As technology has caused a significant shift in consumer interactions and desires, retailers have to follow suit in order to retain the consumers’ business. Customer loyalty is an increasingly fickle thing. And, as convenience has become so easily attainable for today’s consumers, some retailers believe that the only competitive arena left is price. However, this is not always the case at all.

An article on Loyalty360.org shared the results of a recent study conducted with the help of a University of Rochester professor. The study created a customer-brand relationship model based on a popular relationship theory – Sternberg’s Triangular Theory of Love. It used components of relationships and paralleled them to retail loyalty.

The study of 1,000 consumers shared that 86 percent would go to other retailers, rather than their favorite brand, if it were more convenient. However this can easily be handled by providing the right customer experience.

For the study, the repurposed Theory of Love focused on three components to determine consumer brand relationships – intimacy (willingness to share information with the retailer), passion (brand enthusiasm) and commitment (loyalty). And what is interesting it that it was found that the more of these attributes a consumer had towards a brand, the more likely they are to remain a loyal customer and become a brand advocate and recommend the retailer to others. In fact, 96 percent of devoted customers would recommend a retailer to others, demonstrating the importance of creating and maintaining devoted customer relationships.

All too often, customer loyalty is rewarded based on transactions, rather than a customer’s behavior. In fact, many of today’s consumers want a more personalized experience with “surprise and delight” type rewards and experiences, rather than simple discounts or free services.  And for that great customer experience they will pay with the best currency of all – their loyalty. Think about it this way: some salespeople are more motivated, give their loyalty faster and, in turn, work harder for a manager who is supportive and validates their efforts with a pat on the back. They prefer that over any cash weekend spiff. However, many managers assume that money is the most motivating thing. For some, I am sure it is. But what about those salespeople or employees for whom that is not the case? You could just be motivating and rewarding part of your staff while leaving the ones who merely want recognition out in the cold.

Customers are the same way. Some may want discounts and freebies, while others seek more of a high level customer experience and desire recognition from you in return for their business.

Running the dealership as if customers are on an assembly line – even when a loyalty program is in place – can alienate those customers who merely want to be recognized, appreciated and feel welcome.

The sad part is that this second group of customers wouldn’t cost you a penny – only a few minutes of your time to welcome them to the store and thank them for their business. In fact, the same study reported that 59 percent “would buy more if retailers understood their individual needs and requirements better.”

Take the time to get to know your customers through all necessary means. But mainly through personal interaction and attempt to understand what motivates each of them.

Everyone is different. While this may seem like a hard task to accomplish. With, in some cases, hundreds of customers visiting your dealership on a daily basis, the effort required can transform some of that 86 percent who would patronize your competition into loyal brand advocates. These loyal advocates tend to spend more money with you and bring their friends and families with them. And that’s a winning combination!

Great customer experiences can win customer loyalty. That’s why dealerships install restaurants, movie theatres and Starbucks. But while that customer experience is integral to keeping the customer’s business and loyalty, it doesn’t take much to shatter that loyalty and see that once loyal customer desert to a competitor.

Why? Because deep down, people don’t like surprises. Sure, we like them when they are gifts from friends, or spontaneous parties we weren’t aware of. But when a customer visits a business they like and are familiar with, they expect the same service that made them a fan in the beginning. And if they don’t get it, they may start rethinking their loyalty.

Take Hyatt as an example. Most big hotel chains acquire smaller non-branded hotels so as to extend the chain’s reach. Hyatt is no different EXCEPT with its Hyatt Place brand. The Hyatt Place chain was specifically designed to introduce consistency and confidence to its guests and potential guests. While other chains endure complaints from customers that their stay did not live up to the standards that were expected, Hyatt has created a chain that provides the exact same amenities and room layouts at every single location. This gives travelers (especially business travelers) confidence that they will get exactly what they expect and want.

Why is this important?

Because people do business with companies they know and like. The missing component in customer loyalty is that trust. It is the hardest component to earn. But it can be earned through consistency.

Customers come to your dealership for the first time on a gamble. Regardless of what others have experienced, ultimately the customer really only cares about their experience.

In today’s competitive market it’s not enough to provide a great customer experience UNLESS you do it every single time for every customer.

