There have been countless studies about employee engagement and how, when engaged, employees tend to be happier, more productive and deliver a better customer experience. With a 70 percent annual turnover rate in sales, this is an area that the auto industry – at least on the sales side – has a problem with. Don’t think the auto industry is alone, however. According to an article posted on Digitalistmage.com, a recent Gallup poll found that “67 percent of workers aren’t engaged—or worse, they’re actively disengaged—a number that’s been pretty stagnant for the past 16 years.”
The article went onto state that companies who are participating in these polls and then taking action to create initiatives within their organization are failing as well. Why? According to the article, the reasons are two-fold:
- By the time the poll results are published, the results are outdated. This means that initiatives are created based on data that is no longer be valid.
- Management wants to fix things on their own (i.e. create initiatives, champions, etc.)
- Apparently companies are too sensitive.
You can’t fix any problem with old data. If you don’t know what’s going on in the dealership RIGHT NOW, any attempt you make at changing culture and winning over employees will more than likely fail. On top of that, engaged employees aren’t something that can be magically created. Management can peruse data and create ineffective programs even with the best of intentions. Employees must decide on their own to be engaged with a business. Management can’t make them.
So if, as the article states, we’re all doing it wrong and have been for almost two decades, how do we improve? The article suggests that a more modern – and effective – approach to increasing employee engagement lies in three areas:
- Empowering individuals – Everyone likes to talk about open door policies between management and employees. However, in reality many employees hesitate, especially in our industry, as there can be a fear of repercussion or that it perhaps won’t accomplish anything. It’s not uncommon for management changes to usher in a spat of terminations, simply because the new managers want to bring in people loyal to them. Trust tends to be lacking and without that trust, employees will never be engaged.
- Increased transparency – If you think that dealerships only struggle with transparency issues when it relates to consumers, you’d be sadly mistaken. There is plenty of information that is withheld from sales staff under the presumption that it’s for their own good and justified by the fact that sans the information, the sale will end up with a higher gross. The mistake here is that chances are good the customer already knows the information that the dealership is withholding from the salesperson. I get the philosophy behind it. And, prior to the auto industry getting hit between the eyes with the information revolution, perhaps it was a good strategy. Not anymore. How is a salesperson supposed to consult and build trust with a customer when they have less information than the customer? It’s highly likely that the customer won’t believe the salesperson doesn’t actually have the data, but think that they are withholding it intentionally.
- Prioritizing wellness – Retail car salespeople work brutal hours. We’ve all been there. And even salespeople fortunate enough to work at dealerships that offer flexibility, and/or moderate work schedules, must learn to cope with the stress of feeling as if they need to be at the dealership all the time, as the customer may come back and buy from another salesperson, so they lose half the commission.
Employee wellness is imperative to employee engagement. While the auto industry may be their career, don’t force employees to choose between family time, healthy living and mental well-being. Working 70 hours a week, never seeing their families and living off of whatever fast food place is nearby your dealership is a recipe for burn out regardless of the industry.
Employee engagement, employee retention, customer experience and the value of human capital are hot terms in the auto industry right now. To truly create a culture where employees want to work for your dealership and are actively engaged in its success, consider the importance of and think about how the three areas above might be applied in your dealership Just because we’ve always done it that same old way doesn’t mean that way is still viable. The employees are voting with their feet and to keep them happy and engaged with your dealership, it may be time to change things up a bit
Loyalty is a fickle thing. While your customer has consistently serviced their vehicle with you, when they get that $19.95 oil change coupon from your competition, will it go in the trash, or will they choose to take advantage of it and defect to the competition?
Most consumers love sales and discounts. In fact, the whole reason negotiation exists in showrooms is the perception of a “good deal,” which is completely subjective and varies from dealer to dealer, as well as customer to customer. A whole new sector of business has sprung up that offers consumers advice on what a good deal is. Then let’s look at Black Friday — a cultural phenomenon where customers camp out for weeks to save $200 on a television. It’s surprising the lengths that some consumers will go to and the time they are willing to spend researching and shopping for that sometimes elusive “good deal.”
So what if your business decided to never have a sale again? Gone would be those customers that only come in to your business for that discounted service, or that customer that drives 100 miles to save $250 on a vehicle, that you’ll never see again.
