Browsing articles tagged with " cars"

Loyalty: It’s Not ALL About Millennials

By Mike Gorun  //  Uncategorized  //  Comments Off on Loyalty: It’s Not ALL About Millennials

A recent McKinsey podcast shared that when it comes to loyalty programs, a large part of the population is being ignored: elderly customers.

The podcast featured Jaana Remes, partner of the McKinsey Global Institute, and coauthor of the report “Urban World: The global customers to watch.”  According to Remes, the elderly population will grow by more than one-third in the next 15 years, totaling about 222 million people, and account for approximately 51 percent of urban consumption growth, which is equivalent to more than $4 trillion.

That’s a pretty large base of consumers with some hefty spending power that many fail to market to.

According to the McKinsey podcast, the elderly consumer (60+ years) has some attributes that Millennials don’t have and that are very attractive to retailers.

  1. They were raised in a time of loyalty. This is the demographic that would shop someplace because of a great customer experience, they like doing business there and have developed a relationship with the company. Millennials, on the other hand, have more fragile loyalty ties to businesses and will defect much more quickly.
  1. The elderly generation has much more financial stability and, in many cases, has the credit and disposable income to make large purchases very easily should they desire to. Millennials are more likely to make less money, be saddled with student loans and have less disposable income.

All generations have buying power but simply make decisions in different ways.


Compensation Can Affect Employee Loyalty & Satisfaction

By Mike Gorun  //  Uncategorized  //  Comments Off on Compensation Can Affect Employee Loyalty & Satisfaction

Dealerships have forever tweaked pay plans to satisfy bottom lines and keep employees happy. Many employees in the sales department can make more money from a single sales commission than any technician can make in a day. There are even some salespeople that are so productive that their paychecks can exceed those of their sales managers – and sometimes that leads to friction and resentment.

One would think that any manager would be thrilled if a salesperson, or other commission-based employee, made more than they did, since most dealerships pay structures divide the profit incrementally up the chain, meaning if this salesperson is killing it in commissions, it only increases the manager’s paycheck as well. However, because of the percentage differences, sometimes this can create conflict.

Recently, the movement has been away from commission-based pay plans and towards salary based. While that’s still in play, it hasn’t worked out for some dealers.

What’s the problem?

First, the reasoning behind why some dealerships have switched to salary-based customer consultants, versus commission-based salespeople, has to do with marketing. The ability to tell a customer that salespeople don’t benefit financially from profit hopefully eases the customer’s mind and establishes trust in the salesperson as a helper, not an adversary. The problem is that it is so ingrained into consumers’ minds that negotiating price is expected and necessary, that it really doesn’t make a difference. That’s why some dealerships which switched to salaried employees are switching back.

For employees, especially aggressive and productive ones, switching to a salaried position is similar to a demotion. Car sales positions have historically been advertised as a “make as much money as you can” type position. By switching to salaried positions, these producers tend to move on to other dealerships in order to maintain their level of pay. Keep in mind that this switch doesn’t just involve salespeople, but also management.

No longer does a manager get jealous that a salesperson is making more money than they are. However, in the end, are they making as much as they could have been? This creates higher employee turnover.

And from the customer side this turnover then affects the customer experience. If every time a customer comes into a dealership their salesperson and/or management has changed, how can rapport ever be established?

Let’s examine a non-industry movement that’s happening – one a little similar to the movement in the auto industry– no-tipping in restaurants. According to an article in the New York Times, there has been a movement to include tipping within the prices on the menu.

Of course, in order for restaurants to do so, and continue paying employees what they had been used to earning, they had to raise menu prices across the board. The psychological effect this had on their customers was not pleasant. According to the article, regular customers came in and were displeased with the price increases, especially on what the article termed as “welcome items,” such as coffee, a glass of wine with their meal, or other small things. And, frontend staff (similar to the salespeople) made over 500 percent more than the back of the house staff (such as the techs or service advisors), which caused tension among the staff. The end result was that the no-tipping policy in fact just served to increase resentment that the back of the house had with the front of the house staff. It also turned away customers who didn’t approve of the price increases, even with the no tipping policy.

