In the automotive industry, as in all others, no matter whether you’re in a dealership or work as a vendor, you’re most likely part of a team. Sometimes the people on your team (or perhaps, even you) neglect an important detail or fail at something important. When this happens, it can cultivate emotions such as mistrust and anger. That lost commission, upset customer, or incorrectly placed blame, can transform attitudes towards your team – or their attitudes towards you – into something toxic that threatens to endanger the bond that should exist for a team to succeed. But you shouldn’t let it.

One day in 1987, Maica Folch, a famous trapeze artist, was rehearsing for a big show the next day. While being hoisted 80 feet in the air, all of a sudden, the harness she was wearing malfunctioned and she began to plummet to the ground, certain she would die. Because the safety contraption attached was like a giant rubber band, Maica, who stayed calm and collected despite the imminent threat of death, ended up bouncing off the ground, receiving only bruises. She managed to steady herself by grabbing a rope during her ascent. One would think that a trapeze artist who routinely puts herself at risk would be angry. She did almost die – and the crew and safety harness designers failed to ensure her safety. What was her response? “When something goes wrong, there is no one to blame. I love what I do, I love doing it with you, and it’s because I trust you. We don’t live in a perfect world.”

The fact is that, as Maica Folch said, we don’t live in a perfect world. It is hard to expect total perfection, 100% of the time from ourselves and our teammates. Mistakes get made. The key is how those mistakes are handled – and the reactions to those mistakes that determines whether a team is really a team – or just looks like one. Of course, you don’t want someone on your team who constantly fails to pull their weight, and never really acts as a member of the team. However, if they are a trusted team member that constantly makes their numbers, has your back and just makes the odd mistake, surely they are worthy of your support?

A recent McKinsey podcast shared that when it comes to loyalty programs, a large part of the population is being ignored: elderly customers.

The podcast featured Jaana Remes, partner of the McKinsey Global Institute, and coauthor of the report “Urban World: The global customers to watch.”  According to Remes, the elderly population will grow by more than one-third in the next 15 years, totaling about 222 million people, and account for approximately 51 percent of urban consumption growth, which is equivalent to more than $4 trillion.

That’s a pretty large base of consumers with some hefty spending power that many fail to market to.

According to the McKinsey podcast, the elderly consumer (60+ years) has some attributes that Millennials don’t have and that are very attractive to retailers.

1. They were raised in a time of loyalty. This is the demographic that would shop someplace because of a great customer experience, they like doing business there and have developed a relationship with the company. Millennials, on the other hand, have more fragile loyalty ties to businesses and will defect much more quickly.
    
2. The elderly generation has much more financial stability and, in many cases, has the credit and disposable income to make large purchases very easily should they desire to. Millennials are more likely to make less money, be saddled with student loans and have less disposable income.

All generations have buying power but simply make decisions in different ways.

In the world of customer experience, retention and loyalty, a lot of focus is placed on customer satisfaction. The general thought process is that the better the customer experience on a consistent basis, the more likely a customer is to continue to do business and remain loyal.

However, according to an article on Business2Community, the authors of “The Effortless Experience” reveal in their book that customer satisfaction does not necessarily translate to customer loyalty. In fact, they found the same level of interest in returning for repeat business in both customers whose expectations were exceeded, and customers whose expectations were simply met.

If exceeding customer expectations makes no impact on a customer in terms of loyalty, then why do we try? Well, the authors don’t state that businesses should NOT provide a great customer experience and fail to go above and beyond when the opportunity arises. Rather, they suggest that this does not necessarily impact whether a customer remains loyal.

Customer loyalty is a fickle thing and all it can take sometimes is a really good loss-leader coupon from a competitor to conquest a loyal customer away from your dealership.

In their book the authors suggest that it’s not the degree of customer experience that influences loyalty the most, but just how easy the business makes the experience for the customer. Consider businesses such as Amazon. Look at how easy they make it to shop with them – one click transactions, same day delivery, ordering by voice command – the list goes on.

All too often, businesses make it difficult for customers to do business with them. The harder it is, the more likely the customer will go elsewhere. Consider analyzing your current processes to reduce as much friction as possible and make the car buying and vehicle service process easier for customers.

Sure, there are processes in buying a car that take some time – such as the finance office. But there are also technologies that reduce that time and make it easier for a customer. The same goes for the service department.

Any decrease in the effort required by your customers will improve their experiences -- simply because they can conduct business with greater ease – and that will translate into real customer loyalty, repeat business and word-of-mouth recommendations. And that is a great thing.

