Article

Reaching the Summit

January 2013, Auto Dealer Today - WebXclusive

by Daryl K. Tabor - Also by this author

Daniel Wright called the 2012 CRM Convention in Las Vegas a “need-to” for auto dealers like he and his brother, John. Co-owners of Right Place Auto Sales, a small BHPH store in Houston, Texas, the two were apparently not alone in their thinking.

The first-ever CRM Convention, sponsored by Auto Dealer Monthly as part of the 2012 Industry Summit, drew hundreds of dealers from across the nation to hear trade experts share solutions for best utilizing CRM tools to drive sales. The two-day convention also gave inquisitive auto retailers the opportunity to kick the tires of various customer management practices through unbiased feedback from fellow dealers. “You can’t do this in a vacuum,” said John Wright, referring to the need for dealers to be open to new ideas in order to be successful.

The Wrights made the trip west despite the relative pinch it put them in as owners of a small business with only a handful of personnel. “A lot of dealers say they can’t get away from their stores,” Daniel said. “You can’t afford not to.” The competition is stiff for the brothers, whose five-year-old dealership lies just north of Interstate 610, which rings the fourth-largest city in the nation. “There’s no time to feel safe in this business. Every time you look out the door, you have to look both ways,” he added.

Altogether, more than 1,200 dealers, vendors and industry experts convened in the Nevada desert for the CRM Convention and Industry Summit. Many CRM CRM exhibitors were on hand, offering dealers a peek at their respective systems and walking them through the latest CRM tools and methods. “The show was much larger than I anticipated; it was well-structured and flowed smoothly,” said Brad Kalivoda, manager of Fiesta Motors in Lubbock, Texas. “I enjoyed seeing a different take on the industry than I am accustomed to.”

The purpose of the CRM Convention was to help dealers get the most from their current system or find a system that is the right fit for their operation. Convention chairman Greg Goebel said the goal when the conference was conceived almost two years ago was to send auto retailers home with at least one thing that would pay for their attendance “10 times over.” In fact, he added that he would be disappointed if dealers didn’t get even more value from the session lineup. “It all comes back to mining your own database,” the CEO and publisher of Auto Dealer Monthly urged, emphasizing that, collectively, customer data is underused by dealers. “The bottom line is, from my point of view of the automotive industry as a whole, we stink at it.”

That ineffective use of resources can be rooted in many causes, but three primary reasons came to the forefront during the convention: not having the right CRM tool, a failure to fully and correctly implement a CRM system, or simply failing to see the importance of CRM.

While many dealers legitimately don’t have the right CRM system for the size and scope of their business, said Mike Overy of Proactive Dealer Solutions, managers often wrongfully finger their CRM technology as the reason for dwindling phone calls and visits from customers. That, in turn, can lead a dealership to go from one product to the next to find a solution when they need look no further than the mirror. “Many dealerships overthink it,” he said. “You can’t keep switching CRMs (and expect it to solve your problems).”

Shaun Raines, executive director of DrivingSales University, agreed. “There’s never going to be a magical little system with leprechauns jumping out and doing the work for you. We expect more of a CRM than [we expect of] people,” he said. “How often has someone in your dealership refused to use a CRM simply because they didn’t like it? That’s the tail wagging the dog. Hire the right people.”

Other dealers simply fail to see the importance of CRM as a selling tool, Goebel said. Many, he added, have little idea of the traffic or leads their CRM is producing because they don’t understand its true purpose. The three-letter acronym can mean different things to different people, Goebel explained, but generally it refers to customer retention or customer relationship management. “Regardless of what you call it, it’s vitally important,” he said, pointing to industries like real estate, insurance and banking as examples of effective use of CRM tools to cultivate relationships with customers and contacts already in the businesses’ respective databases. “All of these industries are tied keenly to the customer relationship.”

“It’s the smallest things sometimes that can send (customers) to your dealership instead of the other guy,” expounded Kendall Billman of VinSolutions on the importance of building customer rapport.

That can be as simple as a birthday wish or allowing a customer to feel in control of the purchasing conversation. “The dealer who cares the most wins,” Dominion Dealer Services General Product Manager Bryan Anderson added.

For auto retailers, CRM databases may contain thousands of customers and tens-of-thousands of people who have come in contact with their store over the years. With a few exceptions, Goebel said, most of those potential leads and sales are left lying on a hard drive somewhere as squandered opportunities because a dealer doesn’t know how to foster them from data into relationships.

“You’ve got to change your way of thinking,” said Raines, addressing dealers on hand for his first-day session. “The entire process of your dealership should be built around your CRM.”

According to the U.S. Bureau of Consumer affairs, cited Goebel, 80 percent of dealership profits come from only 20 percent of existing customers. Just a 5-percent bump in that customer retention can increase profits by as much as 75 percent.

“CRM is managing customers to the best of your ability,” Overy told convention-goers. “Dealers can’t keep sticking their heads in the sand.” When the proverbial ostrich rears its heads to look around, he continued, it’s going to see an automotive industry that no longer relies on the reactive methods of traditional advertising. Today, dealers must anticipate a person as a customer before they even realize they’re in the market for a new vehicle.

As many as 95 of every 100 car shoppers are searching online before entering a dealership, said Dealer Synergy’s Sean Bradley, who offered dealers in the audience a live look inside an active CRM. That leaves a dealership’s website as the first—and perhaps only—impression for many car shoppers. Through today’s CRM technology, system tools like “heat tracking” and “confetti maps” allow a dealer to know in real time who is looking at their site and what they are looking for when shopping online.

“Gathering real-time information gives you that little edge,” said Billman. Sales staff can utilize such high-tech tools to virtually anticipate the next move of those e-shoppers.

“Don’t make people think, read their mind,” offered Paul Portratz of Potratz Partners Advertising in his educational tract. Today’s proactive solutions to turning lookers into buyers are a 180-degree turnaround from the hail-Mary methods of traditional advertising relied upon as recently as 20 or even 10 years ago. “Spraying and praying is over with,” Potratz said.

“People are changing,” explained Alex Snyder of Dealer.com. Due in large part to the Internet and mobile technology, shoppers are looking at fewer than two dealerships on average before buying a car, whereas only 10 years ago that number was more than three. That’s why correctly implementing a CRM system is so vital. “You’ve got to get to them before the other guy,” Snyder added.

Dealers like Daniel and John Wright—each regularly asking questions and jotting down notes during presentations—believe the CRM Convention gave them the tools necessary to become that first and last stop for shoppers. “There was some cutting-edge stuff here,” said John. “We certainly got what we needed.”

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