Matt Reddin’s CRM Wisdom

We’re captivated by cool, new technology. We’re users of technology on a daily basis, and we’re constantly being introduced to the latest products, processes and enhancements. How much of the value do we really use? How can you be sure you gain the most value from the technology choices you make?

Every decision made within your organization, whether it’s a change in process or the addition of new technology, is directly related to value. If you use technology that provides little or no value, it actually has a negative effect on your organization. Your people will become desensitized to leadership initiatives. They will discount and fight against any new process or technology before giving it a shot. We should routinely ask ourselves if our choices are providing value, and if the answer is “no,” then changes need to be made.

Most likely, you’ll agree that technology improves the efficiency and effectiveness of your dealership. It allows the organization to operate at a high level and remain competitive. Technology is clearly a valuable tool, one you rely on for your day-to-day business functions. How do you measure its value? How do you know when the processes you have in place are producing optimum results, or whether they need to be reconsidered?

The word value can be defined in countless ways. Value can be measured by response time, profit, customer satisfaction, return on investment, or by answering questions such as: Has efficiency and productivity improved? Have there been improved communications and information? Most importantly, are you reaching your short term and long term goals with your current system?

For Ray Riley, the general manager of Liberty Toyota in Colorado, the value of using the technology he’s chosen for his dealership are crystal clear. He’s able to see the value gained through use of his CRM as it directly increases his profit, creates happier customers and leads to less turnover in his sales staff.

“My CRM technology brings a whole new element into the sales process,” says Riley. “It enables us to show customers a variety of customized workups. Then it generates a presentation showing customers multiple options with precisely what they’ll pay each month, depending on variables such as credit score, down payment, rate and number of payments.”

Ten months into the year, sales at Liberty Toyota are up 356 cars. They are selling an additional 40 cars per month, which is a 16 percent increase in sales. The value of his choices is evident in the response from customers and the increase in sales.

Value is realizing direct and measurable results. If you’re seeing results such as increased profit and customer satisfaction that can be attributed to the choices you make for your dealership, then you’re creating value. If however, your dealership isn’t reaping the benefits, it’s time to take action and make some changes.

sexiness sells. We’veall been enthralled by “sexy” technology, such as high-definition media that shows up in our email inbox in the form of video and flash. But do these impressive tools provide real results? Do they inspire consumers to head to your dealership to purchase a vehicle? It may be time to review and prioritize the CRM tools that you’re using.

There are many CRM tools available to you, and while they provide some benefit to your dealership, the order in which you address your dealerships needs and put your CRM tools to use makes all the difference in the results.

For example, you can organize the perfect marketing event that draws hundreds of people. But if your salespeople on hand aren’t trained enough to close the deals, there is no benefit to hosting such an event. Or, if you develop a loyalty program, but don’t know who your customers are, the program won’t work effectively. This concept is the same for your CRM tools, a building process must be in place.

Dealers who have taken the time to capture customer information and get to know their customers may discover that a simple text that says, “You’re overdue for an oil change” or a “Super Sale” email blast with graphics instead of flash videos are a less intimidating way to reach your customers and also more appealing to customers than more lengthy high-tech efforts.

It’s all about starting from the bottom and building up, and knowing your customers’ needs and making decisions accordingly. Here are a few absolutely essential CRM functions for building a solid foundation for your dealership:

1. Capture ALL customer information, keep your CRM information-packed and up-to date

2. Make it extremely easy for your customers to communicate with you on the showroom floor and in the service department

1. Use the knowledge and information on your customers to drive more business

Once you’vegot the basics in place, then you can take that information and use it to move on to the more advanced CRM tools. Technology has to be used in a prioritized fashion to drive results for your dealership. If you don’t have a solid foundation, in other words, the basic tools to retain and gain customers then you won’t be able take advantage of all of the CRM tools that are available to you.

If you’vebeen searching for a new tool to accelerate sales, improve margins, and create a competitive advantage, the building blocks may already in place maybe you just need a push in the right direction! Fortunately, none of this is rocket science.

Take a look at your desking solution; chances are it is underutilized. In addition to its primary function, you can easily put it to work as a highly-effective sales tool to increase your profits and enhance the customer experience.

For example, I know of several dealers who will pre-print a menu of payment options from their desking solution and hand them to customers during the sales process. This simple, straightforward sales tactic draws the customer into the finance process. It creates a bond between you and the customer at a critical moment and inspires trust and a sense of partnership precisely the emotions you want the customer to experience as the deal moves towards closure.

