Ever popular transportation service Uber is coming under fire for what some say is an exploitative business practice. Uber tends to be a convenient and economical way to get around town – especially for inner city dwellers that don’t own vehicles and travelers who don’t necessarily need a rental car.

In an effort to encourage drivers to work during busy times to ensure that Uber customers don’t receive a “No cars available” notice, Uber instituted surge pricing. In essence, surge pricing is a multiplying factor based on demand. Let’s say you need a ride home from downtown New York City on New Year’s Eve, after watching the ball drop. Chances are great that with 2 million people trying to get home, there won’t be many taxis or Ubers available. In these cases, Uber surge pricing has been known to grow upwards of 9 times the normal fare. Revelers found this out this past New Year’s Eve when they woke up to find they had paid $205 for an 8 mile ride. Or, in one man’s case, $1,100 for a trip that would normally cost $125.

While these fare increases typically only occur during really busy times, in an effort to entice drivers to work, these price increases are irritating customers worldwide. Uber may be a giant that has arisen quickly. However, the company must ask itself what would cause a customer to discontinue using its service faster – lack of available cars or the perception of price gouging?

Uber has enjoyed a rise in popularity due to the simple fact that consumers have embraced it’s convenience and lowered transportation costs. Uber drivers are held to certain standard for the type and age of the vehicle they drive. And many users state that Uber vehicles are much nicer than many of the aging taxis that exist. However, while taxis are regulated, along with the fares they can charge so as to avoid price gouging, Uber is not.

There was also the Australian hostage crisis which saw an armed gunman take hostages in downtown Sydney forcing evacuations. Well …. Uber’s surge pricing took effect causing fares to rise to a minimum of $100 for people to evacuate. Enraged Australians quickly took to social media denouncing Uber’s actions as exploitive. To their credit, Uber quickly refunded everyone that had paid for a ride and made additional rides available free for anyone else fleeing downtown.

While Uber’s surge pricing makes sense from a business standpoint, in our supply and demand driven market, every consumer forced to pay hundreds of dollars for five minute rides that should in fact cost just $10, is a customer who is at-risk to discontinue use of the service. That customer could also be a megaphone for bad publicity through social media and word of mouth. This could backfire on Uber and the company may find that users forgo using their services on nights when they estimate it to be busy. They could then end up with drivers that have no customers.

Customer loyalty is a fragile creature. Uber has enjoyed success by creating an excellent customer experience. And the customer experience is usually king. In today's economy, consumers have more options than ever--and they know it. With the growth of the Internet, they can get almost anything they want, whenever they want it. As a result, they increasingly value excellent experiences.

This is a different game, with different rules. Companies win or lose because of the feeling they give customers, not necessarily because of features or prices.

At the North American International Auto Show, Ford unveiled an interesting new program to the world – FordPass. According to The Detroit News, Ford’s goal with this app is to create a centralized hub which allows Ford owners to utilize some unique services related to ride-sharing and mobility. Some of the planned features include FordGuides, which allow Ford owners to ask questions and get answers via text or phone 24 hours per day; and FordHubs, which are actual buildings Ford owners can visit to learn more about Ford technology. Additionally, Ford owners will be able to utilize the app to obtain free parking at airports. These parking lots then rent out the owner’s vehicle while they are away. Ford owners will be able to use the app to locate and reserve parking spaces as well. According to Ford, it is seeking to expand the app to include ride and car sharing as well. The app also introduces a new loyalty program which will reward app users with points that they can redeem for prizes.

While I can certainly see the value of utilizing some of these services should an owner live in a dense market with limited parking like New York or Los Angeles, it would seem as if the initiative seeks to keep Ford owners “in-house,” so to speak. Most of these services already exist. And the offerings are via partnerships with existing companies. Consumers could easily download free apps from the companies whose services they desire already -- without a Ford branded app. It’s also not clear whether a consumer would be willing to allow a parking garage to rent out their vehicle in exchange for free parking at an airport. Trading a small daily parking charge in a long-term parking lot, for some stranger driving around in your vehicle, seems perhaps a bit of a stretch. So, what’s motivating Ford to provide this app. And, how will they get consumers to use it? The integrated loyalty program is the key.

