Friday, June 28, 2013

How to Win (or Lose) a Customer for Life

How much do your dealerships spend on advertising, coupons, and mailings and how much return do you think those dealerships see? Marketing may help get customers in the door, but can it keep those customers coming back? In reality, good first impressions, flexible scheduling, and high quality customer service are the key to attracting service and parts customers to your dealership, regardless of marketing campaigns.

Based on Carlisle’s 2013 Consumer Sentiment Survey, we know what customers value when they get their car fixed—and that they don’t perceive these attributes as their dealers’ strengths.

Now keep in mind these results are from people who have taken their cars to the dealer. But not all customers make it that far. Meeting these customer needs is critical. Let’s look at a couple of examples of dealers; one that failed and one that succeeded in these areas of top importance. A friend of mine recently bought a 2012 crossover and moved to the Boston area. Her car is still under warranty and needed an oil change. After a brief Google search, she found five dealerships within a half hour of her home. She called the closest one on a Tuesday, looking for a Saturday appointment. Not only did the receptionist say that nothing was available that day, but she didn’t offer to schedule an alternative time. The receptionist was curt, short-tempered, and completely unhelpful with this potential customer. When telling me this story, my friend said maybe she should have asked about other times, but she wanted the oil change on Saturday, and she didn’t want to deal with the “grumpy lady.” That’s a pretty easy way to lose a new customer!

So she called another dealer. This one told her to bring her car in first thing in the morning, or mid-afternoon. After providing details about her car to the receptionist (make, model, mileage), the service rep asked if she had the routine 30,000 recommended maintenance done yet. My friend hadn’t, so the receptionist offered to fit it into the same appointment if she came for the morning slot. It would take a few hours, but, because it was under warranty, they would give her a loaner car. “It was awesome because I had errands to run anyway.”

When she arrived, the loaner car was waiting; later, a half hour early, the dealer called to say her car was ready for pick-up. They also told her that she could come back whenever she wanted, as long as it was before the dealership closed.

My friend also wanted a roof rack for her vehicle, and was directed to the parts manager. He looked up the part, and helped her understand what part she actually needed (she had roof rack brackets, but what she actually wanted were the crossbars), without making her feel stupid. They didn’t have it in stock, but the parts manager said he could order it. Then he told her, “Actually, you could go home and order it online and there’s a 20% discount right now.” He went on to say she could have it delivered to the shop and they would install it for her, or that she could probably do it herself! He even walked back out to her car, showed her where the part would attach to the roof rack brackets, and told her that she wouldn’t need special tools to attach it.

In short, this dealer made a customer for life. Before she showed up, the staff members were courteous, helpful, and friendly. On top of that, they nailed at least six of the top ten customer values. Further, they didn’t try to up-sell her on extras and even recommended a cheaper way to purchase the crossbars she wanted! This was her first vehicle under warranty and her first trip to a dealership. Now, she will continue going to this one because she trusts them to continue treating her, and her car, with respect.

Bottom Line: Don’t lose your customers before they walk in the door. A friendly voice on the phone and an accommodating schedule can capture new customers and get them into your dealership. Helpful service and respect for the person and their budget will keep those new customers coming back.

Friday, June 21, 2013

“Parts, Hold…”

Most customers consider your parts counter personnel the face of your brand. The right person will become a customer’s “my guy/gal” – the wrong person will disconnect that customer from your brand.

We spent a lot of time and effort learning about heavy equipment end-customer expectations in focus groups we conducted across the country last year. After all that, it turns out their wish list is short and simple; everyone agreed that counter personnel should:
  • Answer the phone promptly
  • State their name (it’s courteous and it bears accountability)
  • Pull up my equipment in their system
  • Give me the price and availability for the part
  • Get visual confirmation that the part is actually in stock
  • Offer additional part options (e.g., reman, IAM)
  • Mention any associated parts I may need
  • Offer delivery options

What do they get instead? Long wait times. Lack of courtesy. Unprofessional noises. No relationship-building. And a feeling of dread when they have to call the dealer.

Bottom Line: Many OEMs offer parts counter personnel training. What is lacking is effective follow-up and accountability. Why not implement a parts counter training program with mystery shops? In our June 10 blog we talked about using personality tests to hire the right people and properly train them to represent your brand. This can have a significant impact on customer satisfaction and help you sell more parts.

Friday, June 14, 2013

Terms and Conditions Design Considerations

If you manage the supply chain spend at your company, then you definitely know this piece of paper. You know that it has a significant impact on both your parts revenue and your cost structure. It defines how you do business with your customers and what you will pay to provide a certain level of service. In fact, it is probably one of the most important documents on your desk. If you’ve guessed that this document is your “Terms and Conditions” or “Ts&Cs”, then you are absolutely correct. (If you answered “My pay stub”— that too, arguably, does help drive revenue and provide customer satisfaction.)

At Carlisle, we have been collecting, studying and designing OEM Ts&Cs for a long time. We’ve seen some major trends evolve, and also learned what works and what does not. If you have decided that it’s time to revise your Ts&Cs for the better, here are some things to keep in mind:
  1. Define what objectives or behaviors you are trying to achieve with Ts&Cs:
  2. OEMs have historically struggled between accomplishing two goals: keeping Ts&Cs simple and introducing elements that will encourage their dealers to adapt certain desired
    behaviors. Over the last few years, the trend has shifted from the simple and traditional discount-based philosophy to the more complex performance-based philosophy. Instead of simply offering discounts for buying more parts, the incentives are now tied to metrics that reinforce positive dealer behavior, such as Fixed Right First Time, purchase loyalty, off-the-shelf fill, lower obsolescence, attaining brand standards, etc.