Of course, the longer the relationship continues, the more forgiving the customer will be. However, the same logic applies to how betrayed that loyal customer may feel should they experience too many bad experiences after patronizing – and advocating - your dealership for a long time. Then they can become more vocal and damaging than any first-time or short-term customer could ever be.

While a focus on likeability and brand are important, trust is the main ingredient in any loyalty potion. And to earn that, all three ingredients must be present each and every time your customer drinks – they like you, know you and their experience is consistent. Lose any one of those and you may find that your love potion no longer works and you lose a customer.

As Henry Ford stated, “If I had asked people what they wanted, they would have said faster horses.”

Technology changes in our industry faster than many of us can keep up with. It seems like new services and innovations pop up weekly. Do we know which innovations consumers are sure to like or not? Of course we don’t. We can’t actually know until they end up liking them – or not. And they don’t know what they want until they see and experience it. Back when Henry Ford built cars, nobody even knew what a car was, or how this “thing” would improve their lives. Once cars started passing horses and became affordable through manufacturing -- only then did our society adopt and embrace automobiles.

Let’s look at a modern example of this. Prior to Uber, was anybody (aside from the founders) clamoring for a ride-sharing app? Nope. Well, today many companies provide this service and auto manufacturers are rushing to provide cars or partner with them. Customers didn’t know that Uber was something they wanted… until they did.

So how does this apply to car dealerships? If we don’t know what the customers will want next -- and they themselves don’t even know – then how are we supposed to make decisions on which technologies to embrace, services to offer and experiences to provide?

Five years ago, who would have thought that technology would develop to the point that we can complete the entire vehicle purchase process online, from beginning to end – customers can now purchase a vehicle without ever stepping foot in a dealership. Well, now they can and there are many companies – from industry disrupters to large mainstream automotive vendors – that offer this service directly to consumers, or through auto dealerships.

Will it take off and become the next consumer favorite? That verdict is still out. The point is that the only way to know what YOUR customers want is to see if they end up liking it. However, you can also try it out and ask yourself whether you’d want it if you were a customer. When testing new customer-facing technology how about doing a sort of secret shop. Become your own customer and experience it yourself for the first time. Is it something you’d like? Also have some other staff members of different age groups test it out. Any vendor trying to sell you a technology product should be happy to oblige. Then reconvene and discuss. It doesn’t matter how much it costs -- until you know it’s something that your customers will want. Figure that out first.

Many would tell you to ask your customers what they want and act on that. And that is also a great best practice -- in fact it can help identify customer pain points and process issues. However, in the same way Henry Ford didn’t listen to what customers wanted before producing his car – being open-minded to change, and always on the lookout for new technology that can enhance the customer experience and your business, could well keep your dealership ahead of the competition and provide a unique selling proposition.

Staying ahead of the competition and up to date on technology that works well to give your customers a better experience is important. Customers see other industries adopting new ways of interacting with them and will either love the technology – or not. Pay attention to what consumers start to like OUTSIDE of the auto industry in terms of technology. This is one strategy that could help you find and adopt technologies that drive improved results in your dealership. At the same time, look for technologies other industries start to offer which YOU like because you, in the end, are also a consumer.

When companies anticipate consumer wants and needs before the consumer even realizes that need, they build loyalty. And that is the magic happening right there.

A recent article in Automotive News reports that the three-year employee retention rate at dealerships reached a new low, dropping by 2%. In fact, the study showed that only 1/3 of sales consultants stay at a dealership for 3 years or longer. The article went on to share that the average tenure for sales consultants has steadily dropped since 2011, when it was about 3.8 years. Last year? 2.4 years. According to the article the result is: “…reduced productivity, reduced median and average earnings, and reduced dealership profitability.”

What’s the answer to retaining employees? Perhaps we should start looking outside of our industry, analyzing companies that people love to work for and figuring out which of those attributes we can adopt in dealerships.

Consider starting by simply asking employees if they’re happy or not, what could be changed that would make the dealership a better place to work, etc. However, be sure to do this anonymously, or you probably won’t get honest answers. Then sit back and be prepared because some of the answers you get may sting. You can’t, however, make changes without knowing what’s wrong and unhappy employees generally aren’t going to tell you to your face.

