Dealer Marketing Magazine | By Michael Bowen | June 7, 2010 - Customer Relationship Management (CRM) has grown exponentially in importance since it was first introduced. The first CRM systems were little more than contact management systems. Today, however, CRM technology has advanced and has become much more. The latest generation of CRM systems that specialize in automotive retail can segment your database, so you can target your marketing campaigns to specific customers with the right offer at the right time, make sure that you use their preferred contact method, and produce analytics so you can examine your campaign and determine what works, what doesn’t and what you should change for your next campaign.
The next generation of CRM, which has already started to arrive, will be even more sophisticated. It will include features that help you connect your dealership to social media sites, increased cross platform integration, as well as other useful tools such as video email and SMS text messaging.
There are a lot of options out there for auto dealers with different features, options and prices. In order to help you navigate through what is available and what will work best for you, we’ve spoken to some automotive CRM experts and asked them about how to best use CRM systems to grow your dealership and where CRM is headed in the future.
The experts we spoke with are Bryan Anderson, founder and general manager of Autobase, Mike Gorun, managing partner and founder of MediaTrac, Stan Megerdichian, CEO and president of Peak Performance, and Everett Mullens, CFO of Auto Jockey CRM, Inc. … Which CRM is right for you depends on your dealership, but whatever your needs are, our experts will help you understand how CRM can help grow your business and maximize profits.
What are the essential parts of an auto dealership CRM system?
Bryan Anderson — A dealership’s CRM is the central nervous system of its sales and marketing effort. It is the people, processes and technology working together to drive and close significantly more business opportunity in the showroom and service drive. It creates process (and therefore, profit) in everything from showroom control to desking and internet lead management (ILM) to business development (BDC). Through a powerful but easy to use CRM, a dealership can build a single database of every sales opportunity from every customer who ever touched the store, and then use that data to sell more cars at lower costs.
Mike Gorun — The essential parts of an auto dealership CRM system are:
1. Database management. Optimally, it should be linked to your store’s DMS system. This will allow the dealership to capture transactional data in a variety of areas and organize it into a single, detailed profile with preferences about each customer. The ability to National Change of Address (NCOA) your customer data through an import/export function is highly desirable so that the store can maintain an accurate customer address.
2. Customer segmentation. Must have the ability to identify and target the right customer segment with the right services via the right channels at precisely the right time.
3. Database marketing. Identifiable by needs-based marketing, past purchase marketing, non-solicitation communications, information based marketing, value based marketing and life-cycle marketing.
4. Communication design and deployment. Should include a marketing function that will let the dealership easily create and deploy communications of varying content and graphics to specific, identifiable customer segments.
5. Contact management & response analysis. Tracking communication deployment to customers is essential in monitoring frequency of contact. Handling email messages that cannot be delivered to the recipient due to permanent or temporary reasons (hard/soft email bounce maintenance) should be automated.
Stan Megerdichian — CRM systems must have DMS integration, useful analytics, and timely and relevant communication touch points. They should be easy to use, intuitive, support the OEM brand and be measurable.
Everett Mullens — The most essential component for an auto dealership CRM system is literally the commitment from management. Without that, nothing else matters. Of course, ease of use and easy trainability are important as well. Most CRMs provide all the tools required to manage the showroom, BDC and internet, so from a technical standpoint all of the essential components such as manual input, lead integration, automated follow up, reporting and management monitoring, etc., are covered. How it is incorporated into overall sales training is important as well.
What are the latest advances in auto dealer CRM/Has CRM technology reached maturity?
Bryan Anderson — Because CRM is an ever-evolving blend of people, processes and technology, CRM can never really come to a point where it is mature, outdated or unnecessary. When technology-based CRM hit the showroom floor in 1988, it served mainly to handle, in mass, the production of printed letters and scheduling of phone calls. Today, CRM captures extremely valuable customer data and uses it to drive significantly more traffic through SMS text messaging, voice messaging, as well as video email and other forms of digital marketing — all within a permission-based framework that customers will appreciate. Once with a narrow focus on the showroom, CRM now means an integrated, whole business strategy — from single-point stores to the enterprise operation with 50+ dealerships. As technology and the processes that support ever-evolving dealership needs change, so will CRM.