A well-designed desking application should enable the dealer to compare lease to finance payment options quickly and present numbers in compliance with fair business practice regulations (i.e. similar presen- tations for similar credit scores). It should also calculate trade-in value accurately, including and presenting reconditioning elements. Most of all, it should adjust and present numbers easily to help customers reach their desired payment.

Your desking solution should display all this crucial information in one window, so the sales team doesn’t have to toggle between screens to work a deal. If a deal doesn’t close immediately, the solution should enable you to save your notes and retrieve them easily when the customer returns.

A robust desking solution also helps the dealer stay compliant. “In today’s environment, that is absolutely critical,” says Devin Stotts, retention manager at Reliable Chevrolet in Springfield, Missouri.

His desking solution knocks at least 10 minutes off every deal and gains an average of $250 in gross profit. “And that makes everyone happier,” continues Stotts.

Desking technology allows customers to view a 16-by-16 matrix so they can easily compare financing to leasing or balloon payment options. “Your customer feels in control. It’s all spelled out clearly for them in black and white, there are no gray areas or confusion,” says Stotts.

It is also helpful when the desking solution integrates directly with Kelley Blue Book, CARFAX, ADP, Reynolds and Reynolds, and NADA. These integrations enable you to reduce transaction time and duplicated efforts. “The level of trust goes up when you can show the customer all the available op- tions. When the customer understands all the options, it’s actually easier to close the deal,” adds Stotts.

Good technology used creatively generates fresh opportunities for improving cash flow, and with the right tool, the processes are implemented and easily enforced.

Practically every dealer I know is aware that service can be a huge generator of profit. But it’s alarming how rarely that sense of awareness translates into meaningful action even as new car sales margins continue declining.

It amazes me when I see dealers spend lavishly on sales marketing and then skimp on service or retention technology, process and accountability. It’s really a shame especially when you consider that with a little effort, the service department can make an impressive contribution to your net income.

The primary business challenge, of course, is first-time customer retention. In other words, you need to get a customer into your service department the first time and then do all the follow-up work necessary to make certain the customer returns again and again.

Over the years, I’vehave witnessed and implemented quite a few best practices that can significantly increase your chances of scheduling that crucial first service appointment, ensuring that the customer shows up and then keeps coming back time and again. Remember, if you can get them to that first appointment, they then have the chance of coming in again! And again and again! Now we’re talking about some real cash flow!

Here are five proven best practices for improving your income from service:

1. Implement a workable process enabled by a technology for automatically identifying which of your customers should be coming into your service department and then market your service offerings directly to them in a very specific way.
2. Make it as easy as possible for your customers to schedule their own service appointments, whether by phone, by email or via the web. This should be an easy process if the right tool is chosen.
3. Use the tool and process to follow up swiftly to confirm their service appointments and send automatic email reminders to minimize the chances of them forgetting about their appointments. If they are a no-show for the appointment, your tool and process will notify you and drive an activity to reset the appointment with the customer.
4. Make sure they have an ideal customer experience and become raving fans of your service department. This requires you to coordinate your processes and your technology to deliver truly personalized, top-notch service on a consistent basis and make sure that you can measure your success.
5. Give your service customers a good reason to come back. Don’t lose track of them when they leave. Communicate with them. Follow up with highly targeted communications.

If you make the effort necessary to send the right messages to the right customers at the right times, you will be rewarded with an increasingly steady stream of income from a growing pool of loyal customers.

As you well know, this isn’t rocket science. But you’d be surprised how many dealers fumble the critical hand off between sales and service. With service department margins running in the 60 to 70 percent range, that’s a fumble you just cannot afford to make.

Today’s cost-effective technologies make it easy for customers to set up their own appointments while you manage the workload to keep operations running smoothly and efficiently. The same technologies also enable your customers to arrange for shuttle rides or loaner cars while their vehicles are being serviced or repaired in your shop.

Best of all, these technologies can push real-time customer information into your dealer management system, creating multiple opportunities for generating fresh revenue and profit.

Integrating sales, customer service, communications and service isn’t difficult, but it does take discipline. Fortunately, the solutions and expertise are available. Don’t fumble the opportunity.

Who is perhaps the most important person in any business? The customer. Understanding your customer’s needs at each step in their life cycle with you is crucial to the success of your dealership. Using an integrated system for marketing, sales, service and CSI allows you to pinpoint these customer needs, which leads to increased profit and satisfaction.

