It’s beginning to look a lot like the holidays. In retail, that typically means an upsurge in business. In the automotive industry, the sales department typically finds consumers buying vehicles for their loved ones. And the service department sees an upsurge in repair orders in preparation for a road trips to visit family over the holidays. In addition, Black Friday is looming and those bottom funnel consumers are waiting to see where they can get the best deal and where they should spend their money. If you have a loyalty program, this can be your most productive time of the year… if done right.  

What do I mean? According to 2017 Colloquy Loyalty Census, there are 3.8 BILLION memberships in retail loyalty programs. While that may sound like a lot (and it is), there has been a slowdown in memberships – 2017 saw a 15% growth rate down from a 26% growth rate in 2015. Why? Well, consumers don’t want to work hard for rewards and want to feel the rewards offered are worthwhile. According to the census, 53% of consumers enjoy loyalty programs that are easy to use, while 39% like great discounts, and 37% like the fact that the program is “easy to understand.” On the other side of the coin, the reason for abandoning a program is that it takes too long to earn points [that led to rewards], according to 57%. 

That being the case, how do you leverage your loyalty program to motivate and entice both new and existing users? During the holiday season, many dealerships like to leverage things such as price and discounted services. Consider leveraging your loyalty program instead. Promotions with points-based offers incentivize customers to use their loyalty membership and then continue to do so. Think of all the other retailers out their leveraging this. There’s nothing like getting a free $10 Kohl’s certificate to motivate you to go into Kohl’s (where you’ll probably spend more money than the $10). Consumers love it. Another thing that works is to offer incentives such as double points, or sell dealership gift cards at a discount as an idea for a gift for friends and family. (for example, sell a $50 gift card for $45).  

The holidays present dealerships with a condensed volume of opportunities – whether that’s from existing customers who are traveling for the holidays or buying vehicles as gifts; or even friends and family members seeking gift ideas. Find ways to utilize your loyalty programs in the manner for which they are intended – to build relationships! 

Of course, any consumer that doesn’t feel they are being rewarded and/or feels like the rewards are simply out of reach, probably won’t be around long (in the loyalty program). So, make sure your reward program is easy to use and understand, that rewards aren’t too hard to reach, and that you utilize offers to cultivate that relationship. Get your customers into the habit of using it. Once the customer knows that the loyalty program is beneficial to them, they will use it and choose you over a competitor. And that’s the exact goal of a loyalty program – a customer relationship. 

In today’s retail automotive climate, customers have more access to information than ever before. Quite often, a properly prepared and researched customer comes into the dealership armed with more knowledge than the salesperson. This can cause friction as the customer interprets the salesperson as deceptive when, in fact, they may truthfully just not have the information.  

In the past, sellers had a distinct advantage over customers. But no longer. So, how can your dealership use information to foster customer loyalty?  

According to an article on Inc.com, there are essentially two ways that retailers can use information in a transaction. You can use it to gain short-term profit, or use it to the customer’s advantage to build trust and loyalty. For example, when visiting Amazon to buy a book, if you’ve already purchased it before, Amazon will inform you prior to purchase, in case you forgot. This information builds a better and more trusting customer experience. 

While customers have ACCESS to more information, many – especially in vehicle sales transactions – don’t have all the information they need. And, the reason is quite simple: Vehicle sales transactions are incredibly complicated! There are many pieces to the transaction: price, trade-in value, down payment, interest rate, etc. While many customers focus on payments, some may neglect one or more pieces of the puzzle. In these cases, a dealership can choose to keep the secret (information) to themselves and score higher gross on the deal, or they can assist the customer by advising them and providing information for the best course of action for the customer’s specific circumstances.  

If your dealership chooses to keep the information to itself, you run the risk that the customer will find out after the transaction and feel swindled, end up disgruntled and post negative reviews. To say nothing of the fact that the customer will probably take their business elsewhere, since they no longer trust your dealership.  

In contrast, if your dealership chooses to share the information to benefit the customer, that very action is appreciated and builds trust with the customer, increasing the likelihood that they will leave happy, desiring to continue to do business with you. In addition, they are much more likely to refer their friends and family to your dealership.  

The long-term success of a dealership requires a customer base it can rely on. It’s no longer a viable business model to continuously be in customer acquisition mode. If you cannot retain your customers, you will end up running in place, scrambling to replace every customer that defects to your competition. There is no room for growth in that scenario – I am sure you have heard a million times that it costs more to acquire a new customer than it does to retain an existing one.  