Mike Gorun — CRM was originally introduced as a business product in the early nineties by Siebel Systems. Since then, data and data segmentation have moved to the forefront as some of the most needed and desirable product features. Direct customer marketing elements continue to drive product enhancements as well.
As we see continued advances in technology, increases in cross platform vendor integration will maintain product advances for the foreseeable future.
Stan Megerdichian — Customer communication is evolving with technology. I don’t think there will ever be a maturity event as long as new technology is being developed. As new communication tools are being introduced, we find applications for those tools. Social media, texting, telematics, email and direct mail, all have their benefits depending on the message that is being communicated.
Everett Mullens — Integration with the dealer DMS is important. As you can imagine, we are constantly adding new features. Although we have a good short- and long-term strategy for features, the best ideas come from our dealer base.
CRM is a fairly mature technology, but there will always be new ideas, new strategies and new directions to explore for improving dealership marketing and sales. Examples are changes in social networking, SMS, etc. New technologies are being created every day, and conversely, are becoming obsolete every day. It is our job to be aware and keep current as these technologies evolve.
How can dealers best take advantage of their CRM system?
Bryan Anderson — Assuming the CRM is easy to use and powerful enough to drive real results, the best thing a dealer can do is to make it central to everything done in the dealership. Use it in sales meetings. Enforce usage from the point the up is taken to the time the deal is booked. Capture as much data as possible, because it’s the data that is key to making money. Of course, to accomplish this, lean on the CRM provider. Soak up the onsite and online training made available by the CRM provider. Spend quality phone and face time with the CRM account manager to learn best practices that will maximize ROI across both fixed and variable operations. Usage is key, but the dealer shouldn’t have to go at it alone. Dealers can best take advantage of their CRM by taking advantage of every resource their CRM partner has to offer.
Mike Gorun — Adopting CRM best practices is a challenge for many organizations. A recent industry survey indicated that the majority of individuals in dealership management are not familiar with the basic fundamentals of their CRM platform. You can’t take full advantage of your system until you have:
Learned the features and full operation of your system. There is no CRM standard, so what can and can’t it do?
1. Defined the contact strategy and ongoing communication process for each customer segment (sales, service, finance, parts, and fleet) within your store.
2. Develop a plan for transitioning customers from sales follow-up to service communications before they hit the shop door.
3. Have another plan that identifies aging service vehicles and transitions that customer back to the sales prospecting process.
4. Don’t ignore the customers that don’t purchase a vehicle from you. They are great candidates for service and future sales opportunities.
Stan Megerdichian — The simple answer is “by using all of it.” Most dealers are paying for a lot of features that they don’t use. They should periodically review their account setting with their vendors in person and modify different components of their program based on their changing business and market needs.
Everett Mullens — Require use by all staff — no exceptions. Work with your vendor to develop new ideas and strategies.
How can dealers best integrate their CRM systems with their marketing efforts?
Bryan Anderson — Automotive CRM should be the very core of a dealer’s marketing effort. Traditional media is rarely as effective, but be sure, it is always more expensive and just as impossible to track. Rather than a dealer “spraying” his message through TV, radio and print and “praying” that people respond, he or she can market to the thousands upon thousands who have already made contact with the dealership. Customer data is used to create inexpensive, timely and targeted campaigns that drive significantly more traffic to the showroom and service drive. Marketing customers through the CRM with eNewsletters, digital web ads, video mail, voice and text messaging, etc., is significantly cheaper, and it’s never a bad time to see a few extra dollars go to the bottom line.
Mike Gorun — Dealers should try and integrate all aspects of their marketing and customer relationship/retention by taking the information they collect through the CRM program and using it to develop a marketing, informational and value driven campaign(s) that touch all departments of the store. Until recently, CRM was viewed as primarily a sales department tool. Now, through the use of marketing automation software or loyalty programs, CRM can be highly effective in targeting potential customers while reducing your spend on direct mail, email blasts and other ineffective marketing efforts.