Dealerships have forever tweaked pay plans to satisfy bottom lines and keep employees happy. Many employees in the sales department can make more money from a single sales commission than any technician can make in a day. There are even some salespeople that are so productive that their paychecks can exceed those of their sales managers – and sometimes that leads to friction and resentment.

One would think that any manager would be thrilled if a salesperson, or other commission-based employee, made more than they did, since most dealerships pay structures divide the profit incrementally up the chain, meaning if this salesperson is killing it in commissions, it only increases the manager’s paycheck as well. However, because of the percentage differences, sometimes this can create conflict.

Recently, the movement has been away from commission-based pay plans and towards salary based. While that’s still in play, it hasn’t worked out for some dealers.

What’s the problem?

First, the reasoning behind why some dealerships have switched to salary-based customer consultants, versus commission-based salespeople, has to do with marketing. The ability to tell a customer that salespeople don’t benefit financially from profit hopefully eases the customer’s mind and establishes trust in the salesperson as a helper, not an adversary. The problem is that it is so ingrained into consumers’ minds that negotiating price is expected and necessary, that it really doesn’t make a difference. That’s why some dealerships which switched to salaried employees are switching back.

For employees, especially aggressive and productive ones, switching to a salaried position is similar to a demotion. Car sales positions have historically been advertised as a “make as much money as you can” type position. By switching to salaried positions, these producers tend to move on to other dealerships in order to maintain their level of pay. Keep in mind that this switch doesn’t just involve salespeople, but also management.

No longer does a manager get jealous that a salesperson is making more money than they are. However, in the end, are they making as much as they could have been? This creates higher employee turnover.

And from the customer side this turnover then affects the customer experience. If every time a customer comes into a dealership their salesperson and/or management has changed, how can rapport ever be established?

Let’s examine a non-industry movement that’s happening – one a little similar to the movement in the auto industry– no-tipping in restaurants. According to an article in the New York Times, there has been a movement to include tipping within the prices on the menu.

Of course, in order for restaurants to do so, and continue paying employees what they had been used to earning, they had to raise menu prices across the board. The psychological effect this had on their customers was not pleasant. According to the article, regular customers came in and were displeased with the price increases, especially on what the article termed as “welcome items,” such as coffee, a glass of wine with their meal, or other small things. And, frontend staff (similar to the salespeople) made over 500 percent more than the back of the house staff (such as the techs or service advisors), which caused tension among the staff. The end result was that the no-tipping policy in fact just served to increase resentment that the back of the house had with the front of the house staff. It also turned away customers who didn’t approve of the price increases, even with the no tipping policy.

Regardless of whether your dealership is commission-based, or non-commission based, keep in mind that the disparity between employee salaries can cause friction between staff. The need to increase pricing, or maintain a no-haggle policy in order to afford the salaries that used to be supported by individual salespeople, service advisor or departmental gross, can lead to customer dissatisfaction.

In theory, one price stores with salaried employees may sound good but, while some stores do great with it, historically, it hasn’t worked out well for many dealers. In the end, it is important to find a balance between compensating employees fairly, (in comparison to your competition) while maintaining pricing for sales and service that are competitive. Otherwise you risk losing more than you may have expected to gain from the transition – and that loss includes both employees and customers.

Dealerships are well known for their involvement and participation with local communities and many different charities. From sponsoring little league teams, to larger charity initiatives, dealerships have supported and given back to the communities they serve for a very long time.

Cause-based efforts have become increasingly important to consumers, especially to the younger consumers now joining the spending force. For example, General Mills’ “Box Tops for Education” initiative. Founded in 1996, the brand has raised over $719 million nationwide. Of course, the schools themselves aren’t out buying all of these products, the consumers are.

While it is certainly distasteful to always “toot your horn” about how great and charitable your dealership is, there is a right way to do it. Consumers DO want to know what you are doing to give back, it is important to them. Just how important is cause-based marketing to consumers? Let’s look at some statistics from CauseGood,

1. When choosing between two brands of equal quality and price, 90 percent of U.S. shoppers are likely to switch to a cause branded product.
    
2. 97 percent of marketing executives believe cause-based marketing is a valid business strategy.
    
3. When quality and price is equivalent, social purpose is the number one deciding factor for shoppers globally.
    
4. 42 percent of North American shoppers would pay extra for products and services from companies committed to positive social and environmental impact.
    
5. 64 percent of shoppers say simply giving money away isn’t enough; they want businesses to integrate social impact into their business models.
    