Ford is piggybacking, if you will, on the more popular services that are rising in the peer-to-peer economy. I would not be surprised to see Ford launch an Uber-like service in the future. Wait. It just did. Ford also announced its Dynamic Shuttle Service, which is an Uber-type service currently used exclusively by employees. This service, in partnership with IBM, is also being used to test their Smart Mobility Experimentation Platform, which “will aggregate data every 10 to 15 seconds to provide drivers with information like the route with the least amount of traffic and areas with open parking spots.”

Only time will tell if Ford is making the right move. It would seem that trends such as ride and car sharing, along with the explosion of Uber (worth $60 billion after only 5 years) may indicate that it is. However, remember that while these services may be popular for consumers that live in densely populated markets, it’s hard to fathom rural owners taking advantage of or needing most of these. While the loyalty program may attract Ford owners to access these services through their centralized app, we’ll just have to wait and see how owners actually respond once it is launched in the Spring.

Competition for air travel is fierce. Especially when it comes to wooing business travelers. An interesting fact that recently came to light is that the most desirable customers are not necessarily those that have flown the most miles. Airlines have realized this and have changed how rewards and statuses are earned. You see, flying longer distances doesn’t necessarily equate to more revenue. The airlines want to capture those lucrative business travelers that book last minute and end up paying full fare, rather than those that book months in advance and capture sale-priced fares. These last minute bookers bring the most revenue.

In the past, status was rewarded by miles travelled. However, this has now changed. In fact, American Airlines just became the last of the three major airlines to revise the way status and perks are awarded. It is now based on how much money is spent, rather than miles flown.

This recent article on Yahoo Travel relays a viewpoint that airlines have inadvertently created an elitist group of travelers. The thought process is that this is due to loyalty program promises that the airlines sometimes cannot quite live up to. Despite all of the red carpet treatment – Luxury Porsches to shuttle fliers to connecting flights; swanky exclusive airport clubs; etc., there are times when there just isn’t an open first class seat available for a customer upgrade. When that situation happens, airlines have found that this sub-group of elitist travelers attacks with their loyalty cards. They try to out trump each other with status level or threats. The article is quite interesting in how it explains the mentality that the airline’s loyalty programs have created, simply based on how it has been structured and presented to customers. There are certainly a few loyalty program inspired horror stories contained in it.

Loyalty programs have become an expected norm by consumers due to their mass adoption by most major retailers. As such, in many cases they have lost the very essence with which they were intended – to make that loyal customer feel special and appreciated. If we’re to take a lesson from the airline’s faux pas, what is the answer then? How, through our loyalty programs, do we show our customers that they matter to us, that they are important and that we value their loyalty?

Well, one thing that always works is to keep in those basics of customer service. I hear more and more these days about the importance of the customer experience. Show them that they matter by offering exceptional service. Offer meaningful and relevant rewards. And go the extra mile when you know it can transform someone’s experience into one that’s truly exceptional.

Earning customer loyalty in today’s society is especially tricky. As almost every retailer now has a loyalty program, it’s difficult to stand out and make your customer truly feel special and appreciated. Earning loyalty isn’t simply about giving something away. It’s about creating and nurturing a relationship that builds a brand advocate who will continue to patronize your business and also help with your acquisition efforts through recommendations and word-of-mouth. For the customer, the true test of how much a business values their patronage – and typically the moment when most businesses fail – is when a problem arises and they need assistance.