But, we still want to keep our customers coming back. So, how do we continue rewarding our truly loyal customers and make them immune to competitor offers?
A fascinating article on RetailDive explored the tactic that many businesses are adopting – the premium loyalty program. Amazon has been extremely successful with this program. According to the article, it’s estimated that half of all U.S. households belong to Amazon Prime. Let that sink in a moment. Half of the households in the U.S. pay Amazon $99 per year for the privilege of buying merchandise from them. In return, they get special perks, including 2-day shipping, and that $99 expense is revenue generated before the customer has ever purchased a single item!
The article also states that Restoration Hardware chairman and CEO, Gary Friedman, recently announced that his company is adopting a premium loyalty program. Friedman stated that, “Our lives are filled with complexity – and we long to break through the clutter to find simplicity. We want to shop for what we want, when we want and receive the greatest value. So rather than navigating countless promotions, we’re changing things… because time is the ultimate luxury.” The company plans to charge participating customers $100 per year for membership. In exchange, members get a flat 25% discount on all regularly priced merchandise and 10% off of clearance items.
According to the article, the thought process behind a premium loyalty program is simple: customers that pay to join are more likely to continue to patronize the business because they want to get the most value from their investment (ROI).
The article further found that interest in premium loyalty programs is strongest among millennial consumers. Three quarters of respondents between the ages of 18 and 24 and 77% between the ages of 25 and 34 told LoyaltyOne they’d consider joining a fee-based rewards program, while 61% of 18-to-24 year-olds and 54% of 25-to-34 year-olds contend that fee-based rewards are better than free ones.
The beauty of a premium loyalty program is that customers no longer feel as if they need to search for the best price, or wait for you to have a sale. For members, any day they choose to do business with you, they save money. Premium loyalty programs also offer retailers valuable data on their best customers, which can then be analyzed and used to monitor shopping behavior and make more relevant and personalized interactions.
It’s all about how you treat your customers, and it’s about digging in and knowing them, working with them and delivering a better experience.
In a recent interview with Automotive News, Masahiro Moro, head of Mazda North American Operations, detailed Mazda’s plan to increase customer loyalty for both the OEM and its dealers. While his plan mostly revolves around vehicle quality and diversity, as well as shifting from a sales-focused goal to one of retention, it also includes a nationwide training push with dealers to help improve the customer experience. Moro explained that in the past, Mazda’s business philosophy was expansion of sales: “Whatever you do, sell more cars.” And that caused a lot of bad business equations.
In the future, Mazda will focus on acquiring those good customers who really understand what the brand is about and not engage with the rational type of price-seeker. Mazda is now focused on how to make a Mazda customer a customer for life. And, to make that happen, the most important part is how dealers treat the customer. Dealers will need to change their focus to look after more customers so that dealer loyalty and brand loyalty are top of mind.
When addressing Mazda’s internal goals, Moro offered an interesting loyalty metric the factory has decided to use that should perhaps be adopted by all franchised dealers. Recognizing that Mazda is at the bottom of the market share list at 2 percent, rather than focusing on increasing that market share, Mazda has decided to shift focus towards the quality of market share. Moro explained, “…if we are not able to improve the market share for the moment, we should be thinking about if we’re getting a good 2 percent or not a good 2 percent. I really want a good quality 2 percent. That makes a huge difference rather than a lousy 5 percent.”
One factor that Moro uses to determine whether Mazda’s market share is “quality” is repurchase ratio which, he says, currently sits at the bottom of the industry.
How about applying this concept to your own customer repurchase ratio – not from the brand itself but from your own dealership? A stable foundation is key to any growth. In the article, Moro further shared that loyalty and retention are a high priority in order to build that quality market share and that retaining a customer is much more efficient than courting a new customer; increasing retention rates while maintaining the same level of conquest is the easiest and most efficient path to sales acceleration.
Consider applying this and making an effort to understand the behavior of your customers, for sales, service and when it comes to repurchase. This will help to better understand the quality of your market share. By knowing that answer, you can then focus on strengthening that quality through a more customer-centric experience. Only then can customer conquest and acquisition efforts actually increase sales, rather than simply replacing lost customers.