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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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Where Your Hard ROI Don’t Fit

I keep hearing bold talk about hard ROI justifications for things like branding and even customer service improvements. The sayings generally go along the lines of if I can’t measure a hard, direct ROI from an investment I’m not going to make it. With this way of thinking, you can be the Dollar Store of car dealers but you can’t be the Nordstom or Tiffany of car dealers.

Over the years, clients of my customer satisfaction research included Ritz-Carlton, Four Seasons, Fairmont, Atlantis, and Disney. None of those companies got to the price points they command by getting a measurable return from every little thing they did. It just can’t be done. If you make up your mind your store or group is going to have a premium brand image (e.g. Carl Sewell), then you are going to do some things just because you can trace them back to improved satisfaction, even if you can’t quantify the exact amount of financial gain coming from that investment. Improved satisfaction can lead to higher loyalty and advocacy, but it takes time, often years. Additionally, it is difficult to know what the rate of loyalty and advocacy would have been today if the actions to improve it had not been taken years ago. There are just too many other variables causing noise.

Let me be clear, it is okay to not make any investments in anything you can’t directly and immediately measure results from. However, it doesn’t mean you’re a better business person for doing things that way. It means you are a different business person. I’ve made a very nice living measuring things so business people could make better decisions with the information, because it works. However, that doesn’t mean anything not resulting in a quickly and directly traceable profit is not worth doing.

For those looking to provide extraordinary service, let me caution that you must be disciplined about it. Many of the over-the-top stories about customer service in fact were over the top. The classic story of Nordstom refunding a customer for tires when they in fact never sold tires is an example. (note: Norstrom doesn’t do this today but was reported to have done it once). Fresh flowers in the restrooms may be nice, but it may also be over the top. Let’s start with restrooms that are kept clean. Don’t use the some-things-cannot-be-measured card as an excuse to do whatever it is you feel like doing. The core point of the hard-ROI people is that we need to become less reliant upon gut feel in our decision making. They are absolutely right about that, even if they (we) can sometimes be just a bit impractical about measuring every little thing. Remember my grandfather's old saying, you don't need a whole lot of research to know a donkey has two ears.

Larry Schlagheck
Great comments Dennis. Hard ROI isn't always available. I had a conversation with a dealer at NADA who had put offers on a few stores that were for sale in my region. This particular dealer did not "win" any of these deals and the reason was that the CSI scores at his existing dealerships was too low and the manufacturers said no way. Now that's some hard ROI concerning customer service that wasn't immediately available two weeks, two months, or even two years ago.
Bryan Armstrong
So true. You can't measure the ROI of a "Thank you", but I guarantee it's there.
Tommy Bay
Dennis, I'm always amazed at how you make me chuckle as you teach me a great truth. I hope that you publish a book full of family sayings some day soon. I'd like to start working those into my every day dialogue.
Jim Radogna
Brilliant Dennis, absolutely brilliant! Thank you.
Randall Welsh
Great blog Dennis. Having been in the Sewell stores myself, it is clear they are there for the customers experience. Every day we (People) have a recipe, that we follow. A Dealership is no different. They have a recipe (Plans, processes and procedures) they follow on a daily basis. Where a recipe goes bad, is when it does not work and the cook won't make the changes needed. ROI is one way to measure an ingredient in the recipe. While some ROI measurements are fluff, they still can give you an ROI measurement that has value. Dealers need to remember, plate frames and inserts have a place in the recipe, but try to measure that ingredient. Last but not least, you can't expense your way to a profit. Deleting ingredients, only makes the flavor bland and not palatable. rwelsh@cimasystems.NET

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