It’s a well-known fact that retaining customers is less expensive and can be more profitable than acquiring new ones. The reality is essentially, customer churn keeps your dealership stationary. Many dealers blast sales messages across every medium possible – traditional, mailers, and digital; hoping that someone, somewhere will see it and decide to buy a car from them. According to NADA, dealers are still spending upwards of $640 per sale to bring in business on the sales side. And therein lies the problem.
Why spray and pray with your traditional advertising, hoping that the small percentage of people who actually pay attention to your marketing will convert into a sale? Even if you’re the best targeted data marketer in the universe, conversion rates on non-customer lists are low. The fact is that your single largest source of opportunities in both sales and service is sitting right there in your DMS and CRM!
Every dealer’s CRM and DMS contains tens – if not hundreds – of thousands of customers who have touched the dealership in some way, sitting there ripe for the picking. Tracking down opportunities can be as complex as precisely targeting and mining your DMS or CRM with a little help from some vendors. Or, as simple as pulling lists of customers based on search queries and hitting the phones. How many orphan owners does your CRM have? Is anybody following up with those previous customers? With an average 70% turnover rate in sales, chances are good that the salesperson who sold that customer their vehicle no longer works for you. Yet, rather than stay in touch with, follow up and potentially get a second sale from a previous customer, most dealers buy more leads, or increase ad spends, in order to fortify and increase sales. A better strategy is to follow up with customers in your database to ensure that they are revenue contributors for as long as possible, while also working to acquire new customers. Dealerships are great at the second part but many fail at continuously working their existing customer base.
Consider shifting some of your focus towards customers who are statistically ready to trade-in that vehicle they bought from you 3 years ago, or who have a college- ready child who needs a vehicle. You may be surprised by the results.
Only then will you start gaining traction and seeing growth. Until then you’ll simply be running in place.
Whether it’s an unhappy customer in the service drive because the repair is taking too long; or a customer in sales for 4 long hours attempting to buy a car and less than happy as a result; or a customer making a post-purchase call to report issues with a vehicle they just purchased; dealership managers can sometimes feel as if they are constantly putting out fires and that everyone is unhappy. Sometimes the problem gets addressed to the customer’s satisfaction — sometimes it doesn’t. You can’t please everyone, right? So what happens when you can’t?
A study conducted by SDL asked 2,784 consumers if they could recall their major customer experience failure in the last 10 years. Of those surveyed, 76 percent reported that this experience occurred in the last 2 years. Of those, only 55 percent could remember a good experience. The good news is that only 6 percent of those surveyed indicated that their worst customer experience involved the automotive industry. This certainly makes sense when you consider the frequency a customer visits a dealership, as compared to other retail businesses such as grocery stores.
An interesting statistic from the study is that the failures most often happened after the sale (32%). While the remembered successes happened during the shopping or purchase phase. This would seem to align with feedback we encounter from consumers in the auto industry. Think about your online reviews. I would venture to guess that the majority of your positive reviews tell the story of an excellent BUYING experience. While the majority of your negative reviews discuss post-purchase failures.
So, what are consumers saying are their biggest customer experience failures? The top four answers include long waits or poor response times (35%); employees not empowered to assist them (31%); unknowledgeable employees (30%); and conflicting or inaccurate information (29%).
By contrast, the consumer experience success stories showed the exact opposite with the top three being that employees were pleasant and helpful (35%); employees were knowledgeable (27%); and employees empowered (24%).
Something to think about is that these very same traits are directly related to the automotive buying experience. Think about those Internet leads that aren’t responded to at all, or if they are the response is too slow. Or, a failure to give customers the information promised (mainly price). Or sales associates that can’t provide information. The “just get them in” attitude is a relic and customers simply aren’t biting on it anymore. Car shoppers have access to more information and choices on where to buy a vehicle than at any time in history.
When a failure does occur, the younger the customer, the more likely they are to simply walk away and never patronize a business again. The older a customer is the more likely they are to want a solution. These failures are costly, too. Businesses can only win back a customer 20 percent of the time (1 in 5). And, if they do come back, they are 59 percent less loyal than they were before.
In addition, businesses who fail their customers will lose 65 percent of the revenue they would have received from that customer in the year after the fail. The sad part is that, of these failures, 24 percent could have been fixed for less than $20 — or one-hour worth of work. And it gets worse. 64 percent of failed customers will stop recommending the business and those with the capability to do the most damage to a business’ reputation – namely those with large social media footprints – will broadcast these failures more aggressively. These are the customers that are anti-brand advocates on Facebook, Twitter and online review sites viewing their crusade against a business as a means of HELPING other customers by sharing their poor experience.
The news isn’t all bad, however. While the consequences of leaving a customer failure unrectified can be costly, there is light at the end of the tunnel. The study compared what these customers SAY will win their business back, versus what will REALLY win their business back. The top answer was the same – if the business owned the failure, admitted their mistake and showed the customer that their poor experience helped the business improve.