Stan Megerdichian — There is a tremendous amount of analytics that is generated through the CRM systems. Analyze valuable customer behavior information to do targeted, relevant marketing.
Everett Mullens — Your CRM should have all customer contact information, which will give you the ability to use email and print to communicate with your customers. Use filters to target marketing to individual market segments, i.e. sales, lease retention, service, etc. From a sales training standpoint, we send a training CD that will provide computer based video training for showroom and internet staff.
What is the biggest mistake dealers/salespeople make when using their CRM system?
Bryan Anderson — It may come as a surprise that perhaps the biggest mistake made is done so prior to selecting a CRM partner. When selecting a CRM partner, clearly define your business goals and then press your CRM vendors on specific features. Is there a defined strategy and process to close more unsold floor traffic, internet leads and repeat business opportunities? How will they help improve the appointment process, or manage multi-touch, permission-based campaigns?
We offer a number of great features, don’t get me wrong; but the features that enamor us today can fade from view tomorrow. Features will always change, usage can always be increased, but at the end of the day, it’s about how the CRM drives process, builds ROI and makes money for the dealer. Today’s market is too cutthroat to be focused on anything else.
Mike Gorun — They lack a truly defined customer relationship/retention process. Customer relationship management is a process not a system. The CRM system will help you manage that process, but you must identify what your goals are by customer segment and have your CRM system align and target your communications based upon the individual segment objective.
Equally as important, and one of the most frequent mistakes, is using your CRM customer database to drive irrelevant email blasts to customers regardless of who or where they are in their ownership lifecycle.
Stan Megerdichian — They think that once they buy a CRM system, they’re set. Truth is, CRM systems are tools. They’re only as good as the people who use them. The tool by itself won’t fix a problem. Customer Relationship Management has to be integrated within the dealership staff, culture and philosophy.
Everett Mullens — One of the biggest mistakes is allowing personnel to bypass the input of all customers, either because the sales staff is too lazy or does not understand the importance of tracking all customers. Another is not using the power of the CRM to fully automate the long term communications with your customer. Finally, there is a disconnect when managers fail to monitor and manage the sales staff via the CRM.
How can dealers use their CRM systems to help take advantage of the improving economic climate?
Bryan Anderson — He who owns the data, owns the market. It’s true in a down market, and perhaps even more so in a recovering economy. Because a True CRM captures so much data on every customer to touch the store (floor, phone, internet, service, referrals, etc.), the dealership can easily zero-in on customers who are ready to spend money in their showroom or service drive. Dealers can use the CRM to then drive communication to these prospects (and current owners) through timely, meaningful, permission-based marketing campaigns. Not only are sales and service revenues increased, but so is the gross for each deal and the satisfaction of each customer. In fact, the only reductions one should expect are in the costs of traditional advertising and the market share of his competitors.
Mike Gorun — In today’s economy, the customer is the key to a dealership’s future success. The right customer relationship management strategies can give you insights that lead to increased revenue, improved earnings and solid competitive advantage.
Dealerships that implement an effective CRM and or loyalty initiative will ultimately establish and cultivate much stronger relationships with their customers, achieve more loyal customers and experience a gain resulting in a substantial payback through increased revenue and reduce marketing costs.
Stan Megerdichian — Today’s CRM systems make it very easy for dealers to interact with their customers. The dealers should use the analytics to communicate all worthy information that their customer may find useful. If the customer finds value in the engagement then they will be more receptive to any other messages coming from the dealership including returning for service and buying another vehicle.
Everett Mullens — CRM’s should be able to target both short and long term customer prospects. For example, target those customers who will be coming off leases, etc. Dealers need to be creative in developing targeted incentives for customers to buy, whether through specialty advertizing through outside sales firms or internally developing those incentives. Use your CRM to filter or mine the target market.