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Talking to customers wins their loyalty

Derek McGowan believes a basic flaw lies at the heart of the problem faced by motor dealers who have difficulty retaining the loyalty of customers.

“Their manufacturers put the emphasis on the performance of dealers who should, instead, base their approach on what customers need,” says McGowan, managing director of Contact Advantage.

He formed the business four years ago after working for companies in other sectors, including IBM, in the area of customer retention. McGowan thinks the motor industry is improving but still needs to change its approach.

Contact Advantage Automotive’s clients include Listers of Coventry, named AM Retailer of the Year and Large Dealer Group of 2005 at this February’s awards.

Listers’ commercial director Nigel Rickards said at the time: “All our focus is on the customer. Everything we do is focused on making sure we deliver the best possible service to our customers, to look after their needs, and make sure that they will come back again and again.”

This is how Derek McGowan sees it: “Too many staff in dealerships make the mistake of viewing customers in terms of ‘we can make £200 out of him or her’. The right way is to realize that if you win over a customer, they will keep coming back. If they buy several new cars, and recommend you to others, they can become a £200,000 customer over the years.”

Contact Advantage has analysed what customers dislike about car dealerships and helps introduce a new attitude among its clients’ staff. “You are likely to lose customers if you don’t return their phone calls,” says McGowan.

“It’s also important that customers only need to provide basic information once, for the whole group, because they hate it when they phone and no-one seems to have heard of them.”

Contact Advantage stresses that someone has to take responsibility. Clients outside the motor industry include the Scottish Society for the Prevention of Cruelty to Animals, where a call for assistance stays in the system until it is dealt with. “We do the same for the automotive industry, and set it up so that salesmen get warnings if they don’t respond to calls,’ says McGowan.

“You have to win the loyalty of customers to the retailer before you can hope to win loyalty to a product brand.”

McGowan criticizes dealer groups that stop sales staff from responding to emails because, for many, that is regarded as the most convenient way of communicating. Several groups are starting to use the same tactics as clothes retailers, and send text messages to thousands of potential customers, which is targeted and cheap.

“If you have a car that’s ideal for carrying golf bags, invite people who love the sport to a themed day,” says McGowan.

Kate Groombridge, account director at automotive customer contact specialist iSKY, agrees the need for the industry to predict and influence customer behaviour has never been greater.

“Understanding what compels individuals to return to a dealership, or remain loyal to a brand, is ever more vital in a market challenged by falling sales, squeezed margins, block exemption, increased competition and consumer power,” she says.

Groombridge believes that only through discussion will dealers uncover potential problems, misunderstandings or changes in customers’ requirements. This can be by moving a brochure request up to a test drive, or rekindling a showroom walk-out. “In one programme with walk-outs, we found the purchase rate after speaking to them was 38% greater than among those not contacted,” she says. “The measurable return on investment was close to 500%.”

Another trial found that following up owners whose cars were serviced at a dealership made them 14% more likely to return, and to do so more frequently.

“Contact programmes enhance the customer experience because they like to be asked for their opinion. Also, they tease out characteristics of a dealership or marque that has the deepest impact on the likelihood of leading to another purchase,” Groombridge says.

Paul Whittingham, sales and marketing manager at ADP Dealer Services UK, says a CRM system works only if it is part of a strategy. Staff must be coached so that they understand the objectives and the controllable steps to be taken.”

This includes consistent approaches to customers, letters personalized to them and the automatic generation of daily, weekly or monthly contacts. Sales and service workloads must be forecast, sales staff diaries and contacts have to be managed and marketing campaigns must be targeted and precise.

“Never forget you can no longer rely on passing trade. Customers are better informed and have a wider choice, product is more reliable and the market is totally consumer driven,” says Whittingham.

Success for Holiways Ford

John Hardy has stepped back from the day-to-day running of the motor retailing business he founded in County Durham 35 years ago, but still enjoys meeting customers bringing cars in for a service during the morning rush.

The £22m-turnover Holiways Ford group has three dealerships, is investing £1.5m in a new showroom and bodyshop at its headquarters in New Aycliffe, and is seeing turnover and profit rising sharply.

“It has all been built on, firstly, loyalty of staff. We have a much lower turnover of people than the big dealer groups,” says Hardy. “That leads to keeping the loyalty of customers, because people like seeing the same people when they return to a dealership. It builds trust, and they believe it when told something needs to be done to their car.”

Jeff Bedford is typical of many in the Holiways team and has worked there for almost 30 years. He joined at 15 as an apprentice and is now service director.

Hardy’s son, Matthew, who qualified as a surveyor, joined the business four years ago and is now managing director.

“There could be only one boss and we agreed it was him. We’re on track for a £30million turnover next year,” says John Hardy, now chairman.

How to win and keep customers

  • Put customers’ needs first, not the requirements of manufacturers
  • Senior management’s vision to win customer loyalty must be backed up with staff training
  • Make it clear to the customer that the dealer principal is always happy to discuss anything that is causing concern
  • Remember it costs less to keep customers than to win new ones
  • Use a targeted approach to attract potential conquests, then vow to make them customers for life
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