Our workforce is getting younger. These days, many aren’t willing to work under the taxing conditions that we experienced. And it’s usually not because they’re lazy, or have a poor work ethic. It’s because our society and culture has changed. People prioritize things differently. And this trend isn’t going away. It’s only going to keep shifting

If we continue to try and operate dealerships the same way as 10 years ago – mandating “bells” and 70+ hour work weeks – we’re going to keep watching the front door revolving – existing employees leaving and new faces coming in. And if you don’t think your customers notice, you’d be sadly mistaken.

Making employee retention a priority can, by itself, improve customer experience and loyalty. In addition, you will save money that would otherwise have been spent hiring and training new staff. Isn’t the whole point of retention and loyalty to increase revenue? Well those two words apply just as much to your employees as they do to your customers. Never forget that.

A little over a year ago, the founder of a credit card payment processing company made an unorthodox move that resulted in some very mixed reactions and a whole lot of media attention. Dan Price, founder of Gravity Payments, cut his own salary by 93% (from $1 million to $70,000 per year). He did this so he could pay every single employee the exact same amount - $70,000, regardless of if they were the janitor or the receptionist, or how long they had worked there.

The story is not completely perfect and does come with some bumps in the road – his brother (and co-founder) sued him and there was also much speculation in the media about how successful this move would be.

However, it seems to have been a good decision in the long run. According to this story on HumanResourcesOnline, revenue and profits have doubled; new customer inquiries jumped from 30 per month to 2,000 per month; customer retention rose from 91% to 95%; and only two employees quit. Add to that the 4,500 resumes the company has received since this initiative and it would seem that the company is thriving with sales, happy customers and very happy employees. In fact, the employees are so happy that in July 2016, they collectively bought their boss a $70,000 Tesla!

I am pretty sure that any business would love to enjoy similar demand, growth and employee engagement to that of Gravity Payments. However, few businesses are in a position to pay every employee an annual salary of $70,000.

However, the point of this story is really that this particular leader’s personal sacrifice was the ultimate act of appreciation. One that immediately showed his employees that he valued them. In response, the employees increased productivity and worked even harder to ensure their customers were happy. The Telsa, while a grand and generous gesture, was simply a small part of this story. The message here in essence is that engaged employees who feel valued and trusted are the cornerstone to your business’s success.

While many people assume that money motivates everyone, several studies in fact prove that simply showing an employee they are valued and appreciated motivates them more than any amount of money ever could.

Another great example is Doug Conant, the previous CEO of Campbell’s soup. When he took charge he did a tremendous amount to change company culture, including making a commitment to celebrate employees at all levels for their individual contributions and achievements.

During his tenure, he wrote over 30,000 handwritten thank-you notes to individuals that worked for the company. Past employees still contact him to this day and express how much that gesture meant to them. A single, handwritten note showed that employee that he appreciated them and their individual achievements. In so doing, he made these employees want to work harder, better and achieve more.

In our industry, where with each passing month sales staff are on a continuous roller coaster of hero-to-zero, it’s more important than ever to ensure that employees feel appreciated, valued and recognized, not just  because of their sales numbers, but also for showing up and working hard. Even something as simple as personally handing out paychecks and thanking each employee can instill a sense of worth and show employees how much they are appreciated.

In doing so, perhaps… just perhaps, they’ll become more engaged, more productive and you won’t have to have a continuously running “Help Wanted” ad.

The retail automotive world demands a lot, including long hours, working holidays and little flexibility in schedule. Most dealerships require 1 or 2 “bells” per week, (working open to close) and don’t include many weekends off, as Saturday and Sunday are typically busy days, when consumers have time to shop for a vehicle.

 A recent blog post on the AskTheManager blog tells a very interesting story about a manager that questioned their decision regarding an employee who asked if she could come in a couple hours late so she could attend her college graduation ceremony. The employer had a policy of granting requests based on seniority. The employee couldn’t find someone to cover for her so, according to the article, this is what the manager did:

“I told this team member that she could not start two hours late and that she would have to skip the ceremony. An hour later, she handed me her work ID and a list of all the times she had worked late/come in early/worked overtime for each and every one of her coworkers. Then she quit on the spot.”

The manager felt this action by the employee was unacceptable, stating:

“I’m a bit upset because she was my best employee by far. Her work was excellent, she never missed a day of work in the six years she worked here, and she was my go-to person for weekends and holidays.”

