An associate of mine recently told me an interesting story about their 75-year-old father, who purchased an import, rather than a domestic vehicle, for the first time in over 60 years. This was sometime around 2010.

When it was time to replace his domestic minivan, the first thing my associate’s father did was to check the Sunday paper to see in any big sales were happening. His preferred domestic dealer had an ad that mentioned vehicles listed online. He then got on his computer to see their inventory. However, while online, the import dealer managed to conquest his business away from the domestic dealer, offering more detailed inventory and transparent pricing information.

While online he saw several detailed photos of new vehicles on the import site, but just a red-X-in-a-box next to most of the domestic dealer’s new inventory -- the same domestic dealer that had drawn his attention to their website by bragging about their HUGE online inventory in their newspaper ad. He was impressed with the basic price break down on the import site, compared to the words: “CALL FOR PRICE” on the domestic dealer’s website. He chose to contact both dealers, and ended up at the import dealership in a matter of hours. By the time the domestic dealership called him, there was a brand-new crossover sitting in his drive way.

I’m not sure exactly what the import dealer did to get on his radar, but once they got him, they blew him away with such an impressive shopping, purchase, and follow up experience, that he never looked back.

He continued to be impressed with the import dealership during the two years he owned his first import model, due to the consistent level of contact, service and ownership guidance they provided. Once he acquired a bit of equity in his vehicle, he was even more impressed when offered a new model, at a comparable, if not lower, monthly payment. In fact, he ended up purchasing two more vehicles from that same import dealership.

He left the domestic dealer he had loyally conducted business with for decades, and is now fully and continuously engaged with the import dealer. He even managed to convert a few of his friends from die-hard domestic shoppers to at least visit the import dealer that treats him so well.

My associate was shocked the first time he saw his father behind the wheel of an import vehicle, so different to what he had been loyal to for his entire life. He had thought that his father would never in a million years even consider a “foreign” car, let alone transition from a minivan to a crossover. 

That experience was a real wake up call for my associate. It taught him a valuable lesson about the importance of transparency when it comes to retention, not just for millennials, but also for non-millennial generations. Millennials, Generation X, and Baby Boomers all research purchases, and have the same appreciation for transparency.

The ease my friend’s father enjoyed with this import dealer is enjoyed just as much by every generation, just as every generation shops and researches online. Transparency is an important part of every generation’s decision making. It is in fact no more a marketing fad than the internet itself!

Consider this story the next time your dealership votes against advertising price, or chooses to do the whole “Get ‘em in” routine. Consumers know that game and simply choose not to play it any longer. Ignoring consumer demands erodes trust and could easily push loyal brand – or dealership – customers towards your brand competitors.

When it comes to customer loyalty programs, customers like to feel appreciated and recognized for their loyalty. And, if they are not, it doesn’t take much to turn them away from being loyal customers into brand advocates.

I recently came across an interesting story about an Uber customer who wrote an open letter concerning his experience with the company. He wasn’t just any old Uber customer. According to Uber’s leaderboard (yes, apparently they have one), he was the TOP customer in the world, as he had utilized Uber for more rides than anyone else.

In his letter, the customer shared that, while he still loved Uber’s service, he never felt special, recognized or even rewarded for being Uber’s top customer. He stated, “I’ve more rides in an Uber than anyone else on Earth. Has your company once thanked me for my undying loyalty? Not even once.” He went on to state that he feels as if Uber is “missing the boat when it comes to fostering great relationships with its customers…your faithful clients are your biggest potential evangelists… treating them with a special touch would turn them into brand advocates who would spread good cheer about the company on their social networks.”

According to this customer, when he tells friends that he is Uber’s top customer, they inevitably ask what perks he receives. However, he has none he can tell them about.

Let’s translate this into the automotive world. Think about that loyal, repeat customer. The one that has purchased the most vehicles, referred the most people and made the most repeat visits to your service department.

What if they were never thanked, recognized, or rewarded for their loyalty and support. I’m pretty sure that eventually that customer will go away. Sure, they may, if asked, still tell people that they’ve been doing business with you. But the real value lies in them proactively inserting themselves into conversations, encouraging their friends, relatives and networks to check you out first – whether that’s for sales or service.

Customers nowadays may be used to loyalty programs – and some retailers think that the mere fact that they are used to them makes them less valuable. But think about this for a minute: the loyalty program may be why they came to you in the first place. However, that experience quickly fades if you do not look after them and maintain an exceptional customer experience with each visit. If that customer is not acknowledged and appreciated for their loyalty, they may still leave satisfied, but don’t necessarily feel like their business is appreciated, valued or rewarded.

