Every dealer wants a nice healthy portion of their market share. But what if it was only 2 percent? Would that be good enough? Probably not.

Well, according to a recent interview in Automotive News, North American chief for Mazda, Masahiro Moro, thinks it is… However, in the article he states that there’s a difference between 2 percent and a “good” 2 percent, which mainly ties back into higher transaction prices and lower incentives. With a better customer experience, Moro feels Mazda can lower vehicle inventories and increase dealership profitability.

Of course, that’s not his ultimate goal. Mazda has seen brand loyalty grow from 30 percent in 2011, to 39 percent in 2016 – and that’s just the beginning. Moro would ultimately like to see it surpass 50 percent, but his current focus is on small milestones along the way, his ultimate goal being Mazda having the highest brand loyalty in the industry.

While certainly an admirable goal, it’s a steep hill to climb given Mazda’s limited models. That being said, he has the right idea… one which applies to any business seeking to increase customer loyalty, revenue or retention -- and that is small steps. Setting any goal too high without a plan to accomplish it can overwhelm employees and will more than likely fail.

However, don’t misunderstand me, knowing the destination is important. But, if you don’t know how you’re going to get there, and lack plans for each stage, it will be hard to accomplish. Society is constantly changing, as are your customers. What may work to improve customer loyalty and retention today, may look different five years from now.

It would be great if we could all simply make a business plan that played itself out to completion -- but life intervenes. So keep your mind open, your ears to the wall and eyes on the prize and be willing to change and adapt when and if it’s necessary. You’ll find that perhaps that 2 percent IS really enough… for the moment.

Customer experience is increasingly important in business. Retail shops now compete for customer wallets with behemoths such as Amazon. As a result, stores now have to prove to customers they will receive a superior experience more valuable than the convenience of clicking a button to have their product show up at their door in 2 days.

In addition, customer experience can be a fuzzy concept, with many definitions floating around. While most know what a great customer experience FEELS like, it’s very hard to define. And, if you can’t define it, you can’t create it.

I came across an excellent article that outlined an interview with Brainshark COO Diane Gordon. In the interview, Diane shared the best definition I have seen of customer experience, outlining the five components that make a great customer experience. I thought I would share these points and how they can apply to our industry:

1. Relationship is mutually beneficial. For dealers to build customer loyalty, customers must feel as if they are not just a transaction. People don’t want to feel as if all they mean to you is money in the cash register. They’d rather feel that they’re helping your dealership succeed by paying money in exchange for you helping solve a problem for them – and that you are doing it with genuine and sincere intent.
    
2. Customers feel valued/respected. Remember the classic TV show “Cheers.” One line in the theme song resonates and illustrates this point, “You want to go where everybody knows your name.” Who doesn’t like walking into a business they frequent regularly and be greeted by name. Why does this make a difference? Because when this happens, customers realize that a business values them enough to remember them. You can also make a customer feel valued and respected through quality loyalty programs, and by taking the time to listen to customer feedback and then act upon it.
    
3. They believe doing business with you is easy. Everybody wants easy. That’s exactly how Amazon has grown so fast, put some companies out of business and disrupted entire industries. However, don’t immediately confuse easy as fast. There are things customers want done quickly, as time is valuable to them. But sometimes personalized attention, which makes the process easier and a better experience for the customer, can mean a longer process. Every customer will have different needs and wants. The ability to tailor the experience based on that particular customer is the key to your customers knowing that doing business with you is easy.
    
4. Sense that employees love working there. Genuinely happy employees are one of the best ways to broadcast your dealership is a good place for customers to do business. Typically, when employees love working for you, that translates into better customer service, empathy for customers, and the desire to ensure your business succeeds by providing extraordinary customer service.
    
5. Feeling that they (the customer) are part of a strong community. Feeling included has been important to most people their whole lives – from grade school sports and clubs all the way to the present. When your customers can tell that other customers are happy and enjoy doing business with you, it encourages them to feel the same way. So be sure to have a good review program in place that promotes good reviews, allows customers to post reviews and that has a way of contacting and handling any negative customer reviews.

A great customer experience is something that all businesses should strive for. But keep in mind that it is not just something you define, but rather something your customers do. Take time to examine these five components to a great customer experience as they relate to your business.

As consumers increasingly shift their shopping online, choosing to skip visits to traditional retailers, it’s become difficult for businesses to get that all important relationship-building face-to-face time.

In the automotive industry, a similar shift is happening. Industry disrupters are taking the whole purchasing process online, forcing major automotive companies to develop technology that allows consumers to do the same thing, but directly through the dealership.

