In the wake of the backlash from the recent United Airlines incident, it has been widely reported that many airline CEO’s salaries are, at least in part, connected to customer satisfaction scores. In the case of United’s CEO Oscar Munoz, poor customer satisfaction ratings can cost him about $500,000 in bonuses. The CEOs of Southwest Airlines and Delta have similar contractual clauses.
On top of that, one poor experience – especially if it’s perceived by many as being egregious – can, by itself, ruin an airline’s entire quarter, or even the year. In fact, in the case of United Airlines, at one point their valuation dropped about $1 billion, according to USA Today.
But what about an industry closer to our hearts, that is similarly hyper-competitive and also has financial repercussions for poor customer satisfaction scores?
Yes, I am talking about the automotive industry.
Manufacturers penalize franchisees that fail to meet customer satisfaction expectations through loss of revenue including stair step money and other incentives. And some dealers even include CSI expectations in their managers’ and salespeople pay plans. Failure to meet these goals can have a trickle-down effect that costs everyone in the dealership money.
Poor customer satisfaction can also lead to outraged customers who defect to your competitors – taking friends and family with them. This can then force your dealership to increase spending on acquisition, which is much more expensive than retention.
As consumer choice continues to expand, customer experience is increasingly more important. Customers are no longer willing to put up with a bad experience – and they are more than happy to share that poor experience with the world via online review sites and social media.
It really doesn’t matter whether the customer is right or wrong. It’s about how the experience is perceived. That specific United flight needed four volunteers to leave the plane. Three complied without incident. One customer chose not to. While it’s probably safe to say the other three people also had a poor experience and were inconvenienced, we don’t know their story. However, because that one person was treated extremely poorly, and it was captured on video by several customers, we know what happened on that flight. And, because of that, while it did not happen to them directly, other United customers are cutting up their United loyalty and branded credit cards. They are outraged that a company they had been loyal to would allow such a poor customer experience. A single bad experience – and arguably poor employee handling at that time – put United at risk and became the catalyst for a mass defection.
While your dealership probably doesn’t have to worry about an incident of this magnitude, it’s all a matter of scale. The United incident is simply a good illustration of the backlash that can happen due to a poor customer experience, along with poor employee decisions and actions in the heat of the moment.
In the end, it’s far less expensive to suck it up and fix the problem and/or apologize, than it is to take the chance that a customer chooses to share their experience with the world.
Customer experience has grown into one of the biggest differentiator for any business– so the choice is to either embrace that change and ensure a great customer experience, or watch your customers flock to competitors.
It’s no surprise that Disney has created one of the largest groups of loyal customers in the world. Of course, this isn’t by accident. Everything Disney does is by design. According to an article in Automotive News, Porsche wants to do a similar thing and create its own brand loyalists by bringing a little Disney magic to its dealerships.
Porsche has enlisted the Disney Institute to help train all of its customer-facing dealership personnel. It has also asked dealers to create a new position in their stores, Customer Experience Manager, responsible for ensuring staff embrace customer experience. The Customer Experience Manager will also watch and analyze customer satisfaction in their stores at each point of contact.
Customer loyalty begins at the first point of contact a customer has with a dealership. Regardless of if the first experience is in service, via the Internet, by phone, or in person, if this first experience is poor, it’s much harder to win over their loyalty. Through creating a company culture that focuses on the customer experience, similar to Disney, Porsche is on the right track to increase their Customer Satisfaction scores, along with dealership and brand loyalty.
The Disney Institute is a world-renowned training group that has ongoing relationships with other manufacturers, including GM. It has trained dealers in several areas, including leadership and management skills, and attendees largely have very positive things to say about the training.
Low CSI scores can cost your dealership thousands of dollars in lost OEM incentives, to say nothing of the loss of sales and service revenue and the scramble to replace those customers, along with high acquisition costs.