The next time you find yourself in a situation with a customer where you have a choice about if you should use information to benefit yourself, or the customer, keep this lesson in mind. While you may lose a little immediate profit, the long-term benefit (and profit) that comes from a happy, trusting, loyal and retained customer is far more beneficial. Think of the future income! 

The automotive industry, in general, has an employee retention problem. A BIG one. And especially big in dealership’s sales departments. Sure, there are exceptions. However, NADA reports that sales turnover in dealerships averages 70 percent. That’s a lot! 

I’m sure that dealerships would rather not have this issue -- so why is it happening? Well, an article  I recently read in Forbes shines a really interesting light on this. 

The irony of this article is that it is giving advice to job seekers, not employers. It provides advice about hiring behaviors to beware of when interviewing for positions. As I read this piece, it struck me how familiar some of these behaviors are when it comes to how dealerships hire.  

In my many years in the automotive industry, it has not been uncommon for dealerships to be in a perpetual hiring mode. People leave and the dealership needs new people on staff to cover the floor and assist customers. Nobody wants to lose a sale because a customer gets irritated by having to wait due to lack of assistance. So, what does the dealership do? They hire anybody that walks in the door. Don’t get me wrong, many dealerships require drug testing, etc., for potential hires. But should the biggest concern when hiring be availability, rather than the quality of the potential new hire and how well they might fit into the dealership’s culture? Shouldn’t it be important to establish if the person is motivated, ready to learn and willing to work as a team player to create a positive customer experience? If not, your dealership is probably setting itself up for failure.  

The automotive industry is a demanding one. Hours are long, financial stability can be stressful (especially for commissioned salespeople) and management can change quickly, adding a new element of inconsistency to processes and expectations.  

These working conditions are never really explained to a prospect. Most conversations revolve around earning potential, and a lot of managers only care whether a potential salesperson is aggressive and ambitious… and, most importantly, available… as in; “Can you start tomorrow?”  

In essence; continuing to hire warm bodies to cover the showroom, rather than truly identifying people who will fit in and stay awhile, can be a catalyst for employee defection in sales that continues to occur to this day.  

It doesn’t matter how many interviews you put an applicant through if managers are only concerned with ambition and availability. Because, in the long run, that applicant probably isn’t going to stick around.  

Take the time to truly screen applicants and stop simply hiring warm bodies. My guess is that you will start seeing less turnover.  

Let’s face it. The car business can be brutal. Many in auto retail find themselves working long hours, under stressful conditions, with hardly any free time to see their families or enjoy other activities. 

In our industry, many managers are under a lot of stress. The stress of production can wear a person out– whether that’s sales goals to be met, or service revenue targets. As a result, tempers flare and leadership skills sometimes sway away from being nurturing to being annoyed and short-tempered, which affects everyone on the team.  

If this is the case in your dealership stop and think for a minute. Running any business with an iron fist where managers lack any flexibility and are overly demanding about meeting goals, can in fact be less productive. It can make it even HARDER to reach those goals.  

An excellent article in The Harvard Business Review tells the story of the importance of connecting your employees with their work. It discusses an alternate way to lead, which not only makes the business more productive, but also creates a better company culture which then results in happier customers. What is it? 

Storytelling.  

I know, it perhaps sounds a little out there if this is not a term you’re familiar with. But stay with me here for a couple of minutes and all will be revealed! 

So, how do you use storytelling as a manager? The article gives the example of a restaurant employee who was mentally checked out. Rather than doing his job, he was sneaking peeks at his phone and when things were busy, was failing to make the effort needed to quickly keep tables clean for customers. The supervisor noticed this and approached the employee. Rather than discipline him or rebuke him, she told him a story of how she watched a mother leave her 2-year old at a table while ordering food. The table had not yet been cleaned and the 2-year old proceeded to take her hand, wipe it across the dirty table and then licked the crumbs and catsup off. The employee immediately understood how his failure to keep up with cleaning the tables had affected the customers on a personal level and immediately proceeded to perform his job better.  

Why does this type of management work better? Because, rather than simply telling an employee that they are not doing their job, the manager was able to make an emotional connection that was real to the employee and could easily be understood. It personalized the importance of the task. By making that personal connection, it turned a mundane task into a meaningful one. And that made the employee more productive.  

This type of leadership and management style may sound arduous and time-consuming but, in fact, it’s not. According to the article, most storytelling is brief. It involves using concrete examples that reframe a moment by personifying human consequences. 

By emotionally connecting your employees to their work, they become more productive, both personally and as a team member. This makes your entire organization run more efficiently, makes your goals easier to achieve, creates a culture of hospitality and lays the foundation for a better customer experience.  

