Satisfied Customers Help Dealerships Survive

Despite having to cut marketing expenses this year, Kenny Kent Toyota & Scion in Evansville, IN, is thriving.

It has a strong finance and insurance operation, high customer-satisfaction numbers and decent showroom activity in the first half of 2008.

“I think No. 1, it had to start years ago,” managing partner Butch Hancock says of tightening dealership budgets and bracing for tougher economic times. “You can't just start today, but we have a good reputation and a lot of our previous customers coming back — we have good customer retention.

“I could see where it might be hard for dealers — this is a fairly rural market — but I can see dealers who don't treat their customers well and have poor CSI (customer-satisfaction index) scores, they might struggle in today's market. They are not getting as many of their customers to come back to their store.”

Hancock says that one of the things enabling Kenny Kent Toyota & Scion to continue to succeed these days is the fact that they've done a great job with their customers.

“We have strong CSI numbers, and we are getting a good retention to the people we've sold cars to over the past 5-10-15 years,” he says. “That's a key element in our success.”

There might be a lot of struggling dealers that haven't built into their future, he says. “That's something that has to do with 75% of our success. Also important is having a good relationship with the manufacturer and having the right product on the ground.

“Another thing, expense control. Anybody who at the end of 2007 didn't take a look at their advertising expenses or their people expenses, should have. That was a big deal.

“When you felt a little bit of the economy shift coming on, if you didn't react right away you are probably trying to play catch-up right now. I made some budget changes back in late 2007 that are reflected today.”

The dealership is among 65 stores in the Kenny Kent Automotive Group. It recently invested heavily in its Lexus and Toyota facilities in Evansville.

“We do a lot of grass-roots marketing where we go out into the community and we are involved with different things,” Hancock says. “We are still there, only at a little lesser amount of participation, and that's the same way I'm going to be with TV, radio, newspaper.”

The Internet is attractive as “the most least-costly form of marketing,” he says. “I see a lot of dealers, when there's a downturn, they want to try every little different thing that comes along, and there's no consistency in their message.

“That's a key today, in today's market, if you are not out there and being consistent with a message, you won't be consistent in sales, either.”

Another way the Ward's 500 dealership stayed successful in the past few years was by reacting well ahead of the gas-price situation.

“It isn't going to change,” Hancock says. “We are going to continue to see $4 a gallon gasoline or right around there. So, you have to shift your thoughts, to more cars and better fuel-economy vehicles. You can't hope the market will come back. You have to watch your days' supply of SUVs and trucks. Sometimes that's easier said than done. I've got too many trucks in inventory right now.”

Hancock says he's ordering no trucks and few SUVs and only if those get decent fuel mileage.

“You have to make some changes in order to survive the current market you are in,” he says. “That's what I've done here that keeps us moving in the right direction, moving forward, not backwards. Otherwise, you are going to wake up one of these days, and it's going to be very tough to catch up.”

Hancock says his Toyota-Scion store is selling pretty much anything and everything outside of the big trucks, such as the Tundra pickup and Sequoia SUV.

“Those seem to be soft, but everything else we have — every model — seems to be selling,” he says. “We are holding our own, and we are really exceeding some of Toyota's expectations for us in some of those other model lineups.”

The store has done well in its finance and insurance office, well enough to make the Ward's F&I 150.

Hancock says it really makes a difference if a dealership's F&I staffers are trained and knowledgeable about the products they are selling. Dealerships that struggle with F&I don't have a program, whether it's training or a proper product lineup.

“We have a list of products we sell in the F&I office, and we offer every single product to every customer that comes in there, 100% of the time,” Hancock says.

“It's kind of like when you go to restaurant, and the person that's waiting on you asks if you want a dessert, but if they bring a tray with five or six deserts on it, and you see what it looks like, chances are someone is going to take it off of that tray.”