Article

What Is Customer Relationship Management (CRM)

August 2006, Auto Dealer Today - WebXclusive

by John Zieglar - Also by this author

What does Customer Relationship Management, or CRM, mean to you? Is it signing up with a call center to make customer service calls to all your prospects and service customers? Is it hiring a team of customer service specialists to handle inbound and outbound calls? Or is CRM as simple as hosting a barbeque once a month for all your sales and service customers? While dealers may have an infinite number of ways to define CRM and the best strategy and tactics for implementation, one thing they can all agree on is the desired results:
  1. To find and attract more quality prospects and traffic to the dealership at a lower cost.
  2. To sell a higher percentage of those customers.
  3. To keep those customers loyal to both service and to sales.

Gone are the days when dealers had to break up the Saturday morning sales meeting early because customers were flocking to the showroom floor. There are more makes and models available than ever before. Competition is up, supply is up, consumer access to product and pricing information is easier which drives expectations up and trust down. With more franchises competing for the same market, dealers are either in growth or fear mode and they know that the key to success lies in how they define CRM. Many dealers today have committed to a business development model because they realize that full-time effort equals full-time results, whereas part-time effort equals part-time results. Dealers are rethinking CRM, the best way to set up and run a BDC and the role of conventional advertising vs. digital marketing.

The first step for many dealers is to find and attract more quality customers. Dealers state that they can no longer rely on walk in traffic; they need to find alternative ways to drive more traffic at a lower cost per sale. To this end, many dealers have realized that it makes sense to fish where the fish are, meaning that if 7 out of 10 customers use the web during their buying process it makes sense to use the Internet as a marketing medium. The million dollar question then becomes, “How do I leverage the web as a marketing opportunity?” It can help to identify what the Internet as a marketing medium is NOT. It is not as simple as throwing your URL on all your traditional advertising. While this helps, it’s not sufficient. It’s not as simple as setting up an Internet department or even dedicating an Internet team. It’s not just about leads or new and used car sales out of that department. On the other hand, it IS about creating a virtual dealership that can increase loyalty, business and satisfaction for a
ll your profit centers: sales and service and parts and body shop and rental and fleet and F&I. So you’re onboard and wondering where to begin? Leverage three simple strategies: the manufacturer’s site, lead providers and your own URL.

Three Simple Strategies:

  1. Manufacturer’s Site: Customers often start at the manufacturer’s site to begin the product research process. When you get leads that trickle in from the manufacturer’s site to your own URL, they are early in the buying cycle and can require months of meaningful follow up. In most cases the leads are free and they need to be leveraged.
  2. Lead Providers: Third party providers have a national presence and can reach people you wouldn’t ordinarily have access to. Just as all dealerships are not created equal, all lead providers are not created equal. What’s great about the web is that everything is measurable and it’s a piece of cake to track and measure your cost per sale so you can determine which ones are better than others. Lead aggregators make that process even easier today and can save your staff valuable time by providing complete information needed to set an appointment.
  3. Dealership’s Own Web site: In addition to creating sales leads, the goal of the Web site is to market the whole dealership. Step one is to help sell a car today, but step two is to promote all the other profit centers (service, parts, subprime, etc.) and to become a marketing center, rather than an information source. As a result, three different types of traffic will be created: Internet, phone and showroom and herein lies the link to CRM.

With a virtual dealership that functions as a marketing center, many dealerships find that the increased Internet, phone and walk-in opportunities provide the impetus to define a strategy and process for Customer Relationship Management. That strategy and process is generally easier to implement with an action plan turning profit leaks into profit opportunities. There are five major profit leaks as outlined below.

Profit Leak #1: Showroom

Some dealers have a closing ratio of 15 percent others close 40 percent and the difference usually lies in the process. Sales managers need to identify how many people are coming into the showroom and measure how many select a car, how many demo, how many write up and how many close. To improve the odds, it helps to have the following:

  • A clearly defined and documented sales and coaching process.
  • A new-hire training and orientation process to bring new sales people up to speed.
  • A management process that will ensure that each sales person is coached and held accountable for following the sales process in the same way, regardless of who is desking the deal.

If your definition of CRM includes the need to consistently deliver a professional sales experience each and every time to each and every one of your showroom customers, you cannot stop at simply defining your process, rather, you need to hold your sales people and managers accountable for delivering that vision.