Nowadays, most consumers are used to getting trapped in an automated phone system’s multiple layers, offering every option except the one they want – a REAL LIVE person. Most customers don’t expect businesses today to greet them by name, or have instant knowledge of their past transactions. They simply want to know that the business is there for them and that it will help them. Unfortunately, frequently customers instead feel frustrated. They get bounced from rep to rep, or department to department, without that rep having the power to help them. And, even more frustrating, each step of the way they have to explain their problem again to the new person.

One of the easiest and cheapest ways to show your customers that your business truly cares is to treat each one as a VIP. There are countless stories of customers defecting to the competition simply because someone didn’t pick up their extension, and they went straight to voicemail. Train your staff to take ownership of each call that comes into your dealership. If the customer has questions, they should check that the person the customer needs to reach is available. And that they are the correct person to answer the question before transferring the call. Don’t shoot the customer off into phone limbo. Train your staff to brief any employee they transfer the call to about the customer’s issue. Then the customer no longer has to constantly repeat themselves. It’s very easy in a busy showroom to transfer calls around, page salespeople, then place customers on hold. But that’s exactly what will send those customers elsewhere.

Stores with BDCs are in an incredible position to create a concierge-like VIP service for customers. To create a relationship with a customer, you have to become a resource for them. If your customer’s vehicle is broken down, you could simply tell them to call AAA and have the car towed in, and/or give them the number for the manufacturer’s roadside assistance program. Another option is to offer to place that call for the customer -- stay with them until the service answers, offering any information (like the dealership’s address) that the operator may need. Which do you think the customer will be more impressed with? Which do you think would result in that customer’s vehicle at your shop, versus your competitor? I realize that not all of this is realistic at each dealership, it’s the general idea of customer care that I am trying to relay.

Instead of answering the phone with a question of “This is Mike, How can I help you?” try a simple change to “This is Mike, I can help you.” Take ownership of that customer until their need has been fulfilled. You’d be surprised just how appreciative and impressed your customers will be. That is how you differentiate yourself and earn a customer’s loyalty.

An interesting study conducted by MaritzCX and published on CustomerThink relays how dealers should care about – and invest in – the creation of a better customer experience in their stores.

While customer experience can be vague, and in the past has mostly been measured through surveys and CSI scores, MaritzCX conducted a comprehensive study to show dealers the only factor that affects the bottom line – and that is revenue. The study’s results illustrate that when a dealer climbs one level in customer satisfaction (i.e.: from “satisfied” to “very satisfied”), sales volume increases on average by 329 vehicles per year, adding $64,000 in additional sales profits. In addition, the same customer experience improvement in service increases revenue by $41,646 per year. According to the study, “combining additional sales profits and service profits reveals a potential incremental gross profit of $106,315 per year for the average dealership.” By contrast, when the customer experience moves down a level, the study found a decrease in gross profit of $191,624.

Customer experience is currently a hot topic with dealers and vendors. However, many dealers are hesitant to spend lavish amounts of money on showroom improvements, or luxuries without a concrete answer to the most important question most dealers ask – “What’s my ROI?”

The MaritzCX study was able to capture the monetary benefits for dealers investing in an improved customer experience. It certainly falls in line with what loyalty experts have been preaching for years. Customers that have a consistently great customer experience tend to spend more money with the dealership and also refer their family and friends. This referral activity provides dealerships with increased exposure and opportunities that they may not have had otherwise. This represents additional revenue producing possibilities in both sales and service.

Brand loyalty is increasingly difficult to achieve -- and brand advocates are even harder to capture. Dealerships that continue to operate as is, without identifying customer pain points in their experiences – whether those be service or sales – risk losing business to either competitors, or independent service repair facilities. Ensure that conditions are optimal to provide that great experience on a consistent basis to each and every customer. This will help maximize the potential of the customer being loyal and of capturing their future business, directly or through referrals.

