From “as vehicle sales go, so goes service” mentality, to believing that you own 100% of that business and you can capture more of it and grow service regardless of what sales is doing.
From focusing exclusively on generating prospects to replace the customers that are leaving
To realizing that nothing is more important or profitable to a dealership than knowing and working its current customers.
From allowing 84% of our customers to leave and go to the competition, to implementing and requiring processes that get them stuck on you and coming back again and again.
From less than 40% of vehicle buyers initiating any kind of visit to our service departments to requiring that all vehicle buyers receive an orientation at delivery and have that critical first service appointment established with your dealership.
From being only transactional (If I cut another $2000 will you take it home today?) to realizing that at least 50% of your prospects and customers are relational (Do I like you and can I trust you?) and that your sales and service staffs have little idea how to recognize them or treat them. And so on…..
Today, dealerships are faced with extreme competition and finding it problematic maintaining margins and finding it impossible to grow margins because dealerships typically develop customer relationships based solely on price with little that differentiates them.
What’s the solution? Dealerships have to learn to have some relationship with customers that, to some degree, overrides price- or dealerships will slowly, then suddenly go broke as is happening to far too many of them today. The success of a dealership today depends simply on its understanding of psychology. How each individual sales or service employee connects with customers and how each individual employee connects with the dealership.
Dealerships won’t survive continuing to focus only on transactional buyers and allowing that culture to dictate how they look at their customer base and the opportunities inherent in it. Twenty years or so ago it was so easy when sales got slow, just put up a big tent, set up a prize box, get the clowns or the bands, fire up the grill, invite the radio station in for a remote, and we could easily sell thirty or forty cars on a Saturday. Ten years ago that didn’t work so well and today it just doesn’t work at all. Okay so it’s the weather right? No it’s delivering the same old message to a new market filled with a new kind of shopper. It’s not just those transactional shoppers that believe they already know everything to make an informed decision, except the price. It’s also those transactional shoppers that are well aware they don’t know enough to make an informed decision and are shopping for an adviser they can trust not to take advantage of them.
Dealerships can no longer work only in the transactional dimension. They must learn to recognize the relational shopper and understand how to do business with them. Its time to adjust that dial from all transactional and accept that 50% of your customers are relational and that both relational and transactional customers shop in both modes. You must recognize both and adjust to both or continue to loose 84% of your customer base to your competition.
In just thirty-five short years how could the industry go from nearly thirty thousand mostly profitable dealers to less than twenty thousand today? How could the dealer body that sold 100% of the 240,000,000 vehicles on US Highways today give 84% of that business away and allow 400,000 service venues that didn’t exist thirty years ago to be flourishing off dealer customer bases today? How?