Take a look at what Porsche is doing and consider analyzing your customer experience at every touchpoint. Strive to improve areas that are lacking and reward any staff that perform well. Whether you choose to send your staff to the Disney Institute or not, an internal program designed to improve the customer experience at your dealership can certainly mean future business and revenue growth.
It’s great to see a manufacturer take this move to improve the customer experience and thereby loyalty. Hopefully, other manufacturers and dealerships will follow their lead. It can only mean an improved perception of dealerships by consumers. And that will lead to more business for everyone.
A recent article in Automotive News tells the story of Carlos Liriano, a car dealer from New Orleans who migrated his dealership to Texas and brought with him a passion – gumbo. Initially, it started as a way to show appreciation to and treat his employees every month. But, at his dealership’s 5-year anniversary, he decided to invite the community, and they came. And, not only did they come when it first started, the community has kept coming to the point where customers are actually scheduling service appointments on the day gumbo is served.
What started with a couple of gallons of gumbo has grown into 25 gallons, feeding over 250 people. This dealer’s passion – and tradition – is increasing service business along with the top thing that every dealer wants – selling cars.
But why is his gumbo tradition so successful? Serving food at dealerships isn’t a new thing. How many dealers serve hot dogs, drinks and such on weekends? A lot.
What makes this so successful perhaps begins with the fact that his family’s gumbo recipe is good. Secondly, and most importantly, he chose to share that with both his staff and his local community – and it paid off. Even his digital marketing and social media efforts are reaping the rewards and endearing his dealership to the community.
Community involvement is a vital component in branding, in building trust and the DESIRE for local residents to do business with your dealership. Building trust with consumers isn’t always an easy task – especially if you’re a car dealer. The stereotypes and poor consumer perception can be an uphill battle. The big gorillas and wavy tube men do nothing but attract attention – and most of the time that attention simply confirms that the dealership is “just another car dealership.” There are many ways to stand out in your community and every community is different. Mr. Liriano simply embraced HIS passion for gumbo and then involved his community.
Consider exploring opportunities to embrace and involve your dealership in the local community. Keep in mind that you may not see results right away. But whatever your passion is, share that with your primary customers. Don’t use it as a selling gimmick, but as a genuine way to reach out to your community, share your passion and build rapport and trust. If you build it, service and sales will come.
Discover your passion and build it.
It’s a logical conclusion that customer retention and loyalty are important to the survival and growth of any dealership, yet many dealers focus on growth by intangible metrics, simply looking at numbers – 100 units last month vs. 125 this month, or $125,000 in service revenue last month vs. $175,000 this month – without knowing whether that growth was influenced by customer acquisition or retention.
Most dealers spend a lot of money on marketing every month and it’s very easy to attribute any growth to successful marketing campaigns, technology or vendors, when, in fact, it could very easily be coming from successful retention strategies.
An excellent article on Customer Think spells out precisely why loyalty in the automotive industry is incredibly important, and how you can better leverage retention, loyalty and acquisition strategies to increase growth, revenue and volume.
The article suggests the use of data to predict when sales are ripe as one way to help your dealership thrive. Your CRM has many data points which can help indicate that a customer is ripe for a new vehicle based on things such as marriage or kids, along with many others. Hopefully, these customers are coming to you for service, which gives you a running profile on what has changed in your customer’s lives. This allows for more targeted, personalized and relevant offers which ultimately will convert into sales.
Of course, service plans (pre-paid maintenance) are also huge retention drivers, with a retention rate of close to 60 percent, according to the article. Pre-paid maintenance keep customers visiting your dealership for years. Assuming they’re having a good experience, this also helps them decide to get their next vehicle from your dealership, rather than a competitor.