In the end, part of every customer’s buying process involves making the decision who they want to purchase a vehicle from. Treat your customers right, provide a great experience and take the time to really show them you appreciate their business. This then acts as a catalyst for all of your other brand enhancing activities – high CSI scores, increased online reviews and word of mouth advertising. Neglect customer experience at your own peril. Today’s consumers are far less willing to put up with a poor experience and will very quickly take their business elsewhere. Improve your customers’ experience in your store and ensure that they are well taken care of.  Foster brand loyalty and create brand advocates. Your bottom line will grow because of it.

In dealing with the customer experience, all too often the conversation centers on the customer’s buying path from initial contact through the sale. What many businesses don’t think about, however, is that the sale is only the start of the relationship. Customer loyalty is built through a consistent customer-centric experience. In the retail automotive space, this is more important than ever when dealing with customers in the service drive, as potential revenue in service outweighs sales by far. One way dealerships can begin to foster a relationship and lead the customer down the path to customer loyalty is through new car owner clinics.

Vehicles today contain more technology than ever before, with manufacturers increasingly installing many of these technologies even on base model vehicles. By the time the customer has finished paperwork in financing, oftentimes they are simply ready to leave. They then tend to get rushed through the delivery process and the features of their new vehicle are not covered in enough detail for the customer to truly understand and appreciate their use.  And have you seen the average user’s manual? They are huge! Few customers have the time to really go through and learn all the ins and outs to get the best out of all the new vehicle’s features. This can be frustrating to new car owners, especially those that aren’t technologically savvy.

New car owner clinics offer many benefits for both dealerships and their customers. First, it gets the customer back into the store with fresh eyes and ears. Dealers can then spend the needed time reviewing the car’s features and assisting the customer in setting up things they have found challenging. In addition, it provides the dealership the opportunity to introduce the customer in a more formal setting to the management team and service advisors. This allows for a more comprehensive introduction than perhaps existed during the delivery process, when a brief introduction may have occurred.

Facilitating these clinics on a normal schedule can provide increased opportunity to bond with these new customers when they are not worn down from the sales process. In addition, it allows management and service personnel dedicated time to focus solely on these new owner’s needs, wants and questions, when they are not distracted with their daily tasks or duties.

Some dealerships make these formal affairs, offer catered food and beverages, but that is not a necessity. Dealers that simply set aside the time to spend with customers will find that these new owners appreciate it. It demonstrates that the dealership is still there to assist them after the sale. Simply extending the offer to customers, making them aware that these clinics are available and that they are welcome to attend, shows your customers that you care, regardless of whether they choose to attend.

If you’re not already holding new owner clinics, think about trying this. You’ll be surprised at who shows up, and how much they appreciate your efforts.

Yes.

Now let me explain.

In our industry – as well as life – we continuously talk about transparency. Let’s be brutally honest here. Sometimes honesty isn’t the best policy. Is it always that way in real life? If your wife asks you whether she looks fat, you know you’re always going to say “No.” How about those times you go to a friend’s house for dinner and, well, it’s not exactly great. Do you tell him or her? Of course not. You politely say it is good, make a valiant effort to clean you plate and then pick something up to eat on your way home. We like to call these instances of non truth “white lies” and justify them with the knowledge that, in some cases, it’s better to tell a lie than to upset someone by being honest.

Are there parallels in the business world? Of course there are. I’m certainly not talking about deceiving a customer in a transaction, or lying about something of substance. What I’m talking about are those instances where a lie actually preserves a relationship – similar to the goal of the white lies I previously described. When you’re interacting with people, just because they’re customers doesn’t change the fact that they’re human beings. That customer that comes in and needs a lot of help getting financing because their credit is horrible doesn’t need to be beat up and embarrassed. You never know if there’s a co-signer waiting in the wings. You may know for a fact that they aren’t going to get approved anywhere. But you tell them you’ll try. Perhaps you present their file to some of your sub-prime lenders. But ultimately you call the customer and let them know you can’t help them. Think about this though… Some of the most loyal customers began as special finance customers. When one comes through your doors that you can help and they leave with a car, they will just about kiss you. Not only will they be forever grateful, they’ll send every person they know to you. It’s no different with people with excellent credit. It’s all about treating them with respect and providing an excellent buying experience.