    Performance-based terms can add complexity, but their value usually justifies the effort it takes to create them. OEMs have found ways to simplify metrics so dealers can easily understand them. The rule of thumb when deciding which metrics to incorporate is simple – “If you cannot accurately measure it, you cannot use it.”

  3. Do not underestimate or oversimplify the task:
  4. Evaluating changes to Ts&Cs is not an easy task. It can take several months. And it is complex… really complex. Changing even one lever can have implications across the entire supply chain. For instance, let’s say the OEM decides to change emergency order cut-off times.
    This may have an impact on the OEM’s warehouse labor, on transportation cut-off /delivery times and transport costs; it also may have implications for the dealer and the end-customer, which ultimately impacts the OEM’s parts revenues. If the OEM decides to charge for the additional warehouse or transport costs, this may impact dealer profitability, or it may impact end-customer satisfaction if the dealer decides to pass on the cost to the customer. So, what other lever can the OEM pull to mitigate this impact, and what financial and service ripples can this second lever have? These questions cannot be accurately answered without mapping out the relationships for all the factors and developing a robust and sophisticated simulation tool. You can do back-of-the-envelope calculations for one factor, but imagine doing this for a combination of factors. Adding to the complexity is the involvement of sales & marketing, warehousing, transportation and other OEM departments to support these decisions. Making T&C changes without a robust tool to simulate the financial and service impact is nothing short of hara-kiri!

  5. Evaluate scenarios that are win-win strategies:
  6. This step is just as difficult as building a Ts&Cs model. Could you convince your dealers
    to accept a strategy that puts less money in their pockets? Or convince your management to spend more money without any incremental benefit? Scenarios where one or both players lose money are not good strategies. You have to look for the most effective Ts&Cs levers in order to grow the total system profit for you and your dealers. 
  7. Keep your dealers informed and involved:
  8. Imagine the chaos if your dealers do not hear about the planned changes, or their possible impact, until you suddenly
    announce them. Usually, once the OEMs have vetted a strategy and defined their direction, they review these options with their Dealer Council members. The key to these reviews is to be transparent, and share why the proposed changes are important. And the most effective way to gain consensus is to demonstrate to each dealer, via financial statements, how the new Ts&Cs impact their bottom line compared to the existing ones. We’ve also learned from OEMs that if multiple changes are planned, it is better to announce them all at once, even if the changes won’t be rolled out at the same time. Dealers are generally more accepting of changes presented as a total package, instead of learning about them piecemeal down the road.

Bottom line: Designing effective Ts&Cs is a time consuming process that needs to be backed up by the organization, as well as your dealers. However, if done right it can change dealer behavior and drive significantly improved results.

Monday, June 10, 2013

Using Standardized Personality Tests to Hire Service Advisors or Are You Phlegmatic?

As far back as 1775, the Swiss poet and physiognomist Johann Kaspar Lavater was practicing the pseudo-science of determining a person’s character, or personality, from his appearance and face. As shown in the image below, Lavater believed that through observation he could determine if a person was Sanguine (pleasure-seeking and sociable), Choleric (ambitious and leader-like), Melancholic (analytical and thoughtful), or Phlegmatic (relaxed and quiet). Are you Phlegmatic?

Fast-forward about 235 years and Lavater’s research has been significantly improved. Now, a real science authenticates temperament and aptitude measurements using commercial applications known as personality tests. According to the ever-reliable Wikipedia, “A personality test is a questionnaire or other standardized instrument designed to reveal aspects of an individual's character or psychological makeup. The first personality tests were developed in 1920s and were intended to ease the process of personnel selection, particularly in the armed forces. Since [then] a wide variety of personality tests have been developed, notably the Myers Briggs Type Indicator... Today, personality tests have become a $400 million-a-year industry and are used in a range of contexts, including individual and relationship counseling, career planning, and employee selection and development.”

Note this last phrase, “used in… employee selection”. Over the past few months Carlisle & Company has written extensively about how to make your dealer service advisor a MyGuy. We know that one key step to creating a MyGuy is hiring the right person. In fact, in 2012 we had five very high-performing service advisors, in terms of measurable sales, satisfaction and customer retention, at four different brands – Acura, Hyundai, VW and Volvo – take a personality test.

Surprise! They all scored very similarly. In fact, let me quote our testing consultant, “I did want to let you know that the results are pretty astounding – four out of five people have a ‘customer service’ pattern. Also, every single person has a higher B factor – meaning they value relationships and social connections. For the most part, all five of these people have VERY similar patterns and couldn’t really tell your story any better. We see these types of patterns thrive in customer service environments. They want to be helpful and are quick and accurate in the detail.”

What exactly are the customer service behaviors that were observed? They are selling and relationship strengths:
  • Comfortable and confident with proven techniques the employee knows well; reluctant to change unless given good reasons, proper training, and specific guidelines
  • Composed and thorough when representing products where the employee is a consummate expert
  • Convivial and persuasive and utilizes an effective and stimulating style to build a solid, trusted relationship with customers
  • Reluctant to push or pressure a prospect and willing to thoroughly answer questions and provide detailed information before rushing to close
  • Warm and sincere with customers and eager to understand their needs and help them by providing tailored, proven solutions that are within the accepted allowance and without over-committing
  • Generally liked and trusted by clients in repeated contact; adept at maintaining and growing productive business relationships

Bottom line: Personality testing works to drive the desired dealer and OEM results for dealer service advisors. Specifically, hiring the right talent for the job results in higher customer satisfaction, which in-turn means higher service retention and higher vehicle repurchase intent. This means more money to bottom line. Are your dealers using this tool to hire the right service advisors? If not, what can you do to make this happen… quickly?