By Professor Jim Saker
In the 1890s, the famous Russian physiologist Ivan Pavlov was studying salivation in dogs as a response to being fed and noticed that the animals started to salivate when he entered the room even when he had no food.
Professor Jim Saker is director of the Centre for Automotive Management at Loughborough University’s Business School. He has been involved in the automotive industry for more than 20 years.
One of his conclusions was that there were some things that dogs don’t need to learn, they are hard-wired to respond to even the thought of food.
Can I say from the start that I have no wish to compare dealer principals to Pavlov’s canine friends, but come every March and September the manufacturers in the UK dangle performance bonuses that any good dealership is hard-wired to go and chase.
A debate in AM this month is over the issue of incentives. Most manufacturer bonuses are based around some form of volume incentive, coupled with an additional bonus based on a measure of customer satisfaction. In most cases, the volume bonus is the greater of the two – the real issue is whether this affects dealer behaviour. Do you drive for one at the expense of the other or do you try to achieve both?
In reality, the objectives are not mutually exclusive and delivering high volumes to happy and positive customers is something most people would want to achieve. The challenge arises if you end up having to trade off volume at the expense of satisfaction. If you incentivise one more than the other, it is self-evident that the priority lies with the one that has the bigger bonus. Our hard-wiring and commercial acumen will inevitably take us in that direction.
I have spent the past five years trying to persuade the sector to stop measuring satisfaction as it is a weak indicator of repurchase intention, especially on the new car sales side of the business.
With the silo mentality of most dealerships and the high turnover of sales staff, it is unlikely the customer will meet the salesperson again. The bigger level of engagement and relationship building is on the aftersales side, which usually fails to attract any big bonuses from the manufacturer.
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