CRM Starts With Your Customer Dealer Marketing Magazine| August 2008
The latest new car sales figures from Autodata Corp. show an 18 percent decline in sales in June and that estimate is most likely conservative, depending upon the state ofyour local market and specific brand plate(s), it could be much worse. Auto sales are just plain terrible and everyone is affected by this national trend; yes, even Toyota and Honda are feeling the pinch. The domestics are scrambling to align their product base in response to the paradigm shift in consumer buying behavior, and dealers are desperate to bold on to what little customer loyalty remains. The million dollar question dealers should be asking themselves is: Just how important is maintaining a good relationship with your customer? According to Dale Benton, general manager of Serra Toyota in Birmingham, Alabama, that relationship is paramount to the success of a dealership, "Customers always come first," he explains. "Providing the best possible customer experience is critical to loyalty and long-term success. We want our customers to enjoy every interaction with our dealership and to know they can hold us accountable." To create that customer loyalty and long-term success, dealers need good Customer Relationship Management (CRM) solutions that help grow their business by taking advantage of their existing customer base at a time when the market is not only not expanding, but shrinking.
Al Babbington, CEO of Cincinnati-based OneCommand, says CRM thinking and solutions have changed over the last few years. ''The biggest change in the last decade has been aggregating data.
Now dealers can aggregate data into 'silos.' It used to be that data was gathered in such a way that each department within a dealership had its own silo and they didn't work together." Babbington continues, "(Now] instead of gathering information from a department base, dealers can do it from a strategic base. Customers don't have to be thought of as just a lead for the sales department, a service department customer, or parts department customer. Dealers can use CRM tools to link all threads together in a single view." Good CRM technology also helps dealers use this information to communicate more effectively and efficiently with their customers. Babbington believes that dealers should understand that it's not enough to just collect customer data; you also need to understand what it means and find th.e best channel to communicate with your customer.
"By determining the channel to communicate with the customer, whether through emails, telephone calls, text messages, or snail mail, a dealer can actually drive behavioral change on the part of the customer and that makes a difference," Babbington explains. "Internet users, for example, are much more attracted to personalized Web-pages. Dealers can now set up such a page for each customer, who can in tum, periodically check that page for information such as service offers or whether there's been a recall on the car he bought from the dealership." More importantly, a dealer can maintain a relationship with the customer the way the customer prefers. "You don't want to communicate with a customer badly," warns Babbington. ''That annoys the customer and the dealer ends up spending money alienating a buyer. That's why we set up a personalized Web-page for the customer. The dealer lets the customer set the parameters ofcontact. If he wants voice mail messages, regular mail, or no contact at all. The customer is in charge."
How do you make a connection?
"A good CRM system," notes Brian Anderson, founder of Autobase in Indianapolis, "gives consumers more power with tools such as personalized Web-pages and good preference management." These tools can be used to schedule appointments, inform the consumer about services, and even get the customer a loaner car while his is being fixed. This empowerment of the consumer began when dealers started putting up Websites. Back then, the good ones only needed to have infonnation, but technology in the past few years has gone far beyond simple Websites. Thanks to modem cell phones and PDAs, a potential car buyer has many different ways of finding information. “When I was growing up, you sold cars by controlling information," OneCommand's Babbington says. “A dealer didn't give a price, he'd low-ball. Those days are gone. Most of our dealer clients have embraced the changes brought about by new technology. Now many buyers know more about the product than the sales staff."
With the poor economy, Babbington suggests that each customer has become more valuable. "Ad guys will tell you to spend more money on advertising, but you can't buy market share that doesn't exist." One way a good CRM system generates leads from customers already in a dealer's data base is through what Babbington calls an 'equity sweep.' The dealership's records are checked every day. Consumers, who are in an equity position in vehicles they purchased, say two years ago, are identified and then OneCommand's system runs a program to determine if the customer can get in a new vehicle at the same price he or she is paying now. "With the cost of a gallon ofgas at more than four dollars, maybe that customer wants to get rid of his big SUV and trade it in for a more fuel-efficient vehicle. Just like that, the dealer has generated a deal by smartly using information he already has. He doesn't have to pay for a lead and he's made his customer happy. That is just one example of how a good CRM system pays for itself," explains Babbington.
As for the future, Babbington says he's excited because technology will make it possible to further refme how consumers choose to be communicated with. "The next evolution will be with systems like Onstar," Babbington advises. "Many new cars have such systems built right in. It will be possible to send messages directly to vehicle computer screens." Babbington says that even his own kids don't have home phone lines anymore, or get their information from the daily newspaper. Their generation, according to Babbington, gathers information via MySpace and YouTube. Autobase's Anderson agrees, adding that technology has not only changed the way dealers do business, but it's changed consumers themselves.
"The iPhone will push the envelope," Anderson asserts. "From the dealership side of things, they will have to make sure they leverage the technology to improve customer relationships. There is an art to this science." Part of the art is avoiding trouble.
Anderson describes how he's heard of dealers who have been blacklisted because of voicemail blasts that violate the law. Communicating badly with customers can do a lot more harm than good "Having a good CRM system is the just first step," Anderson explains. "Someone needs to be in charge of customer touches or contacts to make sure that everybody does what they're supposed to do. If not, a dealer can find himself spending a lot of money for something that is not producing."
