CDK's purchase of Auto/Mate may create a major disruption in the dealer management system (DMS) industry. Here is our take. DOWNLOAD
I recently read a very thought-provoking article asking this very question; “Is the simple fact that the customer has money enough to make the purchase a determining factor for you?” Too often the customers dealerships try and attract aren’t necessarily the customers they really should be targeting. According to the article, it’s solely the dealership’s fault. Retail automotive dealerships are known for throwing out all sorts of mixed messages trying to attract the widest audience possible.
No matter what dealership department you work in, you have those customers that take up a lot of your time, sometimes are difficult to deal with and that, in general, are customers you’d rather not have. There are countless stories of sales that were not made simply because the sales manager decided that it would be more trouble trying to get the deal closed than it was really worth. According to the article, while these troublesome customers “did indeed have the money [for services], they were hard on the staff, on occasion disruptive and were gone as fast as they came.”
You may be a dealer who specializes in special finance, obviously there’s nothing wrong with that. However, you must be cognizant of the simple fact that the message you put out there will dictate the type of customers you get. If you don’t want your finance department spending a lot of time trying to get financing, collecting stips and having bank fees eat into your front-end profit, then you may want to rethink your approach in attracting credit-challenged customers with your marketing.
If your marketing message is attracting un-loyal customers who are only doing business with you short term, this will detract from any sensible growth strategy and cause the very thing you don’t want; a shift in focus away from customer retention and an increase towards acquisition. If you’re a 100-car a month store, you’ll never be a 150-car a month store if you are continuously having to seek out customers, especially if those customers are the ones that have no intention of sticking around. There’s nothing wrong with deep discounting a car to a person who lives in your market and will be servicing their vehicle with you. At least there is an upside to that loss. If you’re doing the same thing for a customer who doesn’t live in your market and you will never see again; you’ve taken a loss with no opportunity for future growth. The same applies to your service department. If you are trying to acquire customers with $19.95 oil changes and find very little up-sell happening, chances are good that those customers won’t be back… that is until the next $19.95 oil change.
Many dealerships don’t know how to isolate or segregate the customers who are doing this when in fact, it’s a very simple process. Technology offers solutions to dealers that allow them to track purchases and customer interactions through sophisticated loyalty programs. The installation of a loyalty program would help you identify the customers that only come in for these deep discounts but also allow you to separate them from your marketing efforts. It becomes very simple then to not offer coupons or deals to those specific customers that are in reality actually costing you money. The opposite also applies. When you have a customer that you consistently up-sell when they come in for a $19.95 oil change, you can send them these types of offers on a more frequent basis. They are the predisposed profitable customer, and will in all likelihood make that same purchase again.
As the article states, “…in order to build a business that truly can thrive, you must understand who you are equipped to serve best and you must do everything in your power to attract, serve and choose them over all else.”
Next time you are contemplating marketing strategies, think about which customers you want to attract. Then tailor your message to them and ensure that you are equipped to offer those customers everything they need and want. By doing so, you’ll decrease the number of customers you don’t want, and position your dealership to choose your customers. Chances are good that if the choice is mutual, everyone will win in the end.