The manager also mentioned that, during the same time, they adjusted another employee’s end time because that employee had purchase concert tickets. The cost of those tickets was considered in making the decision to grant that employee time off.

The blog went on to paint a very interesting background about this employee who asked for a couple of hours to attend her graduation, and why it was so important to her. She had bounced from foster home to foster home as a child, and was even homeless at one point. Despite all this, she had risen above her past; was their best employee; covered for multiple employees when needed; and had not missed a day of work in six years. She was the “go-to” person at the company and still had somehow managed to attend night school and earn her college degree.

But sadly, because the manager was blinded by a rigid set of rules and considered that the cost of concert tickets trumped a graduation ceremony for someone who was the most loyal, faithful and trustworthy employee; that company ended up losing their best employee.

The saddest part is that this manager didn’t write in to ask whether they had done the right thing. But rather, they wanted advice on how to educate this ex-employee that it was unprofessional to quit with no notice. And that, because the manager cared, they wanted to ensure that this employee understood how this could affect her professional career.

Over 1,200 comments were left on this blog post – the vast majority of which support the employee.

Managers have the responsibility to be fair and human in their interactions. Sometimes, having compassion and being human trumps any rigid rules and cost calculations.

A good manager should also be a good leader, able to identify when the right thing to do is to bend the rules for an employee. People have lives outside of work. Yes, even car dealerships. The ability to understand other people’s feelings and to weigh the importance of a personnel-related decision, versus the impact it has on the business, is paramount to employee retention and happiness. Think about this employee that was denied 2 hours to attend her college graduation. She was incredibly engaged with the business, a hard worker and valued her position at the company. She was well worth a small bending of the rules in order to maintain her as a happy, industrious employee.

It is a real shame that the manager didn’t even realize that a wrong decision was made. But one thing is for sure, no matter what business you’re in, finding an employee with the qualities of this one that quit is rare -- they should be treasured.

Keep that in mind the next time an employee comes to you with a special request. Don’t be so rigid that you can’t factor humanity into the rules. Chances are that simply allowing that employee the 2 hours off could result in years of hard work and loyalty. Or, you will have to find another person willing to commit like that. And in retail automotive, that might be a challenge.

All humans have feelings and those feelings can absolutely affect their decisions in life, including any products purchased, where they buy them and to which companies they are loyal. Large companies know this and realize that corporate social responsibility programs are important to brand image, customer sentiment and loyalty. And these programs can also motivate and inspire employees to become brand advocates.

Who wouldn’t want to do business with a company that shares its values? And, who wouldn’t want to work for a company that is loved? These two things are an important part of transforming a business from one that’s simply a place to transact, to one with personality.

An excellent example of this, and how one small good deed reaped huge benefits, is the story of Jake Nelson and a Ford dealership in Apple Valley, Minnesota. Jake is a special needs boy who loved cars, but was told he could never drive. Because of his passion for cars, his parents took him to dealerships just to wander and look at all of the objects he so loved. Upon visiting Apple Ford Lincoln, a salesperson took the time to talk with the boy and introduced him to others at the dealership. He soon became a fixture at the store, helping in the many ways that he could on the lot, making sure the cars are all locked and well presented. It has brought great joy into his life and acts as an inspiration both to customers and other employees at the dealership.

This story garnered wonderful national media attention for Ford and highlighted the dealership in this great video:
 

This act positively affected a young life and is a wonderful example of how one car dealership’s image transformed in the eyes of its employees, community and the world. And ultimately that’s exactly what social responsibility is all about.

Ford has now announced the launch of its FordInclusiveWorks program. This pilot program, starting June 1st, is designed to provide meaningful employment to adults with autism. With a national unemployment rate of 75-90 percent, Ford recognized an opportunity to make an impact on these adult’s lives.And, while this pilot may only involve 5 people for now, there’s no telling what the future holds should it succeed. Felicia Fields, Ford group VP of human resources and corporate services, couldn’t have said it any better when she said; “We recognize that having a diverse and inclusive workforce allows us to leverage a wider range of innovative ideas to make our customers’ lives better.” [emphasis added]

While Ford may dominate this blog, there are many other automakers and dealers that make an impact in our world. Dealers are well known for being a huge support to their local communities.