And that’s where loyalty programs come in.

Loyalty programs offer your dealership a way to recognize and reward those customers who have supported – and continue to support you -- through sales, service or both.

Dealerships have no problem offering coupons and discounts for customer acquisition efforts -- low price offers with disclaimers that state “for first time customers only.” How do you think that makes your loyal customers feel?

Loyalty programs can incentivize future visits, increase the volume of visits per customer and the amount of money spent per visit.

Consider the argument by Uber’s top customer: Even though he’s a loyal customer and continues to love the service, he wrote a letter and published it online simply to share with Uber how unappreciated he feels.

Lack of customer recognition and a less than exceptional customer experience will certainly fail to attract new customers or increase the loyalty and frequency of visit of existing customers. It only serves to show that no matter how often they spend money with you, they’ll continue to be treated like any other customer.

One of the advantages of Pre-Paid Maintenance Programs (PPM) is that they span the generational gaps. Regardless of which generation consumers happen to be in, none of them like surprise repairs, or other expenses. That’s why dealers focus on payments – and not price – when selling cars.

Consumers want fixed expenses. When it comes to millennials, they tend to be saddled with all sorts of debt including those credit cards they eagerly accepted while in college, and the student loans they end up with in order to launch their careers. Older generations are at, or close to, the point of fixed incomes from retirement plans or social security. Peace of mind that their vehicle is covered, and they are protected against any unexpected repairs, is perhaps more valuable to these consumers than ever before. That’s why many service industries have navigated to fixed price service plans.                                                  

Consider cell phones. The big rage nowadays is the “All-inclusive price” plan. Consumers simply choose a carrier and have all the service they need for a fixed amount. I’m sure you’ve seen the advertisements and commercials. Why are these plans so attractive? I would argue that it’s the fact that consumers don’t like surprises or variables in their monthly expenses.

PPM programs are attractive for exactly the same reason. They provide car buyers with peace of mind that their monthly vehicle expenses will remain the same and that their vehicle will be reliable.

However, while these items may be missed (or declined) in the finance office, there is a perfect opportunity that many dealerships miss to pursue them later in the service drive. Just because someone said “No” in your finance department, doesn’t mean that they will say the same thing later. Lots of factors are in play when buying a car – emotions are high, anxieties over payment could be in play, and exhaustion from being at the dealership for several hour could also be part of the problem. Once the sun comes up and all of those factors settle down, a consumer could perhaps have a clearer view of the advantages of a PPM.

Recent research suggests that almost 65 percent of dealers are ignoring the opportunity to offer dealer-branded PPM plans to current customers that visit their service lanes. While many offer OEM branded plans in the F&I department, the service lane is generally overlooked, not only as a selling opportunity, but as a chance to reengage hundreds of customers for a guaranteed period of time. Dealers are in fact losing two thirds of their possible customer service affinity as well as potential missed revenue measured in millions of dollars.

Really? Millions of dollars left on the service drive floor? Yes. It is so simple.

There is no argument that PPMs significantly raise dealer service retention. It is in fact documented that many dealers experience a retention rate of over eighty percent among those customers who purchase a PPM. So, why are so many dealers’ service retention numbers so much lower than that -- anywhere from thirty, to, in rare cases, maybe sixty percent? That’s a huge loss in retention and potential profit.

In my thirty-five years in the automotive business dealers have shared many different rationalizations as to why they choose to overlook the potential of PPMs in service. While many of the reasons are beyond sensible business logic, such as “I can’t handle anymore service business,” or “My advisors are too busy to sell anything else,” they all escape the fact that, as a dealer, they likely see more customers in the service department in two months then they sell in new vehicles in an entire year! Yet only about 35 percent of franchise dealers offer service drive PPMs today.

It really is simple, but it takes a good eye on both new and used vehicle buyers in your service drive. Just like any other service lane up-sell, it should be positioned as an additional customer advantage on top of what the dealership is already doing, and should be included on all service product menus. By including it on your service menu it serves as a tool for your advisor to sell other services by utilizing any discount the plan may offer on the service the customer is contemplating purchasing during that visit.

Don’t be afraid to keep discussing the benefits of pre-paid maintenance with your customers – whether you sold them the vehicle or not – as it only serves to benefit both your dealership (by maintaining a customer relationship) and the customer.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What’s the problem?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Well, consider these facts:

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

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

Perhaps not. Here’s why:

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

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

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

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

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

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

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

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

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

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

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

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