems and they do this because finance data is easy to measure.

So the measurements we use in the car business tend to be financial measurements that tend to be driven on transactional values and people performance. They are not driven around customer performance.

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Wayne Pearson

In a lot of other industries they spend a lot of time analysing how the customers perform for them. The car business does not necessarily do that. So one of the things that I spent a lot of time doing in our dealership was to re-invent that focus. This meant you had to go back and look more at the non-financial data because most of the customer data is non-financial.

This is a lot more about looking at what your customer is likely to do next rather than scoring the financial result which has already happened. But most dealers do not spend a lot of time predicting what their customers will do next. They focus on what the customers have already done.

 

It gets back to your customer retention processes and how you integrate those processes across the entire business.

 

It gets back to your customer retention processes and how you integrate those processes across the entire business.

Your CRM processes are really about measuring your non-financial data which is very much about predicting what the customers’ behaviour is going to be: when is the next time they are going to touch the business? And what part of the business are they going to touch next?

I always go back to first principles with the car business.

It is five different businesses inside the one business. Most people don’t give it credit for its complexity.

It involves:

  • The sourcing and sales of new product
  • The repurchase of old product and the onselling of that product which is a different business again
  • The repair and maintenance of new and old product
  • The financing and insuring of the old and new product (again another skill-set required)
  • The logistics for the supply and selling of spare parts, not just to the dealership customers but to the trade which is again another business involving the insurance business

So it is quite a complicated business and the skill-sets of all the five different managers are all quite different.

So you have the dealer principal (DP) who has visibility on how all those businesses operate, but the people at the management level tend to just focus on what they do – the service manager gets the customers in and out and gets the quality right; the parts manager focuses on selling spare parts to the trade and to the service department; the finance and insurance (F&I) manager concentrate on funding and insuring the vehicles sold and so.

So each manager has a different role. Unless they are aware of where the customer sits in that process, and they are also aware of the trigger points that take the customer from one point of the business to the other, unless they are across the other departments, they will struggle to see where the customer fits into the total business.

Clearly the tendency to have silos in the car business is very strong and the reason for that is that most people in the car business are only rewarded on their own performance.

 

Most managers are really only rewarded on what they achieve inside their silo. They are not rewarded on the performance of the total business.

 

So most managers are really only rewarded on what they achieve inside their silo. They are not rewarded on the performance of the total business.

I have always been a strong believer that incentive drives performance in the car business and if you actually point people in the right direction, and they insert the coins the right way, they will actually operate the right way.

The dealers who get it done and get it done well are those who tend to offer their managers a more holistic incentive scheme: something where they are rewarded on the betterment and performance of the whole business as a proportion of their compensation package.

It might be a quarter of their potential earnings are driven on the dealership’s performance, not just their own performance.

 

I have found that CRM is not a computer system.  CRM is a mindset.  It is a series of processes used the get the mindset right in your people.

 

I don’t think there is anyone who sells a CRM system per se. There are lots of people who will sell computer system which will help you with your CRM but I have found that CRM is not a computer system. CRM is a mindset. It is a series of processes used to create the right mindset in your people.

You can have the greatest computer system in the world but if the people don’t have the mindset that we are doing this because we are going to get the customer to transact with our business in another department, if they did not have the mindset about how to manage and mine their customers, it does not matter how good your computer system is.

All that would happen is the system would just keep telling you that you are no good at CRM.

That is basically what happens.

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People put CRM systems in place thinking that it is the solution but the solutions is actually getting the human factor right, getting the handling of the customer process right with your people. Then it is a matter of measuring that process with your people which is what the system can be used for, and then it is a matter of training the people on why what they are doing is important.

And the top layer on that is remunerating them on success.

I found the real basic principles of CRM are really simple. It is about making sure that all the customer touch points in all the various departments are guaranteed to get the customer to transact with our business. The role of the dealership is to lock the customer into the business (as a buyer and referrer) and transact as often as possible for the mutual benefit of both parties.

That said, given the silo nature of departments, customers are often allowed to meander freely between departments and in and out of your business without control and management.

 


Ten ways to manage your customers as an asset

 

1. It all starts at delivery, the customer needs to have a proper handover to service, have the schedule explained and be “locked in” with a date of their first service.

I am very big on service handover on deliveries. I was always on about making sure the customer was booked in for their first service. I will tell you how much of a difference that can make to your business.

When I first walked into my dealership I was told every single customer was handed over to the service department on delivery.

After a month of checking, I found the number was actually zero. I then measured the number of customers who came for their first service and it was 60 per cent. So you have lost 40 per cent of your customers before they have even got to their first service. They will not come back at all – ever.

Which means you sold the car for no benefit because there was no money in actually selling them the vehicle.

We put in a very clear handover-on-delivery process and started measuring the appointment of customers for their first service at delivery. We got it up to 98 per cent.

The impact on repair orders was substantial.

Across the group, when I arrived the number of repair orders (ROs) was about 80 a day. We got that up to 200 showing up for services everyday across three workshops. That is the difference that driving a CRM process makes because the focus was simply on getting the customers to show up in the first place and to come back for every subsequent service.

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2. Ask for two referrals at delivery, the peak emotion point.

Salespeople don’t like doing this. I don’t know why. If they have done a good job on delivery they have every right to ask. So we really worked on getting them to ask: Are there two people you know who might buy a car in the next 12 months?

What salespeople need to realise is that people are on an emotional high at the time of delivery and they will have no hesitation in giving those two names. If they are ever going to love you, then this is the time they will love you the most. So that is the best time to ask for referrals.

We had two types of salespeople. Those who did not believe in themselves and did not ask for referrals and those who believed they had done a great job, asked for a referral and ended up selling another car.