Automakers typically have individual charities they choose to assist (such as Chevrolet and the American Heart Association), but also quickly render aid in times of crisis -- as was the case in the Hurricane Sandy disaster, for example.

With each and every one of these; whether a huge expensive campaign by OEMs; or simply a dealer seeing someone in need and choosing to help; it helps to humanize our industry – to show consumers that car dealerships aren’t places filled with people looking to take advantage of them, but rather businesses employing people who care about other people.

So whatever your passion - rescuing animals, helping the homeless or countless others – know that social responsibility, being involved in and part of your community and taking action when others are in need is not only something you could do…

…but something you should.
 

There have been countless studies about employee engagement and how, when engaged, employees tend to be happier, more productive and deliver a better customer experience. With a 70 percent annual turnover rate in sales, this is an area that the auto industry – at least on the sales side – has a problem with. Don’t think the auto industry is alone, however. According to an article posted on Digitalistmage.com,  a recent Gallup poll found that “67 percent of workers aren’t engaged—or worse, they’re actively disengaged—a number that’s been pretty stagnant for the past 16 years.”
 

The article went onto state that companies who are participating in these polls and then taking action to create initiatives within their organization are failing as well. Why? According to the article, the reasons are two-fold:

1. By the time the poll results are published, the results are outdated. This means that initiatives are created based on data that is no longer be valid.
2. Management wants to fix things on their own (i.e. create initiatives, champions, etc.)
3. Apparently companies are too sensitive.

You can’t fix any problem with old data. If you don’t know what’s going on in the dealership RIGHT NOW, any attempt you make at changing culture and winning over employees will more than likely fail. On top of that, engaged employees aren’t something that can be magically created. Management can peruse data and create ineffective programs even with the best of intentions. Employees must decide on their own to be engaged with a business. Management can’t make them.
 

So if, as the article states, we’re all doing it wrong and have been for almost two decades, how do we improve? The article suggests that a more modern – and effective - approach to increasing employee engagement lies in three areas:
 

1. Empowering individuals – Everyone likes to talk about open door policies between management and employees. However, in reality many employees hesitate, especially in our industry, as there can be a fear of repercussion or that it perhaps won’t accomplish anything. It’s not uncommon for management changes to usher in a spat of terminations, simply because the new managers want to bring in people loyal to them. Trust tends to be lacking and without that trust, employees will never be engaged.
2. Increased transparency – If you think that dealerships only struggle with transparency issues when it relates to consumers, you’d be sadly mistaken. There is plenty of information that is withheld from sales staff under the presumption that it’s for their own good and justified by the fact that sans the information, the sale will end up with a higher gross. The mistake here is that chances are good the customer already knows the information that the dealership is withholding from the salesperson. I get the philosophy behind it. And, prior to the auto industry getting hit between the eyes with the information revolution, perhaps it was a good strategy. Not anymore. How is a salesperson supposed to consult and build trust with a customer when they have less information than the customer?  It’s highly likely that the customer won’t believe the salesperson doesn’t actually have the data, but think that they are withholding it intentionally.
3. Prioritizing wellness – Retail car salespeople work brutal hours. We’ve all been there. And even salespeople fortunate enough to work at dealerships that offer flexibility, and/or moderate work schedules, must learn to cope with the stress of feeling as if they need to be at the dealership all the time, as the customer may come back and buy from another salesperson, so they lose half the commission.

Employee wellness is imperative to employee engagement. While the auto industry may be their career, don’t force employees to choose between family time, healthy living and mental well-being. Working 70 hours a week, never seeing their families and living off of whatever fast food place is nearby your dealership is a recipe for burn out regardless of the industry.

Employee engagement, employee retention, customer experience and the value of human capital are hot terms in the auto industry right now. To truly create a culture where employees want to work for your dealership and are actively engaged in its success, consider the importance of and think about how the three areas above might be applied in your dealership Just because we’ve always done it that same old way doesn’t mean that way is still viable. The employees are voting with their feet and to keep them happy and engaged with your dealership, it may be time to change things up a bit.

