In their new book, The Intuitive Customer, authors Colin Shaw and Ryan Hamilton contend that companies that try to fight declining customer satisfaction by lowering prices are going about customer satisfaction the wrong way. Instead, they state that the magic to winning customer loyalty is based on understanding what the customer will do next.
An article in MediaPost, recently shared some of the basic precepts in the book, including the fact that roughly half of a customer’s buying decisions are based on how they FEEL about a company and that understanding the psychology behind why they choose a business is key to tweaking processes and services that cater to those feelings.
Sadly, many consumers don’t like going to car dealerships and if roughly half of customer choice is based on how the customer “feels” about a business, there is a long trail to get there. An interesting point shared in the book is that the most irrelevant aspects of customer experience are often the most important. Some dealers spend a lot of time, money and effort attempting to create an excellent customer experience through increased efficiency, improved technology and dealership premises. What they may not consider are the things that are seemingly irrelevant because… well… they’re seemingly irrelevant.
While a recent trend has dealers installing movie theaters, coffee bars and other amenities, perhaps what really influences the customer experience are the “seemingly irrelevant” actions. Those small actions that go towards improving the customer experience, such as cleaning and vacuuming the customer’s vehicle after it is serviced. Many dealerships wash vehicles but not as many vacuum them. If the vehicle looks great on the outside but not so much on the inside, that could perhaps leave the customer with a less than great customer experience. That’s just one small example to provide food for thought.
The last point the author’s make is how do customers REMEMBER their experience? Do they remember inconvenience, dirty bathrooms, inconsiderate or apathetic employees? What a customer remembers is a completely individual experience.
Everyone is different and there is no way to design an experience that is perfect for everyone. Just as in sales, we tailor how we sell and the tactics we use to each and every customer. Perhaps the customer experience should be viewed in the same way. How about making an effort to establish what provides your customers with the best possible customer experience so that they leave happy, with a memorable experience which they will share with their friends and which keeps them loyal to your dealership.
If you get to know your customers, listen to their needs and wants while paying attention to how they respond to you, the chances of identifying the seemingly irrelevant and making it relevant increases. Customers will then leave with positive feelings and memories. And that means increased customer retention and profitability. In fact, according to authors Shaw and Hamilton, this practice “has translated into a 10% year-over-year sales increase for the past 10 years, reduced customer churn and increased market share.” And that’s definitely something worth striving for.
The automotive industry has a sales department staffing problem – and a big one. In fact, NADA has placed the yearly turnover rate as high as 70 percent. Dealerships are in constant hiring mode to keep their sales floor staffed with enough employees to provide coverage for their floor traffic and to follow up with customers and prospects.
Since customer experience and loyalty depend upon employee loyalty, what can dealerships do to increase the chances of hiring the right person that transforms into a long-term employee and successful brand advocate?
For decades, dealerships have recruited new employees through the same old advertising messages and promises. $2,000/month guarantee, unlimited earning potential… blah, blah. Does this sounds familiar? The problem is that this kind of ad can easily attract exactly the type of prospects with the highest likelihood of NOT sticking around long… namely, those that are simply looking for a job to do while they look for one they actually want. Even in the rare circumstances that someone comes along with the ambition and goal of becoming a car salesperson (c’mon, how often does that really happen?), once they start and experience the long hours, grueling work, boring and repetitive tasks and constant rejection by customers as they follow up, they realize that they don’t really like selling cars and, ultimately, leave.
If the old ways of getting employees isn’t working – and clearly it’s not – then what is a better way?
The one thing most car dealerships excel at is marketing. Dealerships are laser-focused on what brings traffic into the dealership, how to market themselves and their vehicles and, ultimately, get those customers in the door to purchase and drive away in a new car. Then, afterwards, they will market to those sold customers to attract them to the service drive with the end goal of turning them into a loyal customer and brand advocate. It looks like this:
Market Cars –> Attract Customers –> Sell a car –> Market Service –> Service –> Create Loyal Customer
Pretty simple, right?
What if we took the same flowchart of activities that dealerships are great at and applied it to recruiting and hiring?