The next time you feel the need to discipline an employee who is slacking, consider telling them a story that makes the task meaningful. 

A couple minutes of thoughtful interaction can change their behavior for good - not just the one time. In the end, that’s what truly matters and what turns managers into leaders. 

Customer retention is typically much less expensive than customer acquisition. However, with the advent of the internet, consumers are changing. 

Now, I’m not saying that your dealership should ditch retention and loyalty strategies – not by a longshot. You need both retention and acquisition to grow. But what if I told you there is a customer acquisition strategy that costs ZERO dollars? Interested? I thought so. The answer lies in online reviews.  

Online reviews have become a prime source of information for consumers deciding which business to frequent, whether that’s a restaurant, nail salon or car dealer. Consumers trust other consumers – as long as the reviews are genuine and believable. 

According to an article on Loyalty360.com, the problem with cultivating online reviews isn’t that consumers aren’t willing to leave them; but that businesses fail to ask. Those consumers that are happy with the business, had a satisfactory experience and plan to continue frequenting that business, just aren’t emotionally compelled on their own to leave a review… but they would if they were asked. In fact, 70% of consumers would leave a review if the business asked them, according to a survey by BrightLocal.com. 

If you look at recent trends in the automotive industry, reviews have become more important than ever before – not just on the dealership level but on the salesperson level as well. Cars.com recently announced the launch of integrated salesperson-specific reviews on the dealership’s VDP pages hosted on their site. Consumers are now not only determining WHERE they want to purchase a vehicle but WHO they want to deal with at the dealership. 

People want to do business with people they like and trust. If the customer has never been to your dealership, and never done business with you before, all they have to go on is the word-of-mouth by their friends, family and social networks, along with online reviews submitted by other customers.  

Why aren’t dealerships asking customers for reviews as part of their sales AND service process? 

The hesitation I’ve seen is due to the fact that they don’t want to inadvertently motivate someone who had a poor experience. If your dealership has a customer retention, loyalty and experience plan in place, and strives to provide that excellent service, I promise that the positives will outweigh the negatives by far.  

Online reviews can be an excellent way to acquire new customers without expense. You’ve earned it. All you need do is ask. 

Younger generations prefer fixed monthly costs for expenses that include things such as vehicle maintenance. They can then budget and have less concerns about encountering a repair bill they can’t afford. But how do ride-sharing services fit into the PrePaid Maintenance equation?  

Ride-sharing – even as a secondary source of income – is skyrocketing, with many part-time Uber and Lyft drivers joining the ranks to add a little money to their bottom line. This brings opportunities aplenty to provide a valuable service, while also adding revenue dollars for your dealership. 

There are many standard pitches for PrePaid Maintenance such as fixed ownership costs, security and peace of mind. Well, it might be time to add another question when discussing PrePaid Maintenance with customers in F&I. Try asking: 

“Do you plan to use this vehicle to earn extra money as an Uber or Lyft driver?” 

Ride-share drivers put many more miles on their vehicles than regular drivers. I’ve met several Uber and Lyft drivers in my travels. Some tell me they only do it for extra income, while others do it full-time. Who knows what, if anything, they told the dealership when they purchased the vehicle?  

Either way, for those customers planning to make some income driving, PrePaid Maintenance becomes very appealing. Time off the road means money out of their pocket. So, subsidizing maintenance with their vehicle loan means operating without any worries about an expensive repair bill threatening their livelihoods. 

As PrePaid Maintenance covers just regular maintenance, if your dealership locks the customer into a PPM, you have the first chance to gain additional business that comes with normal wear and tear. This occurs much faster with these Uber and Lyft drivers. New tires, brake pads, etc.; the list goes on. For these drivers, PrePaid Maintenance should be a no-brainer for both the customer and the dealership. The customer doesn’t have time to go shop prices at 10 different competitors; they need to get the vehicle repaired and back on the road so that they can continue making money.  

Ride-sharing is exploding and these drivers must provide their own vehicles. Start including questions in your F&I process to establish if the customer is planning to, or may consider becoming an Uber or Lyft driver in the future. You may see some light bulbs going off and find them more receptive to your PrePaid Maintenance offer.

In many businesses, it is typically frowned upon when an employee goes over the head of their immediate supervisor, or directly to another department, to get questions answered or problems solved. This easily creates animosity between the employee and their direct supervisor and is frowned upon as it is a failure to follow chain of command. This system of following a hierarchy has been in place for decades… but is there a better way? 

Elon Musk says there is.  