Whether it’s an unhappy customer in the service drive because the repair is taking too long; or a customer in sales for 4 long hours attempting to buy a car and less than happy as a result; or a customer making a post-purchase call to report issues with a vehicle they just purchased; dealership managers can sometimes feel as if they are constantly putting out fires and that everyone is unhappy. Sometimes the problem gets addressed to the customer’s satisfaction -- sometimes it doesn’t. You can’t please everyone, right? So what happens when you can’t?

A study conducted by SDL asked 2,784 consumers if they could recall their major customer experience failure in the last 10 years. Of those surveyed, 76 percent reported that this experience occurred in the last 2 years. Of those, only 55 percent could remember a good experience. The good news is that only 6 percent of those surveyed indicated that their worst customer experience involved the automotive industry. This certainly makes sense when you consider the frequency a customer visits a dealership, as compared to other retail businesses such as grocery stores.

An interesting statistic from the study is that the failures most often happened after the sale (32%). While the remembered successes happened during the shopping or purchase phase. This would seem to align with feedback we encounter from consumers in the auto industry. Think about your online reviews. I would venture to guess that the majority of your positive reviews tell the story of an excellent BUYING experience. While the majority of your negative reviews discuss post-purchase failures.

So, what are consumers saying are their biggest customer experience failures? The top four answers include long waits or poor response times (35%); employees not empowered to assist them (31%); unknowledgeable employees (30%); and conflicting or inaccurate information (29%).

By contrast, the consumer experience success stories showed the exact opposite with the top three being that employees were pleasant and helpful (35%); employees were knowledgeable (27%); and employees empowered (24%).

Something to think about is that these very same traits are directly related to the automotive buying experience. Think about those Internet leads that aren’t responded to at all, or if they are the response is too slow. Or, a failure to give customers the information promised (mainly price). Or sales associates that can’t provide information. The “just get them in” attitude is a relic and customers simply aren’t biting on it anymore. Car shoppers have access to more information and choices on where to buy a vehicle than at any time in history.

When a failure does occur, the younger the customer, the more likely they are to simply walk away and never patronize a business again. The older a customer is the more likely they are to want a solution. These failures are costly, too. Businesses can only win back a customer 20 percent of the time (1 in 5). And, if they do come back, they are 59 percent less loyal than they were before.

In addition, businesses who fail their customers will lose 65 percent of the revenue they would have received from that customer in the year after the fail. The sad part is that, of these failures, 24 percent could have been fixed for less than $20 -- or one-hour worth of work. And it gets worse. 64 percent of failed customers will stop recommending the business and those with the capability to do the most damage to a business’ reputation – namely those with large social media footprints – will broadcast these failures more aggressively. These are the customers that are anti-brand advocates on Facebook, Twitter and online review sites viewing their crusade against a business as a means of HELPING other customers by sharing their poor experience.

The news isn’t all bad, however. While the consequences of leaving a customer failure unrectified can be costly, there is light at the end of the tunnel. The study compared what these customers SAY will win their business back, versus what will REALLY win their business back. The top answer was the same – if the business owned the failure, admitted their mistake and showed the customer that their poor experience helped the business improve.

We’re not perfect and things happen. As you can see, it doesn’t take much to win a customer back or rectify a failed customer experience. The first step towards avoiding these failures is ensuring that the customer experience during the purchase phase is great. Respond quickly, provide information, empower your employees and provide accurate information. Doing these things will exponentially increase the odds that you create brand advocates. When you do fail, simply suck it up, be humble and fix the mistake. That’s all most customers want from a business. Allowing ego or policy to prevent you from satisfying a customer’s issue can result in future revenue loss and seeing these consumers standing on a virtual mountaintop warning others against doing business with you. And it’s much easier to soak in a customer’s praise than silence an unhappy one.

San Ramon, CA – March 14, 2016 --  Performance Loyalty Group (PLG), today announced that H&H Chevrolet of Omaha, NE, has grown its service revenue by simply switching from a complimentary PPM plan and instead selling extended service plans in both service and F&I using the UltraCare dealership branded Prepaid Maintenance Program (PPM). Fifty percent of those plans are sold out of the service drive.

