Max Warburton, UBS
Picking tomorrow’s winners
Carmakers are concerned about the costs and profitability in their distribution networks, according to analyst Max Warburton of UBS. Some still believe dealers are making too much money. “They are looking at ways to strip this out,” he says.
Warburton claims that most major carmakers have promised shareholders a dramatic increase in profits. “It’s very difficult for the equity market to know what’s going to happen, these are very bullish companies,” he says.
“We’re seeing carmakers talk about profitability in a way we’ve not seen before. It’s going to be interesting to see if there are red faces in 2009.”
Asian car brands will be the growth opportunity for Europe’s dealers over the next few years, says Warburton. He predicts 1.9m units of new capacity in Europe by 2008, of which 1.2m will come from Hyundai, Kia and Toyota. Although constrained until recently by a lack of diesel offerings, this is changing. And they will reap the benefits of production costs far lower than established European and global carmakers.
John Whiteman, ICDP
Updating the franchise model
Although consolidation within motor retailing is driving the creation of ‘mega-dealers’, there will still be a place for small groups and individuals, says John Whiteman of the ICDP.
Traditional owner-drivers may be small in scale but this means they are often more flexible and have scope for real entrepreneurship in their locality, he adds. Regional groups could be best placed to exploit the benefits of gaining scale in their area, through franchise choice, facilities, processes and sourcing.
“If you’re cautious and risk averse you can carry on as before but you must recognize at least that it will get ever harder in this business,” says Whiteman. “But there’s a new game for those willing to take a risk and probably offend a few old friends in the market for a good reward.”
Whiteman suggests the question for those businesses verging on mega-dealer status is whether they will be able to exploit the benefits of scale. Unlike high street retailers, which are marketing led and focused on sourcing and marketing, dealers are still focused on selling their products.
Large groups may lose flexibility and entrepreneurship as a result of gaining scale.
Jonathan Browning, GM Europe
CRM and loyalty schemes
Effective marketing is increasingly important in managing the customer relationship and ensuring products stay on the list of potential purchases, says Jonathan Browning.
Consumers are more selective than ever about which marketing messages they will accept, and readily available information means car buyers now typically visit two dealerships before making their decision, compared to five in 2000.
#AM_ART_SPLIT# Vauxhall uses its ‘Dialog’ programme, which gathers information from sales systems, finance contracts and Network Q used car programme. At its core is the Vauxhall magazine, which has 400,000 circulation, and is used to communicate tactical offers at critical customer lifestyle points, such as building interest in new products at the second service. Browning says the best dealers embrace this and convert up to five times as many leads as the average.
“Unless there’s the right relationship between the retail body and vehicle manufacturer, activities like CRM will not succeed,” he adds.
Questioned on the likelihood of GM entering Chapter 11 bankruptcy protection to resolve its financial problems, Browning insists it will not occur as it would deter customers from buying GM’s products.
Chris Grayling MP, shadow transport secretary
Future Transport Policy
A Conservative government would encourage consumers to buy cars with ‘best in class’ emissions, rather than hurt motor retailers by pushing buyers towards small cars which may not necessarily meet their needs, says Chris Grayling.
“We’ve got to have a better thought-out approach to transport that recognizes the needs of our country and economy,” he adds. Grayling believes there needs to be improvements in technology and a reduction in emissions rather than a reduction in the number of cars in the current parc.
His party will form its transport policy in the next couple of years, ready for the next election. It has not ruled out road-pricing initiatives, which would encourage motorists to use their cars less.
David Carter, Carter & Carter
The real value of human capital
At a time when talented salespeople are at a premium, David Carter, managing director of Carter & Carter, says it has never been more important to invest in staff.
“Do we really understand the value of human capital?” asks Carter.
From his experience in training those working in the automotive sales industry, Carter found that by changing fundamental behaviours, teaching new skills and enhancing knowledge, sales tend to increase.
“Finding the right people for the right job is extremely hard,” says Carter. Employers need to have good processes in place, which allow their staff to align with the brand as well as the company.
He encourages employers to get away from the traditional “chalk and talk” prescriptive sales processes and instead focus on flexible, individually tailored customer service.