However, the one thing that many fail to realize is that – without physical interaction – it’s hard to establish trust. A key differentiator franchised dealers still have going for them right now is their service departments. But, even there, customers want convenience, fast transactions and, most of all, good communication.

So, the most forward-thinking dealers take advantage of technology that updates customers via text message and allows approval of service recommendations online or via a smartphone.

And, some dealers are really personalizing the customer experience with this technology.

A friend of a friend, Blake, shared a wonderful interaction he had with a repair facility after his new Jeep, just two weeks old, was stolen. When the Jeep was recovered, it was in poor condition. As Blake waited for his vehicle to be repaired, he occasionally received text messages from the repair facility, updating him on the status of his vehicle. Blake is well known for his sense of humor and he sent a funny reply to one of those updates. Surprisingly, the repair shop played along and this resulted in a truly wonderful customer interaction, one that Blake will not soon forget. As a result, he has widely shared it with his family, friends and associates.

You can read the conversation for yourself.

Yes, believe it or not, this is a real conversation!

Blake got such a kick out of it that he shared it on social media, where many of his friends also found the humor in it. The repair shop brilliantly injected personality into its communications and engaged the consumer. Blake was certainly frustrated that his 2-week old car needed to be in for repairs and the clever banter back and forth with the car repair shop injected a little light-hearted humor into the conversation and accomplished its goal – to keep Blake informed on the status of his vehicle.

As a result, the experience with this car repair shop is certainly memorable for Blake – and in a very good way. The communication had a very personal touch and is obviously not automated. This personal interaction has already led to exposure via word-of-mouth on his social network.

And, there is a very strong chance that, should Blake need repair services in the future, he will return.

Today, customer experience is King. It’s more important than ever to stand out, provide memorable experiences and personalized interactions in order to differentiate your dealership.

This car repair shop figured out a way to personalize the experience by interjecting humor, while keeping the customer informed. By so doing, it will definitely stand out to its customers, and, these unique experiences and interactions should lead to increased retention, word-of-mouth customer acquisition, exposure and, ultimately, more customer loyalty. 

At the recent Adobe Summit, executive vice president and general manager, Brad Rencher, advised businesses that if they wish to survive in the future, they have to become “experience businesses.” He feels this is what will separate market leaders from the rest of the pack. In fact, he stated, “Automotive companies are transforming into experience businesses. In the past, they sold cars. But cars are evolving into ‘experience pods,’ where technology personalizes your experience with music, playlists, temperature controls, speed settings and more. Pretty soon, the least interesting thing you will do with your car will be to drive it.”

This, of course, offers an interesting dilemma. If cars become more of an afterthought, and the experience becomes the primary allure of cars, what does that mean for dealers?

Rencher offered these four tenets that successful experience-focused business follow:

1. Know and respect customers (and know what they want before they ask)
2. Speak in one voice
3. Transparent technology
4. Delight

Consumers are changing. They have less and less time and are used to getting things on THEIR terms. As I am sure you all know, it has become more and more about the customer experience. It is important today to ensure that the car buying process is as seamless as possible and delivers the experience that your customers desire.

With the many integrations and new, upgraded technology on the horizon; combined with a future of autonomous cars; younger generations will not be focused on what vehicle they are driving – or not driving – but rather what they can do while commuting from point A to point B.

The title of this blog post originated from a thought-provoking interview with Chad Mitchell, senior director of digital communications at Walmart. In the interview he lays out a philosophy that every industry – especially automotive – should embrace. The main point he makes is that our digital and physical world is evolving at light speed and, the car business especially, tends to find itself far behind leading brands when it comes to customer experience, communications and… well, adopting new things.

As an industry we tend to sit back and wait for “new” things to be proven before we even try them. That “sit back and watch” strategy typically finds us scrambling to catch up when that new thing punches us between the eyes and we realize that we need to be doing (or adopting) this “thing.”

Think about it -- there was a time dealerships didn’t believe they needed a website. Now we’re arguing the effectiveness or necessity of social media platforms, advertising, online sales and F&I transactions -- along with in-store technology designed to expedite transaction times. And while we do that, the competition is embracing these new tools and attracting consumers.