6. 88 percent of Americans want to hear about businesses’ social responsibility and the most preferred place to hear about these efforts is on the product’s packaging or label.

Feel free to browse all of the statistics. The fact is that our younger generations increasingly seek to do business with companies that support causes. Of course, it’s difficult for companies to market those efforts. In fact, 70 percent of Americans find companies’ communications about their social responsibility efforts confusing.

So how are you supposed to communicate your charitable and community support efforts to your customers?

Whatever cause your choose, be it perhaps supporting and pledging to donate a percentage of sales and/or service revenue to a valued cause, it is not enough to just simply do it. As stated on the statistics from CauseGood, 88 percent of consumers want to hear about these efforts.

Integrate your charitable cause message into all your marketing efforts including in-store signage and in the service drive. It should be tastefully done and the point is to make it widely known that your dealership supports the cause.

In the end, once it becomes common knowledge within your community, and consumers learn about it through all of your marketing channels, they may well start choosing you over your competition. All while you are make a difference in your community. And that’s a great way to differentiate your dealership from the competition and earn customer loyalty.

The customer experience at your dealership is more important than ever before. With start-ups aiming to take away sales by luring customers with promises of a hassle-free buying experience, customers are starting to realize that they no longer have to sit at a dealership for hours. In fact Amazon France just sold a car completely online and delivered it directly to the consumer via truck and helicopter. If you don’t think that Amazon has larger ambitions – well – you might want to reconsider.

With the many start-ups in the market aiming to sell cars, should dealers be worried?

Well, consider these facts:

1. Technology – For every start-up that comes along and creates technology that makes the car buying process more convenient, an automotive technology company creates a product that replicates that experience. Any dealer who chooses to utilize that technology can effectively squash that start-up in their market. Customers simply don’t have time to sit at a dealerships all day in order to purchase a vehicle. Increasingly most, or all of the car buying process is now done online. New technologies make the process more convenient (and faster) for the consumer and makes the dealership’s sales department more efficient, allowing them to sell more vehicles with less salespeople in the same amount of time.
2. Human Emotions, Senses and Perceptions – Buying a vehicle is an expensive and personal experience. Despite the perception of poor experience, consumers still want to touch, feel, smell and drive a vehicle before purchasing it. And that’s where a dealership has a huge advantage. It is important to get that customer emotionally connected and excited about a vehicle and that connection has a tremendous impact in closing the deal. No online start-up can duplicate that. It’s simply not possible.
3. State Associations – Franchise agreements prevent most manufacturers – with the questionable exception of Tesla – from selling new cars direct to consumers. This will undoubtedly be controversial for years to come. However, for now, dealers can rest assured that their associations have their best interests in mind. Franchise agreements afford certain protections and consumers currently have to come to a dealer to buy a new car (at least in the United States.)

Let’s say that in some miraculous way, dealers can’t replicate the online experience and technology evolves to the point that consumers can use all of their senses (via virtual reality, augmented reality or whatever comes next), should dealers then worry?

Perhaps not. Here’s why:

People want to deal with people. That interpersonal experience while buying a large ticket item is still necessary. The key to winning business and retaining the customer lies not with novelties such as vending machines, but rather in the experience the dealership provides in sales and service and in its efforts to improve and show the customer appreciation for their business.

Going into 2017, make a commitment to analyze and improve your dealership’s customer experience through gaining feedback from both your employees and your customers. If consumers in your market demand a more digital experience (whether in full or in part), consider adopting technology that allows them to interact with you on their terms. When they do arrive, ensure that they are treated well and that the process is efficient. In this way you can increase business and thwart the disrupters.

Auto dealers are well known for their huge support to local communities. Especially around the holiday season when they do many good deeds including toy drives, donations to food banks and a variety of other activities that have special meaning to those particular dealers. It’s noble not to “brag” about the great things we do as businesses. In fact, many repeat good-deed offenders prefer to stay anonymous. And that’s OK.

Sometimes, however, the smallest of deeds are the ones that touch the most lives.

Take for example, the story of a boy that has been going viral this holiday season. There’s nothing spectacular about him that has been reported. He doesn’t have a life-threatening illness that we know of. He’s simply a boy being a boy… who happened to like playing video games. He liked playing them so much that he visited his local Best Buy every day to play his favorite video game in one of their demonstration kiosks.

If you worked at the Best Buy, it would be hard not to notice the same boy visiting every day, playing video games at your store’s demo kiosk for the Nintendo Wii U system. But, in most cases, that would be the end of the story.