So how should dealers make this customer 'connection?' Anderson advocates that communications must be something customers want to receive and should never be a constant barrage of messages that end up alienating customers. "Technology should create a warming relationship with buyers," Anderson continues. "If a dealer can create a Website where the public feels like a part of a greater community, he'll have accomplished something. The Indianapolis Colts on their site, for example, list recaps of local high school games. Dealers can do something similar and create their own kinds of communities." But don't think technology is the magic bullet that replaces the benefits of good old fashioned customer relationships. "That's just the first step," Anderson remarks. "Technology doesn't replace human interaction, it enhances it. If dealers don't continue to focus on sales-staff that believe in relationships with customers, they're in Irouble." Anderson does, however, agree with OneCommand's Babbington that the new dealer-customer relationship is tilting in favor of the customer. And he adds that in order to take full advantage of CRM systems, dealers have to rely on information-information that is controlled by the customer.
Communications don't have to be obvious. Anderson knows a dealer in Texas who sends out an electronic newsletter that doesn't just push promotions. "He printed a story electronically about barbequing, for example. How many times do you think that that article got read?" He askes, "Dealers can even target promotions to customers based on the articles they read," Anderson adds. "Someone clicks on a story about improving gas mileage and a dealer can send follow up information based on that fact." As technology continues to evolve, dealers will have the ability to achieve the same contact through different channels. "I see exciting opportunities with podcasts," Anderson asserts. "Dealers can do fun things like promote secret hidden Webpages via Webcasts, where customers gain access depending on how they respond. With powerful data bases, dealers can uniquely identify customers in a targeted way." While behavioral targeting is an effective way for dealers to identify what their customers are truly interested in, according to CRM experts interviewed for this story, the single most important opportunity is the dealership's own in-house customer database.
"A bird in the hand is worth two in the bush;' Anderson explains. “It can be very expensive to generate new traffic. Why try to create expensive conquests when they're there for the taking in your own data base?" By communicating effectively, a dealer can condition the buyer to think ofhis dealership automatically. "Banks are doing this right now," says Anderson. "They have programs where customers are contacted when their checking accounts drop below a certain amount. Car buyers can be contacted in the same manner. Perhaps every three to four months, a dealer will send out a communication offering a discounted oil change to a customer. When it comes time to buy another vehicle, that customer will more likely use the dealership in the buying process."
Processes can also be created around how the customer contacts the dealership, whether it's a walk-in, a telephone call, or an email inquiry. "The salesman is given a work plan on a silver platter, but the customer has to get the right kind of message. Just as salespeople are trained on how to best speak to customers over the phone or an email message, a mass mailing needs to be worded properly," Anderson says. "Too many dealers don't give their messages much thought. A poorly-worded communication can be worse than none at all."
How do you define CRM success?
"Just because something is banded to you on a silver platter, however, doesn't guarantee success," says Jonathan Ord, CEO of DealerSocket in San Clemente, California. He believes a successful outcome is determined by processes and how well those processes are followed. ''If no one uses the technology, it doesn't provide value," Ord says. "When times are tough and dealers have problems selling, they need to get creative about selling and they can start with their own customer bases."
Staff turnover, Ord believes, is an ongoing problem for dealers. "When personnel come and go, it can become difficult for good CRM processes to take root," he adds, "So dealers should pick a provider that has a full view of his dealership. It is important that the customer be viewed as one customer- not a customer for the service department, the parts department, and so on."
Ord says that it is also important to pick a technology that allows a dealership to grow. "Dealers have to hold staff accountable. If they aren't using the system as it should be used, then discipline has to be handed down. Consistency must be maintained."
"Historically, dealers do well when the customer is in front of them," Ord continues. "Where they've done a bad job is on the science side of sales, such as which customers are coming off lease with equity in a vehicle. Knowing that metric allows a dealer to have an artful conversation. The dealer is able to use the fixed part of his business to drive sales." It is important to remember, however, that there is no one size fits all CRM solution.
Jock Schowalter, president of Dealerpeak in Portland, Oregon, adds that different types of dealerships have different CRM needs. "A single dealership is very different from a dealer group," Schowalter explains. His company does a lot of work for dealer groups and the system's architecture is designed for them. It is configurable, however, so that each store can operate according to its individual needs. Schowalter also says that ease of use is important. "It is good if an owner can check the progress at every store from one location, but at the end of the day it will all still come down to the sales staff and the rapport they build with clients," he explains. "A good interactive Website can build that rapport even before the buyer visits the dealership. This efficiency can be leveraged into more face time with the customer, which is what every dealer wants."
"Today's customer is used to doing things online," Schowalter continues. "When they submit an inquiry via email, they expect a prompt reply, whether by phone or email" These days the consumer is in charge of the relationship. He believes dealers must accept that this is how business is done these days. ''That's where a good CRM system comes in."
Stay abreast of technology, but train and train some more!
Technology interfaces used by CRM systems have improved over the past several years, making communication between dealer and buyer easier than ever. That trend is set to continue as CRM providers have had time to find out what works best, so today's systems are more refined and effective than ever. "The new systems are better and more affordable," says Showalter. "We are a software-as-server model. All a dealer needs is a Web browser."
Jim Knight, president of The Higher Gear Group, in Chicago, adds to that point by emphasizing that sound training is a critical component ofusing technology, particularly in response to the tough sales environment dealers are currently experiencing. He believes that training is more important than ever. ''Any good CRM system should do three things: track customers, bring them in, and close. That's the bottom line and that's what dealers today are trying to do, even the ones who sell the most popular brands," Knight explains.
As the industry progresses, Knight says training will become even more necessary and they're working on making CRM tools more consolidated. The system will encompass the whole dealership, from calls and mass mailings to appraising and booking inventory. "Dealers will find it more efficient to have one system instead of three or four to handle the appraising, mailing, and lease quoting, for example" Knight says.
"Dealers are experiencing difficult times right now," Knight continues. ''There are a lot ofdealers out there who are good dealers doing the right things, but they're still having a tough time. The dealers who have the right processes and measures and hold people accountable and do the basics well, they're the ones who are going to have the best chance of surviving."
