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Customer relationship management: How the ‘love factor’ builds relationships

Customer relationship management (CRM) should be a simple and common sense concept. All it needs is for dealers to invest their time, commitment and resources into developing a successful solution. This shouldn’t be seen as a quick fix, but rather a key part of every day operation.

CRM can create strategic advantages for retail companies. Customers are now focusing on service. Those dealers and manufacturers that understand what their customers want and are able to satisfy their needs will reap the benefits.

“There is very little differentiation between dealerships, making relationships paramount,” says Richard Waddington, chief executive of events specialist First Protocol, which has just published a White Paper on CRM in conjunction with Leeds Metropolitan University. “Customers are looking for suppliers who understand their needs as much as they do.”

A company must have a clear vision and a plan of CRM in place, and any programme must be owned and championed by senior management so that necessary time and resources can be made available to make it work.

“Dealers should focus internally, highlighting and changing areas that might block development. Only after this should firms focus externally by identifying high value clients and soliciting feedback about their needs,” says Waddington.

“In doing this, a dealer can individually tailor services to clients’ requirements, leading to trusting, committed and interactive relationships. It is imperative that dealers view customers as individuals, as well as part of other companies, and really work to understand them as people.”

CRM implementation is, however, challenging, and the research carried out by Waddington and Leeds Metropolitan University highlighted three key areas that need addressing by dealer management in the development of a successful programme: infrastructure, culture and ‘the love factor’.

“For any company, in any industry, the right technology and correct processes are vital. However, many companies have spent hundreds of thousands of pounds on CRM infrastructure to no avail,” says Waddington. “Technology is exactly that: a tool, a process, something that needs to be managed. But there is more to CRM than just technology.”

It’s important that the whole dealership team is aware of CRM. Waddington explains: “From dealer principal to the newest recruit in the service team, all must be included. The challenge is immense, particularly in older, more formal companies.”

His research shows that, while dealerships provide a service to clients, they often don’t have a relationship. What they need is ‘the love factor’.

“Business relationships, like personal relationships, are built on compatibility, value and trust,” says Waddington.

Once a programme has been adopted, the next challenge is to manage it. The last two years have seen record sales of new cars in the UK and it has been a boom time for dealers. But as sales have started to slow down, dealers are finding that CRM is key for both repeat and new business, and those that have not sufficiently managed it are now at their most vulnerable.

Research by dealer management

systems provider Pinewood shows that dealers who have enjoyed strong sales often divert resources away from CRM activity when times are good.

“What we find again and again is that dealers who are enjoying strong footfall in an upward market often stop CRM activity almost completely because they are so busy dealing with customers who simply come to them,” says Neville Briggs, managing director of Pinewood.

“However, when strong sales drop away in the motor industry, it usually happens quickly, as has been seen in February. These dealers have effectively set themselves up for a fall. Even if they start CRM activity in a professional manner again right now, it will be some weeks or even many months before leads start to feed through again. They are very vulnerable.”

Two-thirds of dealers are using outdated techniques or fail to employ CRM at all. Consequently, they fail to see any growth in profitability.

The research is carried out by Pinewood on a rolling basis and covers a database of more than 1,000 dealers contacted over a 12-month period.

“Dealerships should do everything possible to avoid a stop-start business cycle. CRM is a core activity for any car sales operation and should always be carried out as part of a dealerships day-to-day business,” adds Briggs.

Ten top tips to setting up a CRM strategy

1 Engage senior management in championing a CRM strategy and involve people throughout the dealership in its implementation, ensuring they have input and take ownership

2 Review company operations, systems and culture to determine how customer-friendly they really are

3 Change things that obstruct CRM strategy. Build an infrastructure and culture that supports CRM vision and objectives

4 Align employee rewards and recognition systems with CRM objectives. Celebrate success and share best practice to manage human interaction

5 Compile and analyse customer data to determine who your most valuable clients are

6 Focus on ‘high value’ clients first. Respect that they have a choice, so it is critical that you think about their needs above those of the company. Solicit their input in the development of CRM strategy and try to understand how best to interact with them

7 Devise individual client marketing plans, utilizing integrated marketing communications media

8 Use well-placed content-led events to connect with clients on both an intellectual and emotional level. Over time, clients will build loyalty with those who engage them best

9 Start measuring the success of CRM programmes on an event-by-event or tool-by-tool basis by setting clear objectives per media employed

10 Understand that moving customer relationships to a consultative/partnership nature takes time

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