As recently reported on Inc.com, in an e-mail to his staff, Musk outlined how employees should communicate and why. Feel free to click on the link to read the whole e-mail, but here are the highlights: 

• Using the most common flow of information – through management up the chain and then back down – only serves to enhance the power of the manager, but fails to service the company. 
• Free flow of communication between any employees, without having to go through management or a chain of command, gets problems solved quickly. Musk tells his employees they are free to talk to anyone in the company without thought of any chain of command, or the need for anybody’s permission. “You should consider yourself obligated to do so until the right thing happens,” said Musk.  
• Musk also stated that, “…managers should work hard to ensure that they are not creating silos within the company that create an us vs. them mentality or impede communication in any way.”  

Musk feels strongly about management impeding communication. In fact, in his employee communication, he stated, “Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company. No kidding.”  

It certainly seems to make sense. The faster problems get solved and/or issues resolved, the more productive a company is.  

Many dealerships operate in silos and enforce the whole chain of command-type communication system. A sales manager would probably frown upon a salesperson going directly to the GM for an issue. In many dealership, sales and parts are operated almost as independent businesses (silos) which can cause animosity and friction. For example, perhaps a salesperson encounters a problem with a customer that he or she knows can only be rectified by the GM. They cannot go directly to the GM, but first have to go to the sales manager, who then may need to discuss it with the GSM. And then it may still need to go to the GM, all while the customer is getting increasingly impatient. Or, the used car manager gets frustrated with what he considers excessive recon costs. Typically, these issues are discussed or debated with the GM at manager’s meetings, rather than being addressed immediately.

Perhaps it would help if your dealership took a lesson from Elon Musk regarding employee communication protocols. It certainly sounds like a reasonable solution that could increase productivity by empowering employees to expedite solutions, allowing them to increase their contribution to the dealership. 

I’m not saying management is obsolete. Only that managers may want to consider allowing faster communication channels that solve problems. By so doing, employees can do their jobs better, customers should be happier and the result should be improved CSI and profitability. 

If you haven’t already noticed, human’s attention spans, in general, are decreasing. A deluge of short soundbites, marketing messages and social media has created a society that simply won’t listen… if you talk too long. Do you have a friend who, when they want to tell you a story, you immediately ask them how long it is? If so, I’m sure you understand.  

According to a recent article on Search Engine Land, today’s consumers have become so used to receiving relevant information instantaneously that, when the online customer experience doesn’t deliver, they simply leave and don’t do business with the company. For example, the article shared that in July 2016, the average U.S. retail mobile site loaded in 6.9 seconds. Well today, 40 percent of consumers will leave a page that takes longer than three seconds to load. Furthermore, 79 percent of shoppers dissatisfied with site performance say they’re less likely to purchase from the same site again. While that may seem harsh, it’s reality -- and it’s probably only going to get worse.  

For automotive retailers, the current trend is to take more of the buying experience online. This is evident in the start-ups vying to sell and deliver vehicles online direct-to-consumer, as well as in the larger traditional automotive vendors who are rolling out comprehensive ways for customers to complete more of the buying process online. 

If the statistics from the Search Engine Land article hold up for the car dealership web experience (and there is no reason to expect that car buyers are any different from any other type of online buyer), then you would be wise to ensure that the customer experience on your website throughout the entire process is both fast and easy. Otherwise you risk losing the sale and any future business from that customer.  

Customer loyalty cannot be earned from a customer that never existed. There are plenty of people searching through your dealership websites every day that you will never know existed. Ensuring the DIGITAL customer experience is great is in fact as important as, if not more important than insuring the customer’s physical experience is exceptional.  

Your dealership will get more consumers on your digital lot (i.e. website) than in person. Imagine if a customer came onto your lot and was ignored for 30 minutes. That customer experience would probably not work out well for your dealership.  

The problem is that the gap between business investments and technology adoption is currently quite significant – especially in our automotive industry. While many businesses believe they “should” adopt new technologies, according to the article, 66 percent of marketers have no plans to do so.  

Start analyzing consumer behavior as far as what is working, what is not and what is needed (technology-wise). If you don’t, you risk losing sales and loyal customers who could bring you revenue for years.  

In our era of 140-word count tweets, Facebook posts that lean towards shorter videos and brands that thrive on shorter marketing messages, it’s become a challenge for businesses to capture – and keep – the attention of the average consumer. Today’s customers have the attention span of a squirrel. If you don’t cater for the faster, almost instant gratification they demand, your customers will move onto a better experience at the competition.

Texting is by far the most popular form of communication for consumers – especially with younger generations. However, because of the many compliancy rules and laws that have to be followed, many dealers are hesitant to adopt text messaging -- they simply don’t want to risk it.  