Mr. Mitchell isn’t suggesting that businesses drop their tried and true core processes, but states that they should, “try things quickly and be willing to shift and go in a different direction. Don’t be afraid to take chances and learn.” For a leader in an organization as big as Walmart, one would think that perhaps caution would be the better part of valor and, the most prudent business decision. One can only imagine the challenges an organization as large as Walmart experiences when it comes to customer experience, loyalty and reputation. With so many locations, customer touchpoints and the sheer volume of customers, Walmart has challenges on a store-by-store level and overall as an organization. It’s certainly possible that employee interaction and the customer experience at one location can differ from another, simply due to management, staff, location and resources. Well, the key to success, according to Mitchell, is to determine what new endeavors require more care. And, in the retail business, he states that the one thing which should be at the top of the list is customer experience and loyalty.

As consumers get groomed by major brands to expect certain types of transactional experiences, they naturally expect those same frictionless experiences from other retailers they do business with, including auto dealers. Conquesting the competition is sure to become more prevalent for forward-thinking organizations that adopt new technology and offer an easier customer experience and transaction. That’s why most major automotive groups produce and roll out technology, products and services designed specifically to nurture customer loyalty.

It would be a wise decision for us all to pay attention to what’s going on in the world and not drag our feet when it comes to trying new things. While change can be scary, it’s also inevitable. It’s much better to be leading the pack than trying to catch up with it. This doesn’t mean that you should abandon the things that have earned customer loyalty. Core values and tried-and-true processes that your customers love should always be handled – and changed – with care.

Mitchell makes a great final point in the article where he states, “We don’t want to break the heirloom china; we want to break the paper plates.”

Don’t be afraid to try new things, adopt new technology or change processes. Just be prepared to react and alter paths should you find something either failing or succeeding. By doing this, your business should be more future-proof and in-line with customer expectations and, in turn, enjoy greater customer retention, loyalty and acquisition.

Customer experience has become an industry “buzz term” of late when talking about customer acquisition and building loyalty. Most of the time, the focus is on the small things that turn a customer off -- attitudes, inefficient processes, or other such actions. But what happens when, well, everything goes wrong?

Imagine if a couple visited a showroom where they were met by a salesperson. Before visiting the dealership they conducted some online research – as is the case for most customers nowadays. They had pretty much decided on which vehicle model they wanted – a Toyota Sienna, but had some trim level questions. They also, of course, wanted to touch and feel the vehicle. The couple proceeded to ask the salesperson questions and, to each one, received the answer “I don’t know.”

They went on a test drive and the salesperson was literally watching YouTube videos while on the test drive in order to answer the customer’s questions. Based on their own research, the customers decided they wanted a premium model loaded with features. The dealership only had one available and the salesperson went off to find it leaving the couple waiting in the showroom. While waiting they attempted to ask questions of other salespeople. Sadly, they were again met with blank stares and “I don’t knows.”

After about 20 minutes, the salesperson returned only to discover the vehicle sitting right on the sidewalk in front of the dealership. By then, the couple had figured out that they could build a car on Toyota’s website and informed the salesperson that they would just go home and do it themselves. In a panic, the salesperson begged the couple to stay and let the manager introduce himself (sound familiar?). After a long 25 minute wait, no manager had arrived and the salesperson couldn’t even find a business card to give them. The last interaction they had was a call later that evening from the manager apologizing that he had been busy and had not been able to service them.

Pretty much everything that could have gone wrong with that couple’s visit did. Well, I’m sad to say that it’s a true story.

So, what caused this whole chain reaction of bad experiences and misfortune?

1. Lack of Product Knowledge - None of the salespeople had any product knowledge, which is imperative when selling vehicles that cost tens of thousands of dollars. Especially in the hyper-competitive retail automotive market.
    
2. Lack of Organization - A habit of any successful salesperson is to walk their lot daily to see WHAT they have in stock and WHERE the vehicles are. Vehicles get moved all the time. Knowing what inventory is in stock and the location of any vehicle is key both when a customer is standing in front of you and for any customer enquiring about inventory over the phone – they may want to come right in for a test drive.
    
3. Lack of Management Support – The salesperson was no doubt instructed to never let a customer leave without talking to a manager. That’s pretty standard in retail. But what happens when that salesperson tries to comply and no manager shows up? Frankly, I’m surprised that the couple waited 25 minutes before they left -- I guess the Toyota website was keeping them busy in the Toyota showroom.

In the end, the dealership lost a sale. It’s a pretty good bet that the dealership was the closest Toyota dealership to the couple’s home. But they ended up buying the vehicle from a more distant competitor who delivered it to their house. What are the chances that this couple now uses the local dealership for service?

This story illustrates how important it is to ensure that everything is in place for an excellent customer experience: That the staff is knowledgeable; that resources are available and that managers are there to support them – for every customer that visits. Failure to do so is a slippery slope.

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?

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.

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.