Well, this holiday season, the employees decided to act. These are just normal people working at a retail store. This wasn’t a corporate level marketing play. This was simply a group of employees, at a local Best Buy, who decided that this boy deserved their attention.

What they did was special. In fact, it was so special that the video (one version of it) has been viewed over 7.5 million times on Facebook and over 2 million times on YouTube (again, only one posting of the video). What did those employees do? They all pitched in and bought the boy a Wii U console and a copy of the game he came in to play every day (Super Smash Bros.) as a surprise Christmas gift.

Nobody has mastered the recipe for a “viral video” as of yet… and chances are nobody ever will. This was an act of goodwill by employees at a local business in order to make a boy’s holiday that much better. It turns out that the boy really wanted this game but his family could not afford it. I bet this boy remembers this act of kindness for his lifetime, becomes a loyal customer and passes that along to any children he may have, simply because these employees cared and gave him a luxury that he couldn’t afford.

You don’t have to be a mega-corporation. You don’t have to have a huge in-house marketing department devising acts of goodwill. I’m sure you see this frequently this time of year: That flat tire that can’t be repaired but the owner can’t afford to replace or any numerous acts of kindness that dealerships make.

This act of kindness cost Best Buy nothing, and cost the employees around $400. Eight million views later (and counting), that $400 act of goodwill has paid off for this individual store and for the brand.

It’s not how much you do, but whether you do it at all that counts. Happy Holidays!

What would you do if a customer was injured at your dealership and you were at fault? I don’t mean serious injury or anything like that. Perhaps just a bump or scrape? Most businesses would apologize or, at the very least acknowledge the mishap to the customer. Perhaps send some flowers or a gift card. You certainly wouldn’t want to ignore it, right?

Well, that’s what happened to an American Airlines customer who was injured when an unsecured drink cart barreled down the aisle and crashed into the passenger. No apology from the airlines was ever received (although it is a tad hard to believe that the stewardesses didn’t at least apologize). The customer wasn’t trying to shake down the airlines at all. He just thought that an apology phone call or card would be an appropriate response for American Airlines to make to a customer injured on one of their flights. Even if only for the sake of customer retention.

The passenger did receive flowers and an apology… but not from American Airlines. The geniuses over at Virgin Atlantic heard of the incident and sent the passenger flowers along with a card that read:

“We might not be who you expected these to be from, but we heard what happened and everyone at Virgin Atlantic wishes you a speedy recovery. And in case you ever fly AA (American) again, we’ve got you covered. Get well soon.” The Virgin Atlantic Team

 When he opened the box that came with the flowers and card, inside were a pair of kneepads, elbow pads and some other protective equipment. Of course, this passenger couldn’t refrain from sharing what was certainly a humorous outreach from a competing airline. Naturally, the story quickly spread around the Internet.

Being in the car business, chances are that you hear stories like this all the time. Not necessarily someone getting injured at a competitor’s dealership, but perhaps simply someone upset at how they were treated or some other such complaint. Whether you see these stories on the news, the Internet, or via social media, there is a good chance of one underlying fact: that customer will probably NOT be patronizing that dealership any longer. Which means they will need someplace else to do business.

Customer loyalty and retention are fickle things, especially in this world of high-maintenance customers who want everything on demand. Owning and acknowledging your mistakes and making appropriate apologies can rectify most accidents or poor experiences with your customers. Failing to do so can leave a wide-open opportunity for that customer to defect to a competitor.

So, whether it was your customer who had a mishap or your competitors, opportunity exists. If it’s your customer, you have an opportunity to make things right and keep them. If it’s your competition’s customer, this very well could lead to a low-cost customer acquisition and some word-of-mouth marketing – or both. Regardless of which end of the situation you find yourself on, reaching out to the customer when the opportunity arises could pay off exponentially.

Customer feedback is important to any business’ growth. That’s why many send out customer satisfaction surveys and managers pay attention to that feedback.

However, sometimes the feedback system is faulty or gets misinterpreted to the point of being useless. Take the feedback system Uber used to have. At the end of each trip riders were prompted to leave feedback in the form of a star rating from 1 to 5. As Uber drivers are contractors, the corporation wanted to ensure customers received good service and a great customer experience from any given Uber driver. Any driver that fell below a certain star rating was disciplined by the company with a suspension or, in some cases, contract cancellation.

An article in Wired magazine details how Uber came to realize that the star system was faulty. It failed to truly reflect a customer’s experience and was vague to the point of being meaningless. Some people gave 5-stars to a driver even though they didn’t have the best ride, simply because they felt bad doing otherwise. Other customers gave drivers low star ratings for reasons that were beyond a driver’s control, including traffic, or how long it took to get picked up.

