Car Dealers, Be Like Southwest Airlines, Not United

From the notorious forcible removal of Dr. David Dao in April, to revoking a two- year-old toddler’s seat in June, to four blown tires on a Newark landing in November, it’s been a difficult year for United Airlines. Its lack of transparency in handling these incidents has only made matters worse.

It’s no surprise the stock price is down, but it’s not just because of this year’s incidents.

Despite being a leading U.S. airline, United has struggling with decreasing revenue and poor operating margins for years, and it is projected to decline 6.5% in the long-term. In reality, much of the poor performance and reputation can be attributed to a chronic lack of transparency and the resulting erosion of consumer trust.

United is by no means alone in this regard. For decades, airlines have resisted transparency, using hidden or add-on fees for checked bags, flight changes, in-flight entertainment and other amenities to line their wallets.

But the market is changing. Customers crave transparency. With more access to information than ever before, they will find it. even if businesses don’t provide it.

How Dealerships Can Learn from United’s Mistakes

Much like the airline industry, automotive retailing has a history of resisting transparency. Many dealerships still list only MSRPs online, despite the fact that embracing transparency by providing realistic pricing online actually increases total gross-profit per car by $785.

Dealerships should embrace transparency, like Southwest, instead of running from it, like United. Embracing transparency is good for business. It fosters brand loyalty and increases profitability.

Southwest has embraced transparency from the start in spite of industry norms. With campaigns like “Transfarency,” it continues to increase profits and brand loyalty. It has operated profitably for 44 consecutive years, an impressive feat in an industry that has been plagued by bankruptcies and other challenges. In contrast to United’s 6.5% forecasted long-term decline, Southwest’s long-term forecast is 10.5% growth. It has produced greater earnings than United in three out of the last four years with only half the revenue.

A study says 94% of customers will be more loyal to a brand that offers complete transparency. Dealerships that embrace it will gain an advantage over the competition and be rewarded with more loyal customers and increased profits.

How does a dealership embrace transparency? Does it offer realistic pricing and payment information online? Are the Internet, F&I, and sales departments collaborating to deliver the best-possible customer experience?

Offer the information customers seek in a way that fosters trust. Ensure staffers communicate consistent messages to the customer.

Engage buyers online with a completely native experience. A website or e-commerce software shouldn’t redirect users to third-party websites or competing experiences.

Customers are more willing to trust you when a website offers transparency, which can be achieved through realistic pricing and a native experience.

When you embrace transparency, you build trust. Once you’ve done that, customers will be more likely to add accessories, upgrades, extended warranties and service packages.

More than 80% of people say trust is the most important factor in earning loyalty – even more important than price, quality or convenience in making purchases.

It’s not just buyers. When management is open and communicates well with staff, employee engagement and trust increases as well, decreasing turnover and improving performance.

Collaboration between departments helps staff members see the big picture, enabling them to work more effectively towards achieving common goals.

Learn from Southwest’s example and incorporate more transparent practices into online and offline operations, across all departments. Doing so builds trust, increases brand loyalty and drives better business results.

Improving the customer-retention rate by just 5% can increase profitability by as much as 95%. Loyal customers spend more, shop more often and refer new customers.

It’s easy to see from Southwest positively and from United negatively how much transparency matters. So embrace it. Customers and staffers will thank you and your business will thrive.

Aaron Krane is the CEO and founder of Drive Motors, which offers dealerships e-commerce solutions and online buying tools.