Profit Leak #2: Phones

Phone traffic is on the rise in many stores which is why the phones have become the cornerstone for many dealers’ CRM strategy. It may be time to determine if this component of your CRM strategy has become a profit leak or if it’s a profit opportunity. The phones, and potentially a lack of follow up, can be the biggest profit leak because these people often call the dealership three or four months out in the buying cycle whereas the average sales person follows up for three or four days. It’s often your CRM strategy for the people who call the dealership and don’t set an appointment that can make the largest impact on your sales.

Profit Leak #3: Internet

Dealers typically employ one of two basic models for handling non-showroom leads:

Model One: Direct all phone and Internet leads to the showroom. To make this model work, it’s not a good idea to give all sales people equal access to these leads, because the nature of the phone and e-mail communication along with the need for long term follow up require a specific skill set that not all sales people possess. Many dealers rely on a dedicated staff that have the skills, patience and persistence to sell the appointment and the car and take the process from beginning to end.

Model Two: Volume of Internet and phone leads justifies a separate staff dedicated to selling just the appointment and then turning the customer over to the sales staff to sell the car once they show. As a result, they’re less likely to try to sell the car over the phone because their only goal is to sell the appointment. The advantage is that these are people who have specific skills needed to shine on the phone and the time and the talent needed to perform long term follow-up. The drawback is that they can lack the product knowledge that some customers are interested in. To reduce the potential drawbacks, it helps to establish criteria that the sales people must meet or exceed to earn the right to these high quality appointments with the high closing ratio.

Profit Leak #4: Unsold Follow Up

While the Internet has made it faster and easier for customers to access product and pricing information, the manufacturers have increased the models and body styles that are now available to customers. As a result, customers are taking longer to research and buy new vehicles, extending the buying cycle dramatically from one-three weeks to eight-twelve weeks. This extended buying cycle has increased the need for retailers to use CRM to follow-up with every customer throughout this 12-week window of opportunity. The right CRM tool can simplify and even automate some of your unsold follow up activities. You can have the fastest, most simple and efficient CRM technology on the market today, but if you lack the skill, manpower, process and discipline to fuel the tool with accurate and comprehensive customer information, your entire CRM strategy will fall flat. It’s crucial to capture and record quality follow up information. To do so, you need a process in place for a manager to properly exit that customer and gather the customer’s name and number, e-mail address and best time to call. Success depends on where you record this information and what you do with it. Does your dealership use a good old fashioned client card and filing system, do you have two or three showroom computers or one computer on every desk? Oddly enough, regardless of the model you choose to input the information, success depends on how skilled your people are at asking for the information and loading it into the CRM tool. Most CRM strategies break down right there because 50-75 percent of the data never gets loaded in. So even if the CRM tool did the work itself, dealers lose 50-75 percent of the opportunity because the fuel never gets into the engine.

Profit Leak #5: Sold Follow Up

What type of customer contact during the ownership experience will contribute to increased CSI and brand loyalty? Customers claim they prefer minimal contact unless it is to inform them of something that benefits them. How then do you know what your customers want to know about? Most dealers need to obtain the customer’s permission; to contact them, to uncover what they want to be contacted about, and to gather e-mail addresses. The more advanced dealerships are doing sales CSI calls, service reminders and follow up, but not much more than that. Effectively prospecting the customer’s household, asking for referrals and contacting customers who bought from other dealers represents huge CRM profit opportunities.

How to find, sell and keep more customers with your CRM

Conduct a self-assessment to determine if you’re faced with profit leaks or profit opportunities in your dealership and use CRM to find higher quality traffic for less, sell more customers with a higher gross and CSI and keep a higher percentage of them loyal to sales and service.

Some areas that can represent growth opportunities are:

People – Recruiting, hiring and training the right people with the skills, confidence and persistence to implement CRM.

Process – Clearly define the process from beginning to end for every customer touch point, be it phone, Internet or face-to-face, to ensure that every one has a clear vision and understanding of what “should” be.

Place – Do your people have what they need and the infrastructure to support your vision of CRM?

Tools – Technology and tools don’t sell cars, people do. But it is amazing how the right tools can help dealers get more done with less effort.

Measurement – Tracking and measuring your performance results are the only way to hold your people accountable and make sure that they’re implementing the process you’ve defined, utilizing the tools you’ve invested in and building value with your customers.

Comment

  1. 1. bhalchandra gosavi [ July 30, 2015 @ 09:27AM ]

    this is good article and dealership persons need to read this to retain customers and increase sale in competitive edge.

  2. 2. marketingprof [ December 08, 2015 @ 05:06AM ]

    very helpful

  3. 3. marketingprof [ December 08, 2015 @ 05:06AM ]

    very helpful

  4. 4. paresh kshirsagar [ July 11, 2016 @ 01:26AM ]

    good triocs for the sales

 

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