Start thinking about your job opening as a product. You’re trying to sell that job to a customer. To sell it to them, you must attract them to your dealership. By figuring out what those job hunters are looking for in your product (job) and MARKETING your product to prospective employees (customers), you can send a message that is both compelling and attractive to your audience of prospective employees.
Once you attract the right prospects and hire them, then continue to convince them that they should stick around by showing them that they are valued. Be flexible and compassionate and ensure that they know there is room to grow in the organization.
Accomplish that and you’ve created a long-term employee. The only thing left is to continue to make them feel welcomed and part of your organization. You will more than likely find that this person turns into someone who cares about their job, your dealership and becomes a brand advocate for you. This should reduce turnover with engaged employees who are fully invested in the success of your company. Employees who are happy and much more productive. And this combination will result in a better customer experience.
While this is only the first step in creating a loyal customer base, many would argue that it’s the most important. Regardless, by identifying the attributes that prospective salespeople seek from their employees and in their careers, and by ensuring that your dealership is marketing those to the right people and fulfilling those promises when they get hired, you should be well on your way to a more productive and content salesforce.
As technology has caused a significant shift in consumer interactions and desires, retailers have to follow suit in order to retain the consumers’ business. Customer loyalty is an increasingly fickle thing. And, as convenience has become so easily attainable for today’s consumers, some retailers believe that the only competitive arena left is price. However, this is not always the case at all.
An article on Loyalty360.org shared the results of a recent study conducted with the help of a University of Rochester professor. The study created a customer-brand relationship model based on a popular relationship theory – Sternberg’s Triangular Theory of Love. It used components of relationships and paralleled them to retail loyalty.
The study of 1,000 consumers shared that 86 percent would go to other retailers, rather than their favorite brand, if it were more convenient. However this can easily be handled by providing the right customer experience.
For the study, the repurposed Theory of Love focused on three components to determine consumer brand relationships – intimacy (willingness to share information with the retailer), passion (brand enthusiasm) and commitment (loyalty). And what is interesting it that it was found that the more of these attributes a consumer had towards a brand, the more likely they are to remain a loyal customer and become a brand advocate and recommend the retailer to others. In fact, 96 percent of devoted customers would recommend a retailer to others, demonstrating the importance of creating and maintaining devoted customer relationships.
All too often, customer loyalty is rewarded based on transactions, rather than a customer’s behavior. In fact, many of today’s consumers want a more personalized experience with “surprise and delight” type rewards and experiences, rather than simple discounts or free services. And for that great customer experience they will pay with the best currency of all – their loyalty. Think about it this way: some salespeople are more motivated, give their loyalty faster and, in turn, work harder for a manager who is supportive and validates their efforts with a pat on the back. They prefer that over any cash weekend spiff. However, many managers assume that money is the most motivating thing. For some, I am sure it is. But what about those salespeople or employees for whom that is not the case? You could just be motivating and rewarding part of your staff while leaving the ones who merely want recognition out in the cold.
Customers are the same way. Some may want discounts and freebies, while others seek more of a high level customer experience and desire recognition from you in return for their business.
Running the dealership as if customers are on an assembly line – even when a loyalty program is in place – can alienate those customers who merely want to be recognized, appreciated and feel welcome.
The sad part is that this second group of customers wouldn’t cost you a penny – only a few minutes of your time to welcome them to the store and thank them for their business. In fact, the same study reported that 59 percent “would buy more if retailers understood their individual needs and requirements better.”
Take the time to get to know your customers through all necessary means. But mainly through personal interaction and attempt to understand what motivates each of them.
Everyone is different. While this may seem like a hard task to accomplish. With, in some cases, hundreds of customers visiting your dealership on a daily basis, the effort required can transform some of that 86 percent who would patronize your competition into loyal brand advocates. These loyal advocates tend to spend more money with you and bring their friends and families with them. And that’s a winning combination!
Great customer experiences can win customer loyalty. That’s why dealerships install restaurants, movie theatres and Starbucks. But while that customer experience is integral to keeping the customer’s business and loyalty, it doesn’t take much to shatter that loyalty and see that once loyal customer desert to a competitor.
Why? Because deep down, people don’t like surprises. Sure, we like them when they are gifts from friends, or spontaneous parties we weren’t aware of. But when a customer visits a business they like and are familiar with, they expect the same service that made them a fan in the beginning. And if they don’t get it, they may start rethinking their loyalty.