You can’t always rely on your customers to tell you when lifetime changes occur that could indicate they are ready for a new vehicle. Pro-active marketing and continual, relevant communication with your customers is imperative to retaining their business – for both service and sales. Without a continuous conversation, it’s very easy for the competition to conquest away your customers. This worst-case-scenario, when it happens, means it’s too late, in most cases, to continue the customer relationship. It may not even be that anything went wrong, simply that a customer was attracted by a competitor’s offer. However, it’s very hard to win them back. So, keeping in touch, being relevant and anticipating your customer’s needs, rather than reacting to them, is incredibly important.
Also, be sure that your dealership always offers a superior customer experience. It’s much harder to conquest a loyal customer than it is a satisfied one. Don’t mix the two up because they aren’t the same. A satisfied customer simply means that they are fine with the service they are receiving, but are still vulnerable to competing offers. A loyal customer, on the other hand, is much more likely to stick with your dealership.
In the end, it’s important to develop a way to measure, manage and cater to both new and existing customers. If you can’t differentiate between the two, growth is easily attributed to acquisition efforts, while retention gets ignored.
Remember that it’s much less expensive to keep an existing customer than acquire a new one.
Customer experience has become an industry “buzz term” of late when talking about customer acquisition and building loyalty. Most of the time, the focus is on the small things that turn a customer off — attitudes, inefficient processes, or other such actions. But what happens when, well, everything goes wrong?
Imagine if a couple visited a showroom where they were met by a salesperson. Before visiting the dealership they conducted some online research – as is the case for most customers nowadays. They had pretty much decided on which vehicle model they wanted – a Toyota Sienna, but had some trim level questions. They also, of course, wanted to touch and feel the vehicle. The couple proceeded to ask the salesperson questions and, to each one, received the answer “I don’t know.”
They went on a test drive and the salesperson was literally watching YouTube videos while on the test drive in order to answer the customer’s questions. Based on their own research, the customers decided they wanted a premium model loaded with features. The dealership only had one available and the salesperson went off to find it leaving the couple waiting in the showroom. While waiting they attempted to ask questions of other salespeople. Sadly, they were again met with blank stares and “I don’t knows.”
After about 20 minutes, the salesperson returned only to discover the vehicle sitting right on the sidewalk in front of the dealership. By then, the couple had figured out that they could build a car on Toyota’s website and informed the salesperson that they would just go home and do it themselves. In a panic, the salesperson begged the couple to stay and let the manager introduce himself (sound familiar?). After a long 25 minute wait, no manager had arrived and the salesperson couldn’t even find a business card to give them. The last interaction they had was a call later that evening from the manager apologizing that he had been busy and had not been able to service them.
Pretty much everything that could have gone wrong with that couple’s visit did. Well, I’m sad to say that it’s a true story.
So, what caused this whole chain reaction of bad experiences and misfortune?
- Lack of Product Knowledge: None of the salespeople had any product knowledge, which is imperative when selling vehicles that cost tens of thousands of dollars. Especially in the hyper-competitive retail automotive market.
- Lack of Organization: A habit of any successful salesperson is to walk their lot daily to see WHAT they have in stock and WHERE the vehicles are. Vehicles get moved all the time. Knowing what inventory is in stock and the location of any vehicle is key both when a customer is standing in front of you and for any customer enquiring about inventory over the phone – they may want to come right in for a test drive.
- Lack of Management Support – The salesperson was no doubt instructed to never let a customer leave without talking to a manager. That’s pretty standard in retail. But what happens when that salesperson tries to comply and no manager shows up? Frankly, I’m surprised that the couple waited 25 minutes before they left — I guess the Toyota website was keeping them busy in the Toyota showroom.
In the end, the dealership lost a sale. It’s a pretty good bet that the dealership was the closest Toyota dealership to the couple’s home. But they ended up buying the vehicle from a more distant competitor who delivered it to their house. What are the chances that this couple now uses the local dealership for service?
This story illustrates how important it is to ensure that everything is in place for an excellent customer experience: That the staff is knowledgeable; that resources are available and that managers are there to support them – for every customer that visits. Failure to do so is a slippery slope.