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Customer retention: Motor retailers embrace new retention methods

Customer retention methods in the motor industry have moved into a new dimension inside 18 months.

And dealers, sometimes criticised for being slow on the uptake with new ideas, have been quick to seize the potential of social media networking.

Harratts, 45 years old and a traditional family group in Yorkshire, is typical: “Follow us on Twitter, follow us on Facebook,” is the invitation on its website.

Tim Smith, GForces commercial director, said: “This is the year in which dealers have embraced the phenomenon.

"In January 2010 only 10% of the nation’s top dealers were using social media to interact with people – this year that figure has risen to 83%.”

But Smith is challenging dealers with a question: “What incentives do you have in place to ensure that followers stay loyal?”

Customer relationship management (CRM) should be high on franchised dealers’ agenda at a time when sales of new cars are a struggle and the independents are working hard to win more aftersales revenue.

An increasing number of owners prefer email and text communications to mailed letters. This opens up the opportunity of low-cost marketing shots, but that introduces a new challenge.

Staff at dealerships need to be trained and ready to handle feedback swiftly and effectively.

The potential prize for loyalty won and developed is full workshops and higher revenue.

Smith said: “Money from car sales represents 80% of dealer income; money from aftersales 80% of dealer profits.

Dealers need to do be doing everything possible to keep customers loyal, and effective use of social media tools could be key.”

According to GForces social media networks accounted for 12.4% of UK internet visits in January and this new way for people to interact with businesses, friends and family looks certain to grow.

Almost half of Facebook users follow one or more car brands through the social network and around one in four say they would like to receive product information via the site.

That’s the business opening awaiting the dealers who can explain what they offer, provide incentives, encourage the word to get round and win loyalty.

GForces will soon launch a digitalised loyalty scheme.

Dealers will be able to reward customers who interact with a Facebook page and earn loyalty points to be exchanged for servicing, discounts or accessories.

Alphera Financial Services, the multi brand division of BMW Financial Services, this year launched a CRM training programme for UK dealers. Director Spencer Halil said: “It is part of our commitment to support our network across the UK. Development and training is always at the forefront of our mind and we are constantly adding sales tools to our lead management system (LMS).”

Halil said the aim was to provide regular updates for dealers and brokers based on their feedback. “The feedback comes from a number of sources, including our partners’ satisfaction surveys, and enables us to stay connected,” he said. “This ensures we can support them with the challenges they face.”

He said Alphera’s LMS proactively measured CRM with intelligent reporting and complemented existing processes.
“This allows our partners to be fully equipped to grow and develop their businesses. That is important to our relationship with them and with their customer relationships too,” said Halil.

Car manufacturers are investing heavily in pan-European projects to ensure that sales leads and customer contacts are effective.

Complex challenges such as these have led to the birth of electronic customer relationship marketing (eCRM).

One provider is Underwired Amaze, which pulls together email, mobile and social media, online campaigns and website activity in a way that enables carmakers to target prospects.

The company was hired by Peugeot to produce a European eCRM hub for car owners that blends communications to win new customers.

Amaze, the parent company of Underwired Amaze, delivers digital strategy for web-based business initiatives, traditional marketing and public relations.

For Lexus the company designed, built and launched a pan-European website to raise the brand’s value.

It has also designed a mobile app for Lexus and produced an iPad application so that users can request
a brochure or book a test drive.

Car manufacturers need increasingly complex CRM systems because of the explosion in social networking.

Lexus GB tested an application at an event where people were able to watch content on smartphones that was traditionally seen on computers.

The company says the application has streamlined the process of collecting and redistributing data and plans to use it at all UK events.

Providers of aftersales products and services say they have an important role in CRM.

Nigel Head, Castrol UK and Ireland franchised workshop & OEM marketing manager, said: “With a drop in new car sales, it is crucial for dealers to retain business within their existing customer base.

“Maintaining an efficient dealership from front-of-house to the workshop generates income and improves customer satisfaction.

“If customers choose to defer work identified during service and repair visits, dealers should follow up at the right time to keep loyalty high.

“Customers generally appreciate a relevant and timely reminder about due work, and can budget accordingly. A great deal of deferred work is lost to independents due to a lack of effective follow-up procedures.”

Tim Heavisides, Car Care Plan chief executive, said selling extended warranty and service plan products could be effective beyond repeat aftersales work within a CRM programme.

“They also allow dealers to ensure they have up-to-date customer contact details, which are invaluable when it comes to prospecting for repeat vehicle sales,” he said.

“Email activity is so cost-effective in generating repeat sales through strong warranty and service plan products that it is no longer the preserve of the big dealer groups alone.”

Cambria Automobiles, a growing dealer group that relies on systems, starts from scratch with dealership acquisitions in its approach to CRM.

Ian Godbold, marketing director, said: “We go right back to basics and cleanse the database to match our objectives with our customers’ needs and wishes.

“For us emails are convenient and inexpensive, and preferred by an increasing number of customers, but we check in case someone prefers contact by mobile phone or by letter.

“We want to retain customers for aftersales and so they buy their next car from us.

"So our CRM programme is based on lifetime values because of pressure from independents and to discourage customers going to another franchised group.”

Godbold believes social networking will become critical to CRM programmes in the years to come.

“We are not frightened by it – we see it as a great opportunity and are exploring how we can use it effectively,” he said.

Net Promoter challenges CSI on measuring dealer skills

CSI questionnaires, for many years vehicle manufacturers’ preferred method for assessing dealers’ performance, have a rival called Net Promoter score.

It has strengths and weaknesses compared to CSI and there is likely to be room for the two methods.

Greig McCallum, strategic managing partner at marketing agency Balloon Dog, has compared them.

He has worked on customer retention and loyalty programmes with BMW, Vauxhall, Chevrolet, Aviva, the RAC and Barclays.

“Net Promoter is a simple mechanic,” said McCallum. “Customers rate a brand on a 10-point scale from ‘not likely to recommend’ to ‘very likely to’.

It works by deducting ‘detractors’ from ‘promoters’ to get a Net Promoter score.

“It is popular because it’s simple, but effective, quick to deploy and complete. Net Promoter is responsive if you’re trying to shift your performance and allows easy comparison within your sector and across sectors, such as cars vs banks vs soft drinks.”

McCallum said Net Promoter was easy to explain throughout big organisations to non-marketers who may hold power over how a brand is perceived, such as in service bays or parts departments.

But he does not see CSI questionnaires disappearing: “There will always be a need for more granular diagnostic data. Net Promoter is a high-level aggregate score.

"To change it, you need to drill down into the detail and find out what’s working and what’s going wrong.

“That’s where CSI surveys still have the upper hand. However, the scale and frequency of these may change and they may be used in a much more targeted way and directed at smaller, tighter groups of customers to understand specific issues or behaviours.”

McCallum said better and smarter eCRM (electronic CRM) programmes enabled companies to get closer to customers so that a marque manager would always know what customers were thinking.

“Marques like Mazda, with a strong Facebook and social media presence, know what their customers think and feel and openly engage with them,” he said.

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