Chris Hayden, managing director of Ford Retail, told AM the web was influencing the strategic development of the business, from new and used car sales, marketing and prospecting, property development and the provision of aftersales.
Increasing online presence
Collect and delivery pilot
The future with the recession
Ford Retail key facts
Ford Online (www.fordonline.co.uk) is the most obvious manifestation of the importance this channel plays.
The site offers a national approach to retailing and service, which in just a few months has provided significant incremental sales of new and used cars for the manufacturer-owned group.
And one of the recent key developments of the £1.1 billion turnover group is the creation of a specialist internet division to develop the web as a route to market. Hayden told AM: “The key to our online focus is employing people who it’s the first thing they think about when they wake up; have people that do online sales and get to know the online customer.
“Increasingly customers want a different, more convenient way to buy a car. Some don’t even want to see or test drive it since their friends have got one. Then they want their new car delivered to their house.”
Ford Online sees social media and online marketing as a key player in its promotional strategy. Developments on how the website will make use of social media are now being planned and implementation will start in the next two months.
Exact details are not yet available, although Ford Retail is likely to make use of a wide range of tactics such as blogging and micro-blogging (brief text messages or pictures, using sites such as Twitter and Facebook plus podcasting, news releases, viral marketing, surveys and online
“When you visit the United States, it’s frightening how they have pulled away from us in their understanding of the online market.
“When we talk about response times we aim for under 10 minutes for an online inquiry. The guy we were talking to in California said there it was 45 seconds otherwise your chance has gone. It was like a sport on how fast you can get back to a customer.”
Even in the UK now, he said, his staff can respond to an online inquiry two hours after it was sent and in the time it took to respond the customer has bought a car.
Hayden said Ford Retail will “dip a toe” into social networking this year as part of a response to a consumer shift towards buying a car as a commodity.
Click on the next page tor read how Ford Retail is increasing their online presence.
Increasing online presence
“We’re looking at the impact increasing our online presence can have, conscious though of exposing ourselves too fast and losing control,” Hayden said.
“We’re talking about the impact of the internet and the distance people are prepared to travel. The popular perception is they will travel for an expensive car. But, whatever you buy, it will only take place once every two or three years ideally and it will be an event in your life.”
“A lot of people search online and then still want to go to a big dealership where there is the choice of car in different colours and spec. There may be a smaller dealership closer to home, but attraction is the big dealer,” said Hayden.
The impact of the web is not just on retail, but also customers’ aftersales expectations. Or as Hayden puts it: “You can book a hotel in Outer Mongolia, but you can’t book a vehicle service around the corner.”
A number of industry watchers have commented that the recession will bring about a rationalisation of sales centres, but that does not mean a net decrease in dealer groups’ outlets and could instead mean a growth in the number of service centres: customers will drive increasing distances to buy a car; servicing needs to be local.
Is the future in big, local dealerships or convenient service, ie a service centre on a commuter run?
Hayden said: “The challenge is finding a model that works for service. If you’re just going to be fast-fit, it’s a simple model, but if you are going to be all things to all men it takes a level of investment, expertise and becomes affordable through scale.
“The whole issue of getting a car serviced is so inconvenient. But it’s a brave person that will make the changes to the retail/service mix,” said Hayden.
This doesn’t mean consideration around improving the customer convenience of service provision isn’t a focus for Ford Retail. The work to find the right solutions is ongoing.
The inspiration comes from any number of directions. Hayden worked in France as director of Ford Investment Enterprises Corporation and was on the board of a number of dealer groups, including Groupe Palau in Bordeaux.
It was here Hayden sought ways to work round stringent labour laws. “We offered overnight servicing to combat a 35-hour working week, bringing cars in late at night so when technicians came in at 8am the cars were ready to be worked on, maximising workrate and workshop efficiency when time was limited,” he said.
The experience has led the group to introduce overnight servicing for commercial vehicles. At Heathrow the business is working non-stop and this could be rolled out further.
“The problem with the service issue is the customer dropping the car off and relying on someone to pick them up. The stress level is high. How can we make that easier? If we can say bring it in at night would it be easier?"
Click on the next page to read about Ford Retail's collect and delivery pilot.
Collect and delivery pilot
As part of the search for the solutions Ford Retail is piloting collect and delivery with about eight centres nationally, charging just enough to cover costs: between £5 and £10.