Consumers prefer to communicate via text because it’s short, to the point and non-intrusive. Have you ever tried to call one of your kids or grandkids only to have them fail to answer, then text you right back asking what you need? Or have your ever received a voicemail, not bothered to listen to it, and simply texted the caller back?  
 

Short-form messaging is popular and should be high on your list of priorities to offer your customers as a form of communication. Why? Well, while email marketing has been around for many years, emails go into spam filters, get lost in a stack of unread e-mails, or are simply ignored. If you get an open rate anywhere north of 20 percent, you’re doing a pretty good job. Text messages, on the other hand, typically get read within 3 minutes of receipt, according to the Huffington Post. There is also no spam filter (short of a customer blocking your number, that is.)  
 

If that isn’t proof enough for you that consumers want to communicate with businesses via text messages, try this on for size: Google recently implemented a “Message” feature on its Google My Business pages. What does this mean for your dealership?  
 

In the past, when consumers searched a business on a mobile device, they were presented with a map with some user-friendly buttons such as directions, click-to-call, etc. But now, for businesses that choose to turn it on, Google will provide consumers with the option to text the business. Once consumers get used to using it, I’ll get usage will skyrocket. If the most popular search engine by far and largest advertising platform believes adding texting capabilities to its platform is what consumers want, this is a pretty big wake-up call for us all.  
 

While I love the idea of Google’s Message service, I do see a problem with it. Texts sent via this service go to individual cell phones. Sure, as a dealer you can set up as many cell phones as you want for customers to text to. But there is currently no way I know of for you to memorialize those text conversation in your CRM, other than manually notating it. And, as I am sure you are aware, a customer’s cell phone number is gold when it comes to data, functionality and efficient communication. Lacking this data and conversations in your CRM would be a huge hole. If anyone out there knows of a solution to this I would love to hear about it! 
 

My bet is that vendors and OEMs will certainly pay attention to this development by Google, as Google certainly keeps on top on what consumer’s demand. So, keep a look out for a solution soon that efficiently memorializes these text conversations in your CRM – that will be a great addition as far as tracking the consumer’s path to the sale. I strongly believe consumers will soon be using this service (assuming you turn it on and set it up). And, as more and more consumer use this method of communication through Google, if your dealership does not allow this type of functionality, you may well find you are missing prime opportunities which go to competitors which do offer it.  
 

Text messaging isn’t going away. As a form of communication it’s only going to get more popular. Flip the “on” switch and be there when they reach out. Your customers will appreciate it and you’ll be able to more efficiently communicate with your customers – a win-win in my opinion. 

Let’s face it, for every 10 businesses that exist, 9 have some sort of rewards program. While they used to be novel and exciting, customers are now used to them. They may well sign up. But, far too often, customers do so not because they are loyal, but because they happen to already be at that business.  

Too many companies use customer loyalty programs as a crutch, thinking if they give their customers something for free, or offer incentives, this will create loyalty. That viewpoint is wrong. A loyalty program is designed to enhance the customer experience and show the customer that you care about them. Often, loyalty programs aren’t as successful as anticipated solely because the customer experience falls far short of any reward the customer could possibly earn. Or the program presents customers with undesirable or irrelevant rewards and makes any that are desirable seemingly impossible to reach.  
 

Well, if it’s not rewards, what actually does create a loyal customer? 
 

An article carried by SmartCompany, gives an interesting example about a fish and chips restaurant that always gave customers an extra serving of fish. As customers got used to it, they started ordering one less than they actually wanted, knowing that the restaurant owner would give them an extra one – the exact amount they wanted. This practice actually had an adverse effect on the business and it ended up losing money while failing to create customer loyalty. Why? Because the reward became… well… not a reward, but an expectation.  
 

To earn loyalty, the first and foremost item on your “to-do” list should be to create a great customer experience. Without a great experience, it doesn’t matter what rewards you offer. According to Chief customer experience officer and strategist of CXA, Cos Luccitti, who is quoted in the SmartCompany article, “Humans are complex, demanding creatures. We like free stuff, but it’s not what bonds us to a brand or business.” He goes on to state that answering the question of “how does the business solve my problem and make my life easier,” is the most important thing.  
 

Loyalty programs have become integrated into our society. You probably belong to several. The fact is that many customers would find it odd for businesses NOT to have one. However, simply offering one, and having one that is fully integrated it into a company culture based on an excellent customer experience, are two completely different things – and guess which one wins? 
 

Rather than trying to leverage your loyalty program to create loyal customers, why not leverage your customer experience first, and then use your loyalty program to reward them? That, is a winning formula.