H&H Chevrolet introduced its UltraCare PPM program in February 2013, by including an 18 month plan for free with every vehicle purchase. Between February 2013 and August 2015 the dealership gave away just over 2,000 plans. While improving customer retention was the underlying purpose for providing those free plans, Steve Hinchcliff, President and CEO of H&H Automotive, was surprised when he looked at the customer data the plans were generating. While 88% of customers returned to purchase additional services when they utilized their free PPM, the average service up-sell amount was only $65.24 per visit.

“Complimentary factory scheduled maintenance started to nullify what we were doing with the complimentary plans. So we changed our plans and tried to enhance our maintenance packages around the factory as an enhanced offering. We felt if the customer had more skin in game, there would be a higher perceived value. And it is true, in fact now they are coming back and spending three times as much as they did when the plans were free. Our philosophy is based on customer retention, on the lifetime dollar value, not transaction dollar value. And this is really what our culture exemplifies,” Hinchcliff stated.

In fact, selling the plans resulted in three times the customer up-sell which has now risen to $222.16 per service visit, an increase of $157.00 over what the complimentary plans were generating.   

The dealership now averages 138 plans sold per month with an average retail amount of $254.77, producing an additional monthly revenue over $35,000. Besides being a great revenue generator the PPM plans are also a powerful retention tool as well with over 71% of the plan purchasers returning to the dealership for ongoing service.

According to Hinchcliff, three things have contributed to the success of selling the PPMs rather than giving them away for free. First is the perceived value to the customer. Second is selling the plans out of his service drive -- more than 50 percent of the PPMs are now sold directly by service advisors. And third is offering an added bonus of a dealership gift card, which is perceived by the customer as an additional discount.

Hinchcliff went on to explain that when he started offering PPMs in his service department he began to see better upsell numbers. “We decided that we had this wonderfully busy and customer rich service department that would benefit from offering customers a good plan to save money, while also giving us the fulfillment of retention. We are not real big on making a large profit per transaction, but see a huge value in the lifetime value of the customer,” said Hinchcliff.

An example of how the process works at the dealership is if the customer is in for an express service of some kind the service advisor will say, “Here is your quote for service, but by the way, we are giving away a $25 gift card with our PPM programs and you have a choice of 3, 7, 9 or 12 oil changes for X amount. Which is already a discount on what you are currently paying. And, you also get the $25 gift card to spend at our store. So in effect, you are winning twice.”

According to Hinchcliff, the key to the whole program is retention, not making money. He does not make a huge profit from selling each package but the value is when the customer keeps coming back. “Our goal is to have the customer for a long time and get repeat and referral business. We feel the number one reason car dealerships are not well thought of, and that customers defect to the independents, is that most consumers think it costs too much money. The traditional car dealer strategy is just not that workable. I did not create this idea of retention. You have to look at the fact that selling cars is not like selling groceries. A vehicle is not something the consumer needs to purchase every week. So our pricing has to be reasonable in service. Successful groceries stores, for example, cannot exist on exorbitant prices as customers simply will not come in,” Hinchcliff stated.

UltraCare is a web-based technology that auto dealerships use to create, manage and market their own PPM plans. These plans can be sold in both the service lane and F&I. There is no third-party administration, no sharing program revenue or forfeiture, and no service claim submission requirement.

Dealers interested in finding out more about UltraCare or any of Performance Loyalty Group’s innovative sales, owner retention technologies and sales acquisition products, can visit Booth #3623C at the 2016 NADA Convention and Exposition, March 31-April 3, at the Las Vegas Convention Center, call: 800-608-2080 or visit: http://www.performanceloyalty.com

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About H&H Chevrolet:

Founded over 85 years ago by Augie Hinchcliff and Joe Haney H&H Chevrolet is part of H&H Automotive Group. Today, the Hinchcliff family continues to conduct business in the same manner in all their Omaha locations. H&H remains focused on customer satisfaction and volume selling.

About Performance Loyalty Group:

Established in 2001 and headquartered in San Ramon, California, Performance Loyalty Group (PLG) specializes in customer loyalty and retention programs for the automotive industry. It has designed and implemented custom loyalty (LoyaltyTrac®) and prepaid maintenance programs (UltraCare®) for over 700 individual and OEM automotive clients. PLG is the leading supplier of retention-based solutions dedicated to the automotive industry in North America. For more information, please visit: http://www.performanceloyalty.com.