Take Hyatt as an example. Most big hotel chains acquire smaller non-branded hotels so as to extend the chain’s reach. Hyatt is no different EXCEPT with its Hyatt Place brand. The Hyatt Place chain was specifically designed to introduce consistency and confidence to its guests and potential guests. While other chains endure complaints from customers that their stay did not live up to the standards that were expected, Hyatt has created a chain that provides the exact same amenities and room layouts at every single location. This gives travelers (especially business travelers) confidence that they will get exactly what they expect and want.
Why is this important?
Because people do business with companies they know and like. The missing component in customer loyalty is that trust. It is the hardest component to earn. But it can be earned through consistency.
Customers come to your dealership for the first time on a gamble. Regardless of what others have experienced, ultimately the customer really only cares about their experience.
In today’s competitive market it’s not enough to provide a great customer experience UNLESS you do it every single time for every customer.
Of course, the longer the relationship continues, the more forgiving the customer will be. However, the same logic applies to how betrayed that loyal customer may feel should they experience too many bad experiences after patronizing – and advocating – your dealership for a long time. Then they can become more vocal and damaging than any first-time or short-term customer could ever be.
While a focus on likeability and brand are important, trust is the main ingredient in any loyalty potion. And to earn that, all three ingredients must be present each and every time your customer drinks – they like you, know you and their experience is consistent. Lose any one of those and you may find that your love potion no longer works and you lose a customer.
As Henry Ford stated, “If I had asked people what they wanted, they would have said faster horses.”
Technology changes in our industry faster than many of us can keep up with. It seems like new services and innovations pop up weekly. Do we know which innovations consumers are sure to like or not? Of course we don’t. We can’t actually know until they end up liking them – or not. And they don’t know what they want until they see and experience it. Back when Henry Ford built cars, nobody even knew what a car was, or how this “thing” would improve their lives. Once cars started passing horses and became affordable through manufacturing — only then did our society adopt and embrace automobiles.
Let’s look at a modern example of this. Prior to Uber, was anybody (aside from the founders) clamoring for a ride-sharing app? Nope. Well, today many companies provide this service and auto manufacturers are rushing to provide cars or partner with them. Customers didn’t know that Uber was something they wanted… until they did.
So how does this apply to car dealerships? If we don’t know what the customers will want next — and they themselves don’t even know – then how are we supposed to make decisions on which technologies to embrace, services to offer and experiences to provide?
Five years ago, who would have thought that technology would develop to the point that we can complete the entire vehicle purchase process online, from beginning to end – customers can now purchase a vehicle without ever stepping foot in a dealership. Well, now they can and there are many companies – from industry disrupters to large mainstream automotive vendors – that offer this service directly to consumers, or through auto dealerships.
Will it take off and become the next consumer favorite? That verdict is still out. The point is that the only way to know what YOUR customers want is to see if they end up liking it. However, you can also try it out and ask yourself whether you’d want it if you were a customer. When testing new customer-facing technology how about doing a sort of secret shop. Become your own customer and experience it yourself for the first time. Is it something you’d like? Also have some other staff members of different age groups test it out. Any vendor trying to sell you a technology product should be happy to oblige. Then reconvene and discuss. It doesn’t matter how much it costs — until you know it’s something that your customers will want. Figure that out first.
Many would tell you to ask your customers what they want and act on that. And that is also a great best practice — in fact it can help identify customer pain points and process issues. However, in the same way Henry Ford didn’t listen to what customers wanted before producing his car – being open-minded to change, and always on the lookout for new technology that can enhance the customer experience and your business, could well keep your dealership ahead of the competition and provide a unique selling proposition.
Staying ahead of the competition and up to date on technology that works well to give your customers a better experience is important. Customers see other industries adopting new ways of interacting with them and will either love the technology – or not. Pay attention to what consumers start to like OUTSIDE of the auto industry in terms of technology. This is one strategy that could help you find and adopt technologies that drive improved results in your dealership. At the same time, look for technologies other industries start to offer which YOU like because you, in the end, are also a consumer.
When companies anticipate consumer wants and needs before the consumer even realizes that need, they build loyalty. And that is the magic happening right there.