Regardless of whether your dealership is commission-based, or non-commission based, keep in mind that the disparity between employee salaries can cause friction between staff. The need to increase pricing, or maintain a no-haggle policy in order to afford the salaries that used to be supported by individual salespeople, service advisor or departmental gross, can lead to customer dissatisfaction.

In theory, one price stores with salaried employees may sound good but, while some stores do great with it, historically, it hasn’t worked out well for many dealers. In the end, it is important to find a balance between compensating employees fairly, (in comparison to your competition) while maintaining pricing for sales and service that are competitive. Otherwise you risk losing more than you may have expected to gain from the transition – and that loss includes both employees and customers.


Now Is the Time to Be Selling Pre-Paid Maintenance

By Mike Gorun  //  Uncategorized  //  Comments Off on Now Is the Time to Be Selling Pre-Paid Maintenance

With the major shift into leasing certified pre-owned vehicles by several OEMs and major financial institutions, many dealers have predicted a decline in service contract sales. However, according to an article in Automotive News, they would be wrong to do so.

Due to an influx of low-mileage pre-owned vehicles, captive finance companies and others have started to embrace certified pre-owned leasing programs. Lease customers haven’t always been the best candidates for service contracts – especially high line leases, as many of these vehicles come with free maintenance. However, the length of many leases and, more importantly, the length of loan terms have increased.

This is an indicator that many consumers who opt for extended term loans, or leases, would certainly benefit from service contracts as they will either 1) still be in their lease when the free maintenance expires; or 2) hold onto their vehicle for an extended period of time, far longer than in the past.

According to the article, while new vehicles will still outpace used vehicles in service contract penetration, there’s no need to worry about a decline in service contract sales. In fact, both new and used vehicle service contract penetration has increased among prime borrowers, with the gap between new and used vehicle service contract penetration decreasing from seven percent in 2007, to just 0.5 percent in the second half of 2016.

Many buyers – prime and sub-prime alike – increasingly see the value of a steady monthly vehicle expense without the worry of a hefty service bill. Yet there are many finance managers that don’t present service contracts as aggressively to prime borrowers for used vehicles as they do to sub-prime — they assume the customer won’t be interested. While this may historically be accurate, the CPO leasing movement, along with extended loan terms, have substantially altered the rules of the game.

Consumers have warmed up to service contracts and have come to understand the benefits for convenience and financial stability. And, as new car margins continuously decrease due to manufacturer incentives, competition and increasing pricing transparency via third party sites, dealers increasingly rely on their F&I departments to increase profits through back-end product sales. Yet many F&I managers have been trained – via customer interactions and their common sense – that certain customers don’t need or want a service contract, but that is where the shift has occurred and there is opportunity aplenty!

Perhaps in the past service contracts didn’t make sense for certain buyers. However, these days, increasingly car buyers ARE investing in service contracts — both for purchasing AND leasing.

The key to any successful selling process is consistency. Train your finance managers not to assume anything. Present, show the value of and sell service contracts to every customer, regardless of lease or purchase. According to the statistics, they will thank you for it, and it’s a win-win for the customer and your dealership.


How New Car Owner Clinics Can Foster Customer Loyalty

By Mike Gorun  //  Uncategorized  //  Comments Off on How New Car Owner Clinics Can Foster Customer Loyalty

In dealing with the customer experience, all too often the conversation centers on the customer’s buying path from initial contact through the sale. What many businesses don’t think about, however, is that the sale is only the start of the relationship. Customer loyalty is built through a consistent customer-centric experience. In the retail automotive space, this is more important than ever when dealing with customers in the service drive, as potential revenue in service outweighs sales by far. One way dealerships can begin to foster a relationship and lead the customer down the path to customer loyalty is through new car owner clinics.

Vehicles today contain more technology than ever before, with manufacturers increasingly installing many of these technologies even on base model vehicles. By the time the customer has finished paperwork in financing, oftentimes they are simply ready to leave. They then tend to get rushed through the delivery process and the features of their new vehicle are not covered in enough detail for the customer to truly understand and appreciate their use.  And have you seen the average user’s manual? They are huge! Few customers have the time to really go through and learn all the ins and outs to get the best out of all the new vehicle’s features. This can be frustrating to new car owners, especially those that aren’t technologically savvy.