We’re not perfect and things happen. As you can see, it doesn’t take much to win a customer back or rectify a failed customer experience. The first step towards avoiding these failures is ensuring that the customer experience during the purchase phase is great. Respond quickly, provide information, empower your employees and provide accurate information. Doing these things will exponentially increase the odds that you create brand advocates. When you do fail, simply suck it up, be humble and fix the mistake. That’s all most customers want from a business. Allowing ego or policy to prevent you from satisfying a customer’s issue can result in future revenue loss and seeing these consumers standing on a virtual mountaintop warning others against doing business with you. And it’s much easier to soak in a customer’s praise than silence an unhappy one.
In this age of always-connected consumers seeking instant gratification 24 hours per day, consumer engagement and the customer experience are more important than ever in order to earn that elusive thing: Customer Loyalty. Consumers are more independent than ever before. They’re tired of chasing automated phone systems and having to tell their story multiple times as they get bounced from one rep to another. In fact, a study conducted by Aspect Software has a pretty fascinating conclusion:
Consumers don’t want your help. They want to be able to solve the problems themselves. And, if your company allows that, they will be loyal to you.
Don’t get me wrong. When they are dealing with your company directly – whether that means they’re at your dealership or in a retail store — they want a great experience. And whether that experience ends positively or negatively is increasingly dependent on one thing – customer service. In fact, 76 percent of ALL GENERATIONS view customer service as the true test of how a company values them as a customer. And, for many, a great customer service is one in which they can solve their own problems without your help. 73 percent said that when dealing with a customer service issue they should have the ability to solve most issues on their own.
How much do they want this? They want it so badly that about a third of those surveyed reported that they’d rather clean a toilet than talk to customer service.
But if you give them the ability to solve their own problem, 65 percent of all generations reported that they left feeling good about both themselves and, more importantly, the company.
Yet, in the automotive industry, we have typically shied away from allowing consumers to do things on their own, for fear of loss of control, decreased gross profits, or perhaps an unwillingness to invest in technology. That’s changing. As companies, including manufacturers, increasingly adopt an online buying process, consumers are getting more used to interacting with car dealerships in the same way that they do an Amazon – online. Consumers won’t want these online interactions, however, to be isolated to sales transactions. You better believe that those customers that actually end up buying their cars online from you will expect interactions with you to continue after the sale and, if you don’t provide that ability, they will find a business who will.
And why shouldn’t we give them the experience they want? All of the technology exists. As an industry, we need to bolster our customer loyalty by addressing the expectations and providing the experiences that our customers desire. Right now, our customers are from a wide variety of generations with differing life experiences and expectations. The day isn’t that far off when every customer we deal with will have no memory of a time without self-service, instant gratification and interaction through technology.
So, let customers interact via text, chat or email. If they want to buy cars online, make sure you have an option for that. Ensure that they can schedule a true service appointment – not just a form that gets e-mailed requesting an appointment that never gets confirmed and that nobody knows about when the customer arrives.
We can’t sit back, stay 5 years behind the rest of the retail world and expect to become a more popular shopping destination. Adopt technology that allows your dealership to operate more efficiently and delivers the digital experience that consumers desire and your business will be in good shape for years to come.
An excellent article on Customer Experience Insight shared an analogy that resonated with me as it can be applied to automotive salespeople. The article compares salespeople to trees and states that only 10 percent of salespeople are considered evergreen; are strong and productive no matter what business and/or the economy is like. They nurture their relationships with their customers which return that loyalty. The next 40 percent are more akin to deciduous trees. They do not cultivate relationships with their customers and do not earn their loyalty. Instead, these salespeople continuously seek out new customers and rarely earn any repeat or referral business. The remaining 50 percent are pegged as barren trees and have no sustainable relationships or connections with their customers.
In your sales department, your salespeople are the face of your dealership. It’s not uncommon for sales managers to hide behind one-way glass in their towers, or some other out-of-sight office. For the most part, the only contact the customer has is with the salesperson. The quality of that first, and all future interactions with your dealership, could very well be dependent on the customer experience that your salespeople provide. It’s all well and nice to think that your dealership’s customers are loyal because of your dealership. However, that’s not very accurate. The fact is that customers are loyal to your business because the staff at your business provide an exceptional customer experience. Not just once, but consistently, EVERY time.
If customer retention is so important (which it is) then why are managers so focused on salespeople getting the next up so that they can get the next sale? Yes, new sales are important. But, don’t you think the focus we put on that next sale is adopted by our sales staff? How about instead encouraging, motivating and training your sales staff that all customers are equally important – whether they bought a car 2 years ago or walked onto the lot for the first time 5 minutes ago.
Don’t forget your past customers, because they may very well still be your present customers in service. Set aside time for your salespeople to regularly check in with previous customers. There’s nothing more irritating to an owner or sales manager than to discover that a previous customer just bought a new car somewhere else – especially when that previous customer brings their new vehicle (bought from a competitor) into their service department!