There are times when little white lies can actually improve your customer’s experience. For example, imagine a customer calls a week after trading a vehicle in and says they believe they left something valuable in their vehicle. Perhaps this vehicle has already been detailed and cleaned, or even wholesaled out. The fact is that YOU know there is nothing in the vehicle. You could tell the customer you won’t (or can’t) check for them. In which case they’ll be upset, OR, you could tell them you’ll check and call them if you find anything. Which path do you think will be more conducive to maintaining the customer’s satisfaction?

Our world would probably become chaos if everyone could do nothing but tell the literal truth. Customer loyalty and experience sometimes requires telling the customer what they want to hear simply to let them save face, spare their feelings, or satisfy their needs. Keep in mind that there is a fine line but, for the most part, if you treat people right and use your conscience to make decisions -- just as you would if your wife asked you a question that it would be unwise to answer honestly -- you’ll find yourself making more friends and keeping more customers.

The reason that consumers don’t trust us is simple… the messages we send them aren’t believable.

Point in case: Doug Demiro, a former manager of Porsche Cars North America, and now author of a popular column on automotive website Jalopnik, answered a reader’s question in his column that illustrates this point very clearly.

The question essentially boiled down to this: “Do those letters and e-mails from dealers saying they really want your trade-in actually mean anything? Do dealers really want your trade-in? Are they going to pay top dollar for your vehicle because they have some customer who desperately wants it?”

His answer: NO

Go ahead and read the article. It’s pretty much how consumers perceive these offers. The comments are also rather entertaining. It’s all consumers sharing experiences in which they received a similar offer and actually wanted to take the dealership up on it -- until they found out the dealer couldn’t deliver, or that the offer was unobtainable. And now, in general, they assume ALL offers are simply ploys and conspiratorial plots to entice the customer into the dealership.

Are they right? Is that what we’re doing?

Well, that all depends on how responsible a dealership is in handling their marketing. Dealerships who turn over their entire DMS to outsourced BDCs, direct mail companies, extended warranty companies, or any other vendor without first segmenting out and vetting that database to ensure that it is correct for that targeted message; that the recipients of the message qualify for the offer; are in fact, for the most part, doing more harm than good.

All this type of poorly thought out, uncoordinated mass blanketing of promotion does is create an aura of mistrust with existing customers. By blasting them with irrelevant messages you make it more difficult for the customer to believe ANY message they receive - even if it does apply to them. This practice, which is still more widespread than many realize, in turn gets projected onto the retail auto industry as a whole.

That being said, smart dealers understand the importance of segmentation and relevant messaging. When a dealership realizes that “spray and pray” hurts more than it helps and takes the time to segment its database and send relevant messages to those customers most likely to be interested, the campaigns - no matter what form of marketing it is - will always perform better. Why? While you may be marketing to less people, those people are more likely to take you up on your offer. They’re more likely to convert when they come in, since they will actually qualify. And you’ll spend less money to achieve better results. The side effect of segmenting your marketing messages is that you will start to earn your customers’ trust. They still may not believe everything you send them (even if it’s true). But, when they come in and discover that you can actually fulfill the offer, not only will you win their business, but also their trust. And that’s something all dealerships and our industry certainly needs to do.

In the automotive industry, hundreds of customers pass through dealerships on a daily basis. Each of these customers will interact with dealership staff multiple times during their visit - whether they’re there to buy a car, or for a simple oil change. It’s very easy to function as an organization with a focus on efficiency - how quickly can you complete a repair, how quickly can you get someone in and out of the finance office, etc.  We are, after all, in a society that’s always on the move. The trend is to speed things up for the customer. By doing so, however, we neglect the biggest part of customer’s experience and the most important piece of the big puzzle that is customer loyalty: personal interaction.