An integrated system for all of your dealership’s departments provides better customer service, increased productivity and highly efficient marketing. It gives you a complete view of the customer, plus it allows employees from all departments to easily access customer information prioritize communications and create relationships effectively. Deals can be made in less time, and customers leave satisfied with their experience.

Besides increasing customer satisfaction, an integrated system sharply reduces the marketing and advertising dollars spent. For example, when a customer returns a negative email survey, you wouldn’t want to market future products or sales to that customer until their complaint is resolved. This would compromise the relationship with the customer who is still awaiting a resolution to a problem, and the effort would be a waste of time and money.

Having a complaint resolution process and supporting technology embedded within a CRM system is critical because it defines and enables a process to efficiently handle every concern in a timely manner. With one system in place, complete information on any customer at any time is at your fingertips. And employees are able to make informed decisions on a customer-by-customer basis.

Using separate applications may appear to work initially for your different dealership departments, but this is simply not the best long term solution. Information that has to be collected from separate systems and departments not only slows productivity, but increases operating costs and limits selling between departments (a key to retention). To sum it up, it hinders the ideal customer service experience that you want your customers to have every time they visit.

Here’s an example of how separate applications can work against your business. A customer searches the internet for a vehicle they intend to purchase and initially they deal with an internet lead manager. Then the customer walks into a dealership showroom and deals with a showroom salesman, creating an internal competition for the customer. This isn’t fair to the customer or to the employees. If your data isn’t working together effectively, you’re compromising every department.

The bottom line is, customers and prospects expect you to know about them. With disconnected solutions that don’t cover every interaction that happens, customers feel orphaned and abandoned. They are more likely to head elsewhere next time they need their car serviced or are in the market for their next vehicle.

Exceptional customer service adds value to the customer the most important person. An integrated solution provides a solid understanding of your customer. And that information is vital to the success of your business. It allows you to streamline your day-to-day processes so you can offer your customers an exceptional customer service experience every time and without fail. It’s a win-win situation for the dealership and the customer.

In today’s fragmented marketplace, newer technologies provide cost-effective alternatives to indirect media.Are you still spending thousands of dollars every month on mass marketing tactics that don’t add measurable profits to your bottom line?

Are you still relying on indirect media such as print, TV and radio to drive traffic to your showroom when you should be running direct marketing campaigns that can increase sales by 20 to 30 percent?

According to a recent NADA analysis, spending for newspaper ads dropped from 52.2 percent of total ad dollars in 1996 to 27.3 percent of total ad dollars in 2006. That’s a drop of nearly half, reflecting the inability of newspapers to deliver results.

Over the same period of time, spending for radio and TV ads increased, but not by much. The marginal gains of radio and TV resulted mainly from advertisers bailing out of newspapers and not yet adopting online or email marketing mediums.

Auto retailers now spend 10.2 percent of their marketing budgets on direct mail and 11.5 percent on Internet advertising a category which wasn’t even measured back in 1996. You can count on those percentages to increase as more dealers discover the power of both online and offline direct marketing strategies.

Think about how much you spend on marketing and advertising each month. Then ask yourself these questions:

• Do I really know which of my marketing tactics are working and which aren’t?
• Do I know how much I spend on marketing to generate a sale?
• Can I trace a direct link between the marketing dollars I spend and the vehicles I sell?
• Do I know who responds to my marketing campaigns?
• Do I keep track of prospects as they move through my sales process so I can market to them even more effectively?

You can’t use yesterday’s marketing tactics to compete in today’s hectic marketplace. You’ll spend yourself into bankruptcy before recouping a fraction of your investment. But you can easily leverage the information sitting in your database to create sharply focused campaigns aimed directly at the most valuable customers in your market.

Here’s the best part: You already own the information in your database. With a little extra effort and the right technology, you can turn that data into pure gold. For example, you can target micro-segments of your audience based on vehicle mileage, value and service history. You can slice and dice your database to generate direct marketing lists based on CSI responses, manufacturer incentives, birthdays and graduations.

You can market directly to customers who haven’t visited your service department in the past six months. You can target customers who are near the end of their loan or lease. You can reach out to customers who bought from you in the past and have no more than $2,000 negative equity in their vehicle.

You can do all that and more by using the information in your customer database. So what’s holding you back?

Many dealers I know are still afraid of technology. They think it as another money pit. In truth, the timing has never been better for dealers who want to build up their database marketing capabilities. The price of technology has fallen steadily while its value has risen dramatically. Each new generation of technology is easier to use.