New car owner clinics offer many benefits for both dealerships and their customers. First, it gets the customer back into the store with fresh eyes and ears. Dealers can then spend the needed time reviewing the car’s features and assisting the customer in setting up things they have found challenging. In addition, it provides the dealership the opportunity to introduce the customer in a more formal setting to the management team and service advisors. This allows for a more comprehensive introduction than perhaps existed during the delivery process, when a brief introduction may have occurred.

Facilitating these clinics on a normal schedule can provide increased opportunity to bond with these new customers when they are not worn down from the sales process. In addition, it allows management and service personnel dedicated time to focus solely on these new owner’s needs, wants and questions, when they are not distracted with their daily tasks or duties.

Some dealerships make these formal affairs, offer catered food and beverages, but that is not a necessity. Dealers that simply set aside the time to spend with customers will find that these new owners appreciate it. It demonstrates that the dealership is still there to assist them after the sale. Simply extending the offer to customers, making them aware that these clinics are available and that they are welcome to attend, shows your customers that you care, regardless of whether they choose to attend.

If you’re not already holding new owner clinics, think about trying this. You’ll be surprised at who shows up, and how much they appreciate your efforts.


Stop Racing to the Bottom: Sell Value Instead of Discounts

By Mike Gorun  //  Uncategorized  //  Comments Off on Stop Racing to the Bottom: Sell Value Instead of Discounts

The other day, a friend of mine was in the market for a new tech toy. As he researched the different available brands, he noticed a huge difference in pricing – from $325 all the way up to $1800 — but was unable to tell the difference between any of the brand offerings. The features seemed the same. They all looked the same. He read reviews, even those were similar — consumers were generally happy, regardless of brand.

My friend was most interested in the premium-priced brand, because an associate had purchased and recommended it. However, this associate stated that this premium brand was probably the same as the less expensive $325 brand. In an effort to find out why the brand he wanted was priced so high, my friend turned to the brand’s Twitter account.  He found daily posts offering a discount if retweeted, so he did. Minutes later, he was messaged with a coupon code offering 10 percent off the purchase. Not swayed, he engaged the brand asking what made their product more expensive. He was given the following reasons:

  1. It was a better quality than the less expensive brands.
  2. The other brands were made and shipped from China. Therefore, it would be very difficult to obtain any customer service or warranty work should something happen. One the other hand, their product was made in the United States and came with a one year warranty.
  3. It offered some additional features that the other brands did not.

These value propositions swayed my friend and he purchased the more expensive model. So, why would someone – all things being equal – choose a more expensive brand, at more than twice the price? For him, it was these unique selling propositions. Not the discount.

In our industry, consumers are constantly barraged with messages about low prices, coupons for service and many other similar offers. Dealerships tend to neglect to ensure that their primary message always reinforce any unique selling propositions. In many cases, consumers are willing to pay more if they feel that the additional cost benefits them. I recall seeing a dealership that had a chalkboard in its service department that listed their service pricing as well as all of their competitors – both franchise and independent. This same chalkboard also listed the reasons why they weren’t always the lower price and the benefits of choosing them over their competitors. They weren’t always the lowest price. However, their thought process was that the information made customers feel more comfortable to make on-the-spot decisions. The customer was no longer left to “think about it,” which is really code for “let me do some research, price shop and get opinions from my friends and family.”

With all the information and resources available to consumers, dealers feel they are in a race to the bottom. It has certainly become more challenging.

Consider perhaps focusing messaging on why customers should do business with YOUR dealership – even if you aren’t the lowest price. You may well find that customers are willing to pay more if they see the benefit of doing business with you versus the competition.

Find your unique selling proposition and make sure that it is broadcast in all of your messaging. As a result, consumers may well get more interested in doing business with you, rather than your price. When that happens, you’ll see your customers explaining to their networks the reason they chose you — just like my friend did to me.

MediaTrac In The News


  • collapse2018
  • expand2017
  • expand2016
  • expand2015
  • expand2014
  • expand2013
  • expand2012
  • expand2011