Uber also realized that its star system didn’t provide the drivers themselves with any useful feedback on what their customers liked or didn’t like about a trip. Therefore, drivers had no opportunity to improve or correct something as they had no way to know what was bothering their passengers if it was not stated during the trip. Uber has now revamped its system so that it includes the star rating while also allowing customers to give feedback in the form of virtual stickers and, if the passenger desires, they can leave personalized feedback via a note. This provides Uber with a better assessment of the driver and can also instill a sense of pride or fulfillment in the driver for a job well done.

In the auto industry we face a similar dilemma. Manufacturers survey customers and assign CSI scores to each survey. These scores can mean the difference between a dealer making or losing a substantial amount of money. However the surveys are formatted similar to Uber’s old 5-star rating system. Each question is either scored on a 1-10 scale or a Yes/No answer. This provides little clarification to the manufacturer or the dealer as to how the customer experience actually went. In addition, manufacturers assign different weights to the questions so a dealer can receive a failing grade on a survey even if every question is answered perfectly except one. Many manufacturers even consider anything less than perfect (100%) as a failing grade. There is nothing wrong with demanding perfection, but it is tough when the grading system is not itself perfect.

Venture back to your school days. Imagine getting a 90% on a math test. In the real world, that would be an “A” and if you or your child brought home straight “A’s”, you would be proud. Yet a dealer who receives a 90% on a survey could be punished monetarily and, unless the customer actually bothers to write feedback, does not know or have any way to change a process or hold someone accountable. In addition, the manufacturer, just like in Uber’s case, has no true idea of just how the customer’s experience went at the franchisee’s dealership.

This isn’t anything new. Dealers have long complained about the unfairness of survey grading and losing money as a result of the weighted questions which don’t really reflect how their customers are treated.

Perhaps the industry can take a page out of Uber’s playbook. True feedback should be in-depth and judged on an individual experience basis. Only in this way can a dealership be judged accordingly, change any needed processes, truly improve and be fairly rewarded.

In their new book, The Intuitive Customer, authors Colin Shaw and Ryan Hamilton contend that companies that try to fight declining customer satisfaction by lowering prices are going about customer satisfaction the wrong way. Instead, they state that the magic to winning customer loyalty is based on understanding what the customer will do next.

An article in MediaPost, recently shared some of the basic precepts in the book, including the fact that roughly half of a customer’s buying decisions are based on how they FEEL about a company and that understanding the psychology behind why they choose a business is key to tweaking processes and services that cater to those feelings.

Sadly, many consumers don’t like going to car dealerships and if roughly half of customer choice is based on how the customer “feels” about a business, there is a long trail to get there. An interesting point shared in the book is that the most irrelevant aspects of customer experience are often the most important. Some dealers spend a lot of time, money and effort attempting to create an excellent customer experience through increased efficiency, improved technology and dealership premises. What they may not consider are the things that are seemingly irrelevant because… well… they’re seemingly irrelevant.

While a recent trend has dealers installing movie theaters, coffee bars and other amenities, perhaps what really influences the customer experience are the “seemingly irrelevant” actions. Those small actions that go towards improving the customer experience, such as cleaning and vacuuming the customer’s vehicle after it is serviced. Many dealerships wash vehicles but not as many vacuum them. If the vehicle looks great on the outside but not so much on the inside, that could perhaps leave the customer with a less than great customer experience. That’s just one small example to provide food for thought.

The last point the author’s make is how do customers REMEMBER their experience? Do they remember inconvenience, dirty bathrooms, inconsiderate or apathetic employees? What a customer remembers is a completely individual experience.

Everyone is different and there is no way to design an experience that is perfect for everyone. Just as in sales, we tailor how we sell and the tactics we use to each and every customer. Perhaps the customer experience should be viewed in the same way. How about making an effort to establish what provides your customers with the best possible customer experience so that they leave happy, with a memorable experience which they will share with their friends and which keeps them loyal to your dealership.

If you get to know your customers, listen to their needs and wants while paying attention to how they respond to you, the chances of identifying the seemingly irrelevant and making it relevant increases. Customers will then leave with positive feelings and memories. And that means increased customer retention and profitability. In fact, according to authors Shaw and Hamilton, this practice “has translated into a 10% year-over-year sales increase for the past 10 years, reduced customer churn and increased market share.” And that’s definitely something worth striving for.