David Martin, Mar-Kee Group
Turning browsers into buyers
“Technology does not sell cars. People sell cars,” says David Martin, president of the Mar-Kee Group of America, who was also a speaker at this year’s NADA show.
It is easy to forget the basic principles of what makes a good salesperson. The majority of customers will arrive at a dealership feeling apprehensive. It’s up to the salesperson to put them at ease by acting in a strong, confident manner in every phase of the sale, advises Martin.
#AM_ART_SPLIT# Customers generally prefer buying from people like themselves. A good salesperson will spend the time gathering information and building up a rapport with the potential buyer.
Tact is also a key factor. “There may be a vast difference between showing a customer what they need rather than what they want,” says Martin.
Customers also like to feel in control. “Make them make the decision you want them to,” says Martin.
Paul Flatters, Future Foundation
Using consumer trends
Becoming friends with customers and learning how to predict their future behaviour could be key in helping you sell more cars, says Paul Flatters of the Future Foundation.
The easiest way to do this is by looking out for a customer’s status in terms of income. Flatters says that with consumers getting richer, they want more for their money and they are harder than ever to pigeon-hole.
More joint decisions are being made in the home. “Kids will also have strong opinions that filter through to the parents,” says Flatter.
Over the past two decades cars have taken on a new role in people’s lives. They no longer see driving as an activity that fills leisure time. Instead, time has become the luxury commodity of choice,” Flatters says.
In this environment it is paramount that retailers focus on providing good service and value for money. “If you don’t provide them with a good service, they’ll go to someone who will,” says Flatters.
Simon Gulliford, consultant
Engaging your customers
Advertisers need to be more innovative in their approach to the marketplace. Brands need to grab a customer’s attention and money by highlighting what makes it different, says consultant Simon Gulliford.
“You cannot bore customers into buying your products anymore,” says Gulliford. “You have to show that you have gone out of your way to do something special.”
Most people will avoid direct mail, internet pop ups and generally most forms of advertising. “Companies have to work much, much harder to engage with customers,” he says.
The rise of this culture has stemmed from the ever increasing wealth among consumers. Gulliford explains: “The more affluent people become the more they will pay to avoid communication.”
One thing that hasn’t changed is that people will talk about good or bad service. The 90-10 rule applies: 10% of the population will influence the views of 90% of the population. Gulliford says to ask yourself: “What do you want to tell the 10%?”
Sue Brownson, Blue Bell BMW
Outstanding customer loyalty
Sue Brownson OBE, managing director of Blue Bell BMW/Mini, says her staff are the key to the company’s success.
Last year, family-run Bluebell achieved a turnover of £95m while its staff attrition rate is 20% – below the industry average. The route to happy employees is to ensure they are happy and fulfilled in their job.
“Staff need to be informed – be proud of their role,” Brownson says.
Finding the right person for the job is also vital. As well as hiring experienced employees, Bluebell runs a graduate programme in conjunction with BMW. It also recruits people from schools and colleges. All staff are trained to focus on the customer.
“You can spend millions on marketing and advertising but the most effective way to be successful is to keep the customers you have rather than going out and finding new ones,” Brownson says. “There is no substitute for customer loyalty.”
Such an atmosphere can be created by always being available – both to staff and customers.
“All our directors, managers and myself are always available,” says Brownson. “We are there.”
Lyell Strambi, Virgin Atlantic
Retaining your customers
Dealers can gain valuable insight from the innovation and customer-focus that drives success at Virgin Atlantic Airways. The company strives to differentiate itself from its competitors and provide real value in return for the customer’s spend.
“Think from the customer’s perspective and innovate,” says chief operating officer Lyell Strambi.
Key to good service is recruiting the right staff and empowering them to deal with situations in ways which make customers want to return.
“Rather than train values into people we look for people with those values intrinsically and then attract them to our business,” he says.
“You cannot write a rule-book for situations your people will face. We try to choose people with the right attributes, equip them with the skills they need and trust them.”
The best staff will listen to the cues customers give them and act suitably. Keeping the customer informed of any issues and the actions you are taking to resolve them is also important. Ultimately, Lyell says, give the customer an experience that is memorable in a good way.