For the cost of a single ad campaign in a traditional media, you can run dozens of highly effective direct marketing campaigns via mail or telephone. You can run hundreds of tightly focused campaigns via email. And we’re only beginning to see the impact of mobile telephone marketing!

Today’s technology enables dealers to create their own sets of automated business rules and custom-build marketing campaigns that generate margins far greater than their costs. If you’re still not entirely comfortable with database technology, knowledgeable vendors are waiting to help and support your direct marketing efforts.

Your most profitable customers are the ones you already know. Use the business intelligence locked up in your database to entice those customers back to your dealership. You’ll be amazed at the additional revenue you can generate when you market directly to loyal customers.

And one more question “When is the last time that you bought a product based on the type of marketing that you are currently using?”

You’re probably familiar with the term “outsourcing,” using a 3^rd party company to complete projects that you don’t want to or can’t do internally. Many dealerships use external call centers, surveyors, mystery shoppers and outside mail houses.

Reasons for outsourcing range from economies of scale, convenience, accountability and increased productivity for current employees. Outsourcing can be a huge benefit to a dealership. One challenge for the automotive industry is to outsource for the right reasons. Most dealerships outsource for the wrong reasons.

One key question to ask yourself is, can you be sure that the projects you’re outsourcing are driving the desired results? The decision whether to outsource or remain in-house doesn’t have to be time-consuming or challenging. The goal is to simply to determine the best way to accomplish the project or activity most efficiently while driving the desired result.

There are four steps in determining whether to outsource or remain in-house:

Step 1: Identify what works what processes or activities when implemented drive results.

Step 2: Test the process to ensure the desired value is realizable.

Step 3: Implement the process consistently with the right resources (in-house or outsourced).

Step 4: Measure the results and strive for even better.

Generally, outsourcing is a good option when at least one of the following issues is at play: the task is mundane and/or very task-oriented, the task requires specialized skills that you don’t have, the task requires constant management oversight for compliance or high efficiency to be achieved, or the task does not take away from the customer experience if done by someone outside the dealership. If these are not issues, in-house may be the better option.

If you’vedecided to outsource, the easiest way to ensure that your outsourcing decisions will be valuable to your business is to select a partner that will enable any execution strategy that YOU want. The key components to making your selection are flexibility, accountability and reliability, and most importantly the integration of the outsourced task into the day to day business processes of your people. This normally requires impressive technology and great communication between the outsourcing company and the dealership.

Choosing technology, for example, that is tightly integrated with an affiliated call center and print house affords you choices as to how your goals can be accomplished. You can perform the calls that you want to perform internally, and you can have calls that have not been made in a defined amount of time or based on certain criteria to be executed externally. This provides the dealership the control of the cost and the customer experience, both items are of extreme importance and drive profit. Many vendors can not accomplish such goals. So, choose your partner wisely.

This is just one way in which outsourcing can be beneficial. So should you outsource or keep your activities in-house? The real answer is both. Whichever choice allows you to enable the the most efficient linking of your goals — to processes to profits is the way to go. A good strong partner is the key.

Many automotive CRM companies are gearing up for growth and changes within the automotive industry. In fact, you will see many different “new” offerings this year at NADA, all under the name of “CRM”. For a CRM company to consistently provide value to automotive dealerships, we have to keep up with market demands, and this requires constant attention to the latest needs, trends and developments outside, and most importantly, inside the dealerships.

CRM companies who successfully respond to the needs of dealerships are those who spend as much time on dealership expertise as they do on their technology talent. It’s impossible to understand the business from an outside view of the dealerships.

In DealerSocket’s case, a full year was spent working for free in dealerships so a CRM solution could be accurately developed based on the needs of day-to-day business. Also, with more than 500 dealerships on the product we spend the majority of our people’s time in dealerships, refining and creating our tools to ensure maximum value is delivered to the dealer. This valuable dealership time is spent recognizing the turnover rate of customers, employees and prospects, analyzing advertising and marketing, changing market dynamics and noting legal concerns. Gaining dealership experience is the first step in creating technology that is not only successful, but has the ability to change along with the industry needs.

Now, how do you find a CRM company that will work for your dealership and be as flexible as your needs? In selecting a CRM partner, the most important element to consider is whether they are able to change with the constantly evolving automotive industry.

The CRM company must entail 4 attributes:

1. continuous focus on improvement

2. ability to listen to the dealer

3. ability to listen to problem and know how to solve it with technology

4. technology architecture that enables quick change and enhancement.

In addition, an internet-based server is ideal, as a server based software application with multiple versions installed on a local computer is much less able to provide the changes in a timely manner”