Making the Grade in CRM

When it comes to customer-relationship management, too many dealers are “leaving money on the table,” says Steve Lane, an instructor with the National Automobile Dealers Assn.'s Dealer Academy.

Inadequate training with CRM tools and technology, lack of staff focus and incomplete management “buy-in” often leads to shortcuts and haphazard use. As a result, closing sales ratios are not at optimum levels.

Lane and Bill Adkins, a colleague at the Dealer Academy, are trying to change the way dealers use and view CRM so it becomes a more effective tool for customer follow-up.

They are especially focused on incentivizing the dealership managers and staffers attending their classes to understand that proper CRM use is essential in order to generate more return visits from customers who don't buy on their first trip to the showroom, especially in a tight market.

“The closing ratio is too low for first-time clients, in large part because tracking them is not being done very effectively,” Adkins says. “If you want better control of your marketing and advertising dollars, more sales because of a higher closing ratio, reduced expenses and increased overall profitability, a good CRM structure could be the answer.”

The academy instructors stress the need to use CRM in a more disciplined and focused manner. “You need to effectively log and track every customer every time,” Lane says.

Dealer Academy statistics bear that out. Of the 80% of visitors who don't buy on their first trip to the dealership, about 33% return (so-called “be backs”), and 67% of those ultimately will purchase.

About 50% of clients buy on the spot if they receive a good product presentation and demo ride, and under those same circumstances 38% buy within four hours.

However, Adkins and Lane teach their students the “be-back” percent can climb to 67% with proper CRM use of systematic customer contact and follow-up to drive up the closing ratio.

Not all dealerships underutilize or misuse CRM. Some get it right. One is the New England-based Ira Automotive Group.

The Dealer Academy uses it as a case study, with permission, to teach best customer-marketing and tracking practices as part of business-development processes.

These sessions help dealers improve their use of CRM with step-by-step teaching and evaluation of customer communications and follow-up in the sales and service departments.

Dealer Academy students are encouraged to bring forward other examples of successful business practices to share with the class, ensuring the teaching emphasis is on real-life business situations.

The quality of CRM technology, its analytics, communications capabilities and ability to integrate into an existing dealership-management system also are factors in improving customer tracking and follow-up. That is especially true for larger dealerships with large customer bases.

The newest generation of CRM technology offers dealers more flexibility than older versions, which largely were just contact-management systems.

Today, dealers can segment their databases much more precisely and strategically. CRM technology offers database management and marketing, contact management and response and customer segmentation.

As a result, the right customers can be reached the way they want to be reached, and analytics can better measure the effectiveness of various contact strategies. It becomes the responsibility of dealers to identify their goals for each customer segment and use CRM to meet those goals.

Management buy-in, including a commitment to making the right system and training investments, can be one of the biggest hurdles, Adkins says.

He notes that managers sometimes use CRM performance-tracking capabilities more to dish out reprimands than to motivate staffers.

“Pushback is not unusual in some dealerships, because there can be a natural tendency to resist change from the old way of doing things, especially if it has been successful in the past,” Adkins says.

“But today's market is more complex and competitive, and the opportunities to reach customers are so much better. Dealers are well-advised to take full advantage of and step up their focus on CRM.”