CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
Here is a recopy of the open letter I published in the most recent edition of the Dealership Innovation Guide. Let me know what you think...
Having good strong relationships with your dealer network is a top priority; just as maintaining a good relationship with you is a high priority for your dealers. Neither party can exist without the other and when the tide rises, all boats in this relationship lift together. It’s disappointing to me that vehicle OEMs are making three huge mistakes in digital marketing strategies that are shooting your dealers in the foot, and thus hurting everyone involved.
Mistake #1: OEMs have forgotten their dealerships in their social media strategies.
Social media allows brands to connect with customers on a personal one-on-one level. I still brag about how Allan Mulally, the CEO of Ford, had a small conversation directly with me on Twitter. The personal attention he gave me, even through 140 characters, created a personal connection between me and Ford, as do all of the hundreds of thousands of people Ford has connected with through social media. When done right, social media humanizes your brand and forges deeper relationships with the customers.
Social media success largely revolves around starting conversations through the sharing of good content. Think about how we communicate these days: we share content. When I’m proud of my son for a great T-Ball game, I share pictures on Facebook. When I’m frustrated with a product, I rant on my blog. Videos of my daughter’s dance recital can be found on YouTube. The world, especially generation Y, like me, communicates through sharing content.
You, as an OEM, do an incredible job connecting directly with customers by sharing content. You are able to create a consistent brand message by creating and sharing content with your customers via social media. Dealers, however, struggle to do social media well because they don’t have the staff in place to create the content. How many dealerships do you know that have a content writer or creative department on staff? Very few. In addition to participating in local community-related discussions, dealers should be publishing blog posts on your products, distributing local press releases when your incentives change, broadcasting video comparisons against your competition, and more. It would be immensely helpful if you as OEMs took the content that you already produce and make it readily available for dealers in a format where dealers could easily insert their city/state and share. And why not? You already make it available to consumers. Sharing it with the dealers in addition to the customers would serve to compensate for dealers’ weaknesses, and it would align that dealer better with your brand, creating a consistent experience for the consumer. I know you are focused and doing well at creating and sharing the content with customers, why not make an equal effort to educate and put that content in the hand of the dealers?
Giving dealers easier access to your social media content and making it easy for them to share is a simple solution to implement with technology and would be a big boost in the reach of both you and your dealers. Think about how many fans you, as an OEM have on Facebook. At the writing of this article, Toyota, as an example, has about 380,000 people who “like” their page on Facebook. Let’s say 1200 Toyota dealers could accumulate only 1000 fans each, which is very possible. This would mean that Toyota stands to increase the reach of their Facebook brand message from 380k to over 1.5 million by adding their dealers to the social media mix. And not only would it create more reach, but it would tie your customers to your local dealerships, which is where your customers belong. The car business is still a local retail business, its the people business, but your dealers are totally left out of your social media strategy and that is a mistake.
Please note that I am not saying to take control of your dealers social media efforts, that would be a disaster. Simply use technology to make your content readily available to your dealers to add their location, and personal touch and share through their channels. Your dealers are an extension of you at the local level. Don’t refuse them the tools they need to be successful for themselves and for you. Bring them back in the loop.
Mistake #2: CSI is dead, move on and move the market to your benefit.
The concept behind CSI is right on target: collect honest customer feedback so dealership performance can be measured and customer loyalty can be understood and improved upon. However, given today’s market, CSI needs to be phased out for something much more useful.
There are too many flaws in our current CSI strategy. For starters, the collected feedback is not an honest representation. There is too much dealer “encouragement” on customers to give them good remarks, so the surveys do not reflect accurate customer sentiment. Until the scores are collected in a more verified manner, the sample set of data will remain tainted and not worth the paper it is printed on.
Before you blame the dealers for tainting the data set, think of why they HAVE to be so concerned with those scores. It’s because of the pressure they feel from you – the OEMs who use CSI rankings to rank dealers and reward stores – that they can’t afford to let natural results come in. This tells me two things.