All too often we go through our days thinking that if we don't get complaints, our customers are happy. But, that’s not usually the case. Running the dealership like an assembly line serves only to depersonalize the experience. While you may not hear a complaint, you shouldn’t assume that every one of your customers had a good experience. You’d think that if there was something substantially poor about their experience, the customer would inform you. And some customers would. But what about little things that affect the experience? In many cases the customer either doesn’t feel it’s worth mentioning, or doesn’t think anything will be done about it. Those customers complete the transaction with you and go on their way leaving dealership employees with the impression that their experience was satisfactory, assuming they will return. And, in many cases they do…

Until another company offers them a superior customer experience.

All of a sudden, this repeat customer simply stops coming in. Oftentimes, we’re left clueless as to why. Did we do something wrong? Was there a bad experience that we didn’t know about? Is it a price thing? Did they move? We mine the DMS and email coupons and offers to dormant service customers that used to come regularly, to invite them back. Sometimes they respond or take advantage of our offers, and sometimes we’re left wondering.

So how then are we supposed to know whether a customer really had a good experience during their visit? It’s very simple. We ask.

Human interaction is the single most effective way of gauging the thoughts of another. Just as you can tell when someone isn’t telling you the truth, or is unhappy despite what they may say, the same occurs when your sales manager or service advisor makes sure they speak to the customer before they leave. Take the time to thank the customer for their visit and ask them how their experience went after each and every transaction. This can help to identify problems. Perhaps it was something as small as the fact that the restrooms were dirty, or there were no paper towels. Perhaps the car wasn’t washed to their satisfaction or there are greasy fingerprints in their car. The customer may just leave feeling irritated. Having knowledge of that fact right then would allow you to fix that issue so that another customer does not have the same problem.

Make it a point to train your employees in the importance of conducting exit interviews with every customer. If they’re in sales, a manager TO is the perfect opportunity to thank the customer and ask how their experience was. You’d be surprised how that previously quiet customer all of a sudden opens up when a new face with authority asks them. In service, have your service advisors or, if possible, your service manager do the same thing prior to a customer leaving. Identifying customer complaints or service hiccups can go a long way towards ensuring that the experience for every customer is as optimal (and consistent) as possible. It doesn’t take much to lose a customer nowadays. Taking a few extra minutes with each customer will show them that you care and that will go a long ways towards earning and keeping their business.

There is a group of people that seems to sit in limbo when it comes to dealership marketing messages, especially when it comes to service. This group of people tend to have cars in the 2-year old range. Yes, they’re probably getting the dealer’s random e-mail messages with service coupons. But, this is also the time when these vehicle owners may have to start shelling out more significant money for repair or maintenance work.
 

Many consumers don’t realize that they can still purchase extended warranties and/or prepaid maintenance plans once they have left the finance office. How often do your service advisors inform customers that they are still eligible? Are you sending relevant messages to this group of people? The manufacturer and finance companies are. An acquaintance of mine has a 2-year old car and has received numerous solicitations from Ally Financial for an extended warranty. They even offered 0% interest and to roll it into his monthly payment. Yet he received zero offers along this line from his dealership.
 

Extended warranties and prepaid maintenance programs bring in great revenue to dealerships. I bet that your finance departments are doing their best to sell these at the point of purchase. Why, then, aren’t service advisors making an effort to offer these programs to customers? Chances are their pay plans aren’t structured in a way that gives them any incentive to do so.
 

Consider educating your service advisors. Train them and implement a process in which they inform ideal service candidates about these programs and incentivize them to sell them. You may find that your post-sale warranty and prepaid maintenance penetration increases. Not only does this increase revenue but, at least in the case of prepaid maintenance, it ensures that the customer is tied to your dealership for as long as they own the vehicle. There’s no better person to sell a new car to then the one that bought their current one from you and that has been getting it serviced with you for years.