Picking the Right Targets

Implementing a customerrelationship management(CRM) program can be daunting for dealerships. Most dealers have a vague notion that CRM is something they probably should be doing, but Tommy Brasher, owner of the Brasher Motor of Weimar Inc. and Chevrolet Dealer Council chairman, notes that few smaller dealers are using a comprehensive CRM system in their stores.

Some dealers, instead of buying into those “complete” solutions, are trying to keep the CRM process simple by focusing only on specific objectives. Still, even the simple solutions require effort.

Dealers who want to increase sales, for example, might want to develop a database of current and potential customers and then begin marketing to them. “It's a simple concept,” says Joe Annoreno, chief executive officer of the Ensurety Group, an Arizona firm that specializes in customer retention. “Dealerships that want to sell more cars should concentrate on the customers they already have.”

Dave Mungenast, president of the Mungenast Automotive Family in St. Louis, MO, 15 years ago started a customer relations department that focused on building a database of current and potential customers. That database now has 35,000 potential customers. “We make sure our name gets in front of them 8-10 times a year,” says Mungenast.

The group cut its advertising costs and increased its sales and customer satisfaction. “That client base is one of the most valuable assets we have,” Mungenast says.

He adds, “But you have to be willing to open your checkbook. When you call the customer and something is not right, you're reopening a wound and you'd better be able to solve the problem. Don't think about what it's going to cost you, think about how you can make this customer happy.”

The hardest thing is to getting the managers to buy into it, Mungenast says. “It takes a while to teach them the wisdom. But believe me, after 15 years, it works and it's the least expensive form of advertising and your customer satisfaction will soar.”

Another area some dealers are focusing on is getting customers to return to the service department. Not only does it create more service revenue, studies have shown customers who return to a dealership's service department are 17 times more likely to buy another vehicle from that dealership.

Eight months ago, City Toyota in California began implementing a new system designed to keep customers coming back to its service department. “We don't use a comprehensive CRM solution throughout the dealership, though,” says Jim Wordy, general manager for City Toyota.

The dealership, instead, focuses its CRM efforts on the service department. “Our retention in the service department was not what it should be,” Wordy admits. “We knew we had to do something.”

The dealership implemented a customer loyalty program that rewards customers for coming back for service. Sales people, upon selling a vehicle, provide the buyer with a loyalty gift card that offers service-related discounts. The information is on a computer strip on the card and uploaded to a customer-specific website.

When the customer returns for service, the service advisor or cashier swipes the card. The information is updated for both the dealer and customer. “We're trying to get them into the mindset of coming back to us,” says Wordy.

Annoreno, whose company designed the loyalty program, says it is the dealership's job to sell the customer on its service department. “Our program helps the dealer point out the things it might already be doing, such as free car washes or discounted oil changes, to name a few.”

Dealerships can run reports off the data to see what offers are attractive to customers. The data also provides a ready-made customer base dealers can market to.

Although the program appears simple, Wordy says “We struggled initially…We've had to go through the evolution, tweaking and making some changes.”

The dealership had to develop a process for providing the cards at delivery and getting the service writers to ask customers for them.

Adds Wordy: “In the beginning, we knew we would see margins drop because of the discounts. But we also knew we would see those customers more often.”

The store had to determine what discounts to offer. “It took us a while to see the trends — what types of service attracts our customers,” he says. “It has worked for us. It was the right thing for us to do.”