Thinking Man's Guide to CRM

Auto dealer Kevin Reilly holds various sheepskins from top universities: bachelor degrees from Georgetown; a law degree from the University of Virginia; and an M.B.A. from Duke.

So it's not surprising that he took a studious approach in selecting, launching and implementing a modern customer-relationship management system for his Virginia dealership, Alexandria Hyundai, near Washington.

He learned a lot along the way, including how to control costs and make sure the high-tech system is uncomplicated enough and the training good enough for dealership personnel to handle.

“Too much technology is just as troublesome as too little technology,” says Reilly, sharing his knowledge at an E.N.G. automotive CRM conference in Los Angeles, CA.

But on the too-little end, many dealers think CRM is a function of Microsoft Office or that “you can just take it off the shelf,” Reilly says.

You can't.

“CRM is not ‘I'll take No.3, supersized,’” Reilly says. “It is made to measure.”

Consequently, “selecting the right vendor-partner is as important as the CRM solution you choose,” he says, citing functionality, range of offerings and track record as what to look for in purveyors of information technology.

Other things to focus on: flexibility, pricing, terms (as in length of contract), support, training and references.

But it is more than just picking out a good system from an upstanding company, then sitting back and watching prospects turn into sales, he says.

It also is a matter of getting staffers to systematically obtain, pursue, cultivate, track and close leads using sophisticated computer software that requires a certain skill level and degree of motivation.

That means sometimes taking employees to where they don't want to go.

“The chief obstacle for the success of your people is your people,” Reilly says, paraphrasing American humorist Don Marquis. “It's human nature. We don't like change even if it helps you make more money and gets you more customers.”

To get employee buy-in, Reilly says he assembled his staff and told them, “This is the way it is going to be done. It's non-negotiable. We're spending too much for it otherwise.”

He says most employees “got it.” About 30% resisted. A way to overcome that is to reward staffers for using the system, not just for achieving improved sales and margins.

“The price of inaction is far greater than the cost of making a mistake,” Reilly says, quoting Meister Eckhart, a 14th century philosopher.

Also in Reilly's textbook of CRM success is the need to make sure entered data is complete and accurate.

Accordingly, questions to ask include:

Number of test drives? Turnovers?”

Such issues need to be discussed on a regular basis, Reilly says. “Make key metrics an inviolate part of your meetings.”

He says the dealer principal or general manager should make reports easily accessible and department managers should “incorporate performance reviews in daily work plans.”

Reilly founded Alexandria Hyundai in 2001. Since then it has won sales and satisfaction awards.

It annually sells 1,000-1,300 new vehicles in a department consisting of eight to nine salespersons that are computer-friendly and moderately experienced.

Reilly says his new-car customers tend to be professionals who are Internet savvy, confident and expecting a high level of service.

His two-salesperson used-car department sells about 400-500 units a year, about 90% through Hyundai Motor America's certified pre-owned program. Reilly says his used-car customers generally are Internet savvy and value conscious.

The service department — consisting of seven technicians, two service writers and a “hands-on” manager — handles 800-1,000 repair orders a month. The servicecustomer base is loyal, value conscious and willing to invest, Reilly says.

He praises Hyundai for its 7-model lineup and the progress it has made in product quality and refinement during its 21 years in the U.S.

“There's the story of a Hyundai salesman who back in 1986 went on a test drive with a customer in an Excel and had to turn off the air conditioner to get enough power to go up a hill,” Reilly says.

Contrast that with an '07 Hyundai Vera Cruz that sells for $35,000, he says.

“Who would have thought Hyundai would be selling this luxury SUV, one that is rated higher than the Lexus RX 350?”

He notes that during those two decades, tools for developing and tracking sales prospects have gone from Rolodex card files to sophisticated CRM software.

Reilly says he lacked the money to buy a proper CRM system until Hyundai this year increased dealers' profit margins. “It allowed us to be moderately profitable and make these investments.”