The pilot has been running for two months and will continue for up to four months before a judgement will be made.
Ford Retail has also looked at while-you-wait servicing. “One answer could be offering it at supermarket car parks – the customer can do something else while their car is worked on. I know it’s been tried before, but it could be time to try again,” Hayden said.
Ford Retail has increased the number of collect and deliver services, but not without challenges. “It works well in Barnsley, but in London a journey that takes 10 minutes one day can take two hours the next due to traffic.”
Stoically Hayden concludes: “Courtesy services is a major challenge since this industry has been very good at deciding what customers want, but not asking them. All customers want different things and somewhere there is the solution.”
Another area Hayden is passionate about is Ford Retail’s database. A database monitoring team in Yorkshire will flag up within 24 hours where a customer-facing employee has failed to get an email or postal address.
And Experian works on Ford Retail’s database continuously, helping to fill in the blanks, cleansing and sanitising it.
Hayden said: “It was a million-strong in theory when I took it over five years ago. But the same person was on there 20 times, so it was a false figure. I would get service reminders that I’d had 15 times already. It was ridiculous.”
The focus on the database pays off everyday, Hayden said.
“Data is about what customers want from us. We create a fairly personal relationship with someone when we sell them a car. If the sales person is linked in to what they’re doing under our ‘customer for life ethos’, they know on Options (Ford’s personal contract hire programme), that we outsell and renew better than anyone in the country.We don’t sell someone three years of finance if they are looking to replace the car in two years. We also don’t, by policy, sell 48 or 60-month finance. We try to keep a much tighter relationship.”
Click on the next page to read why Ford Retail remain upbeat about the future, despite the impact of the recession.
Upbeat about future despite painful impact of the recession
Chris Hayden is upbeat about Ford Retail’s achievements and its ability to meld the business around the current market’s shifting sand character. But the recession has had painful consequences.
Pay was frozen from April 1 and there were 200 job losses (around 6% of total headcount) at the end of last year.
Fleet and commercial sales at stages in the first quarter of 2009 were dropping to less than 50% of the run rate of last year, giving Ford Retail “incredible” stocking issues.
January and February felt like a “lockdown” as stock failed to move, Hayden said.
Used sales were also down 50% year-on-year placing “massive stress” on the business.
“You can take one of two options. You can sit and moan or have the attitude that somewhere in the towns we operate someone will buy a vehicle and our job is to find them,” Hayden said.
“We overcame the stocking issue with absolute razor focus, educating people that stock is cash. We’ve taken millions out of our working capital year-on-year by some very ruthless control and assigning people as single points of control on the purchase of used cars.”
But how was stock cleared? “A lot of customers got a very good deal. This couldn’t be a long-term, viable business model, but when you are faced with stock levels that are not right for your business you have to address it appropriately.”
Now Ford Retail is experiencing more confidence – in the LCV market in particular – when expectations were of a terrible market. “More people have been coming to us smuch more positive, telling us they will be changing their vehicles,” he said.
While the war on cost continues the honesty appears to have paid off: a confidential internet staff survey called ‘Give us your steer’ revealed 92% are proud to work for Ford Retail.
In 2008 it was 83%. Ford Retail has also continued investment in buildings and IT.
Click on the next page to see Ford Retail key facts.
Ford Retail key facts
- Turnover: 2008 (2007) £1,058m (£1,050m)
- Profit/loss: 2008 (2007) -£0.85m (£5m)
- Employees: 3,252
- Locations 67 centres
- Comprising: 22 Dagenham Motors dealer-ships, including three Iveco
- 14 Polar Ford dealerships
- Eight Lindsay Ford dealerships, including two Mazda;
- ThreeHeartlands Ford dealerships; three Brunel Ford dealerships; three La Motte and Bougourd Ford dealerships
- 17 further sites (aftersales, bodyshops, parts centres, head office).
- Units sold: 2008 (2007) 80,392 (69,438)
- New retail 27,945 (22,222)
- New fleet 15,078 (11,175)
- New CV 9,460 (11,281)
- Used retail 27,909 (24,760)
- Aftersales 2008 (2007)
- Service hours 711,464 (624, 739)
- Bodyshop hours 373,022 (323,728)
- Parts sales £85.7m (£66m)