First, the fact that OEMs need to reward and incentivize dealers to get good CSI means there is not enough correlation (or the correlation isn’t communicated well enough) between good CSI and a dealership’s success. If CSI led to a measurable increase in deals, I guarantee you wouldn’t have to do a thing; dealers would naturally focus on it. I suggest you make the impact of CSI stronger by moving to a model of verified online reviews. Yes, I mean publish the results for customers to see and aggregate all other forms of verified dealer ratings as part of your score. Consumers turn to online reviews to decide where to shop and so this is the data you should be watching, after all this is the data your customers are using to make decisions. By moving to a model of transparently sharing verified scores you collect, or moving to just simply track the verified scores that are already aggregated online you will get a better view into customers’ true satisfaction, and you will move the market. Believe me, where the customers go, dealers will naturally follow.
Second, today CSI is not about creating happy customers. Due to the overt pressure from you, at the OEM level, CSI is about creating good scores, not happy loyal customers. If the result is to grade a dealer on creating happy customers because happy customers create loyalty, reward dealers for selling repeat business. If customers are loyal, they come back. Reward dealers who successfully capture the repurchase, not create the illusion of potential loyalty.
CSI is a sticky topic, I know, and the suggestions I have laid out have many details to be addressed, so let’s get to it. CSI is obsolete. It’s not accurate at tracking consumer satisfaction; thus, it does not create loyalty and your current incentive structure has turned CSI into a political process, not a happy customer process. It was helpful before, but its time to catch up with the times and do something that is effective today. We as an industry, waste too many resources playing this political game that could be successfully invested elsewhere... like in online reviews. Let’s stop playing politics and do something to benefit the market and all parties involved.
Mistake #3: Your domain ownership rules are killing your online marketing and strengthening your competition.
Too many manufacturers are enforcing stricter domain ownership rules upon dealerships that other online marketers don’t have to follow, creating a disadvantage for you and your dealers. Many OEMs are sending dealers letters, putting pressure on reps, and even suing dealerships for domain names that they don’t like because it contains the franchise name in it, such as PreownedLexusConcord.com. Manufacturers can hold dealers to this higher set of rules because of their dealer agreement, but unfortunately for the dealers and the OEM, this is a lose-lose proposition. The general public does not have to adhere to these rules, so the dealers are at a severe disadvantage in their online marketing strategy.
Many current OEM rules state that a dealer cannot have a second website that uses the franchise name in it, even if it complies with trademark laws. In our example from above, Toyota will not allow a dealer to have PreownedLexusConcord.com, but the courts have made clear in multiple cases that as long as the content of the website does not impersonate the OEM and cause consumer confusion, anybody can own and operate such a site. This means a third party lead collector can use the site to collect leads and sell them, and an independent dealer who sells used Lexus vehicles can use the site to capture your customers. Yes, basically anybody except that dealer who must abide by these arduous OEM rules, can use that domain to steal your customers. In other words, you are opening up the field for intense competition against your franchised dealerships by holding them back despite the courts having cleared the way for others as long as they follow trademark laws with the content inside the site.
Some may be asking “Why would a website with a domain like this be valuable?” Google has a history of ranking domains based on exact keyword match, so they are likely to rank domains high for keywords such as Lexus, Concord, and Preowned. Higher rankings gain more traffic and thus more car deals. But, again, because of your domain rules your dealers can’t compete on this front so your customers are being stolen right out from under the dealers, and all that traffic and those potential car deals are being passed on to Mr. General Public or any seller that is not a franchised dealer. Your domain rules are a big digital marketing blunder made on the part of your legal teams, someone needs to step in and get this corrected asap.
The bottom line is the relationship between OEM and Dealer must be strong. Its difficult to align strategies when OEMs and dealers don't always have exactly aligned interests and are at different levels of digital marketing knowledge. Sometimes the dealers are ahead, sometimes you the OEM is ahead. Either way, the solution starts with education. You can’t fix what you don’t know, but hopefully now that we have brought these three issues to light, there can be some quick resolution, for there is much to gain.
Dealers who read this, I encourage you to share the article with your factory rep. We need to call as much attention to these topics as possible. Factory reps, if you would like do discuss these topics with me offline, I can be reached at email@example.com.