 


 

3. Customers need a reason to keep coming back (apart from the need for service). Retention tools like Harrier National mechanical protection plans, service plans and roadside assistance give the customer a reason.

One of the reasons why we went from 80 to 200 ROs a day was because we offered them free Harrier mechanical protection and offer them some value for coming back.  Because if they don’t come back they no longer get the protection plan.

 


 

4. Get customers back into the dealership early for the first service in first 2 months which is a training exercise on how to work with the service department.

Car companies are trying so hard to keep down the cost of ownership that service has become a once every year or two year event. The problem with that is that it disconnects the customer from the dealership.

So the first service is very important because it becomes a training exercise for the customer. It does two things. It gives them a little peace-of-mind because very thing on the car is okay. No rattles and squeaks.

But more important it gives the customer knowledge on how to deal with the dealership. For most customers the scariest part of dealing with a dealership is actually showing up. They don’t know where to park; there are no spots; there are people everywhere etc. If they come in for a practice run for the first service it’s the old story: once you have done something once you are an expert.

So it is more about engaging the customer in the dealership lifecycle.

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5. Follow up is the key: one month prior to service send electronic direct mail (EDM). One week prior: a phone call.  One day prior: SMS.  Each of these are mandatory to ensure they come back.

One of the reasons people were not showing up for service was that we were simply not following them up. People forget, can’t be bothered that day or are waiting for the car to break down. There are a million reasons why they don’t show up for service.

But once you have locked them in they will come.

At the previous service you should give them a date for the next one. That is logged into the CRM system that sends the EDM that will confirm the service they are having, the time, location and the name of the service advisor. It would include a call-to-action with some offer in there.

Three weeks out we phone to confirm they are right for their service, that it is in their diary, that they are going to be there and reconfirm with them the time and the date and the service advisor. We would reconfirm the call to action for, say, the special on headlight protectors so we get the service confirmed and maybe get an up-sell.

The SMS would be just a friendly reminder that the car is booked in for the next day. Your service advisor is Zac. Looking forward to seeing you tomorrow. If there is a problem give us a call. If you are not able to make it send us an N in the reply line.

 

Think of the money forgone. Five no-shows would be worth $1500 lost every day. That is a return of $45,000 a month for just five phone calls a day.

 


 

6. No-shows must be contacted same day and re-booked immediately.

No-one did this. But I wanted a list of workshop no-shows by 10am and I wanted times and dates for the re-booking of all the no-shows by 2pm. First you have to show the staff the boss is looking and secondly getting dates and times is a pretty simple phone call. The bottom line is that if you get them on that day they come back.

Think of the money forgone. Five no-shows would be worth $1500 lost every day. That is a return of $45,000 a month for just five phone calls a day.

 


 

7. Lapsed customers must be contacted quickly and reminded they may lose their Harrier five-year MPP or they are not using a service plan they have paid for.

If a customer has slipped through the system we would send them an EDM and a phone call from our CRM centre to remind them that one of the conditions of them being covered by the protection plan is that they need to get the car serviced with us.

 


 

8. Post 24-month service customers must be proactively re-engaged with the sales department – positive equity emails (chrysalis), 30,000km “we want to buy your car”, rear vision hangers in service, daily test drive of wait customers. The more you re-engage the better chance of “keeping the asset”.

 

This goes back to encouraging people to buy another car. We are reminding them that they have positive equity in their car because two years down the track most people still have positive equity in their vehicle.

So we write to these people and say that if they came in today we can get them into a new car for similar repayments (with interest rates falling) and a cheque for $2000 thrown in which they can spend or put back into the car.

So we are saying that we can pay you more for your car that the debt on it and for the same repayments you can get the equivalent new model. Each month we would do that calculation for the 40 to 50 customers who were prime targets, send that as an EDM and follow up with a phone call.

The 30,000km mirror hangers have great success. They work really well. All they would say is that we want to buy your car. “We have identified your car as one we would like to own because we are in the business of selling pre-owned cars” and we would put the mobile number of the sales manager.

We would get about five customers a week ringing the sales manager offering their car for sale and, as you know, once you have de-horsed them they need a new horse.

For the customers who wait for the car to be serviced we would get our salespeople – especially those who sold them their car – to have a chat with them and offer to take them for a drive in a new model.

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9. Treat your used-car customers the same as your new-car customers; they are all valuable assets.

That used to do my head in. The factories do not rate a used-car customer as having the same standing as a new-car buyer. But once the tyres hit the curb they are all used cars. The only new cars are the ones in the showroom. So I tried to get that out of the minds of our people. We have to treat them all as customers. So we made sure that the processes for our customers were similar for all customers not just the ones who were considered special because they bought a new car.

 


 

10. Win back your out-of-warranty customers.

Most out-of-warranty customers leave dealerships because they believe they are not wanted, despite the fact that they are the most valuable repurchase customers.

The last service before warranty should be an amazing experience, with a clearly locked-in and defined post warranty schedule, special rates for loyalty, rebooking the next service and sales reintroduction.
Make them feel wanted.

I used to ring customers whose cars had just come out of warranty and you would find out that they did not think we would service their car anymore. And you would find that they got that impression from the way they were treated as being not as important by our own people.

So we developed an out-of-warranty pack which gave them their service schedule for the next three years with a discounted labour rate pointing out that while they were out of factory warranty they still had their Harrier protection plan for another three years.

So we changed the mindset; their job as customers was now to keep coming back to our service department. Once we got the service managers heads around it they really got on board the program.

Treat customers as special and give them a clear plan for the future and they will keep showing up.

By Wayne Pearson

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