Scot Eisenfelder explains the differences between personalized and broadcast media and how engaging with consumers on multiple media channels will benefit your dealership.

Free monthly webinars designed to help auto dealers maximize revenue potential

Chicago, IL—August 20, 2018— Affinitiv, a leading provider of innovative marketing and software solutions to dealerships, today announced a free educational webinar series for auto dealers. “Revenue Rescue” webinars will take an in-depth look at the solutions, strategies and safeguards proven to help auto dealers maximize their revenue potential from common challenges they face every day. Every month a new topic will be presented.

“The goal of this webinar series is to answer the questions we frequently hear from dealers,” said Scot Eisenfelder, CEO of Affinitiv. “Our experts will show dealers how to tap into overlooked resources that can help them recover revenue that’s often left on the table.”

The first webinar is titled “The Right Side of Recalls” and is scheduled for Wednesday, August 22nd at 1 p.m. EST.

 “The Right Side of Recalls” will share recall management best practices that build customer trust and generate repeat business. In this webinar, Affinitiv will reveal the most effective strategies on how to alert customers and create a sense of urgency to drive them into your service lane. Webinar attendees will learn how to:

• Use events to support their recall strategy
• Create a multi-channel marketing plan to reach more recall customers
• Increase service appointments
• Convert recall ROs into loyal customers

“When faced with a recall, many dealers are unsure how to get the word out or make the most of the opportunity,” said Eisenfelder. “We want to take the stress out of recall events and ensure dealers see them as a chance to connect with customers, not as a burden.”

To register for “The Right Side of Recalls” or to learn more about Affinitv’s webinars, click on this link: https://www.affinitiv.com/revenue-rescue-affinitiv-webinar-series/

About Affinitiv:

Affinitiv is a leading marketing technology company serving automotive manufacturers (OEMs), dealership groups, and individual dealers. Affinitiv’s Connectiv1 Platform is designed to provide a 360° view of customer, vehicle, dealership and marketing campaign effectiveness all in one place. Connectiv1's advanced predictive analytics engine makes it easy for auto dealerships to leverage data and target customers with the right message at the right time on the right communications channel.

Affinitiv enables dealerships to produce, manage, measure and optimize omni-channel communications to drive brand loyalty and increase revenue. Affinitiv’s digital and analytic capabilities support a consistent customer experience through the entire ownership lifecycle. Affinitiv was formed in 2016 and is headquartered in Chicago, IL.

There’s a lot of buzz around subscriptions as a new ownership model, with various industry pundits forecasting major disruptions for dealers. I see things differently.

I believe there are several major barriers to subscription growth for non-dealers, and opportunities for dealers to thrive, should subscriptions break through as a significant ownership model. Let’s review the two types of subscription models emerging.

Pool Models

In a pool model, consumers purchase access to a pool of vehicles and can switch vehicles depending on the availability of vehicles in the pool. This model resembles a daily rental fleet where the pool owner absorbs the asset utilization and remarketing risk, albeit with less frequent remarketing events, since there is no need to remarket after each owner.

The pool model appeals to consumers who have very divergent vehicle needs, e.g. small commuter car during the week and large pick up on the weekend to pull the boat.

OEM subscription models such as Access by BMW, Book by Cadillac, and Porsche Passport are pool models. Dealers launching subscription models are also pool models.

It’s difficult to find the details of how these pool models work, but OEMs would likely be much more strict on mileage and age restrictions. Dealers, on the other hand, would likely be willing to keep vehicles in the pool longer. For example, an OEM might keep vehicles in the pool up to two years and 24k miles, whereas a dealer might keep vehicles in the pool up to four years or 48k miles. 

I envision a world with luxury and non-luxury tiers…but also nearly-new and aged tiers. Less expensive tiers could offer vehicles that are three- to six-years old with up to 70k mile vehicles.

Serial Ownership 

The second subscription model is serial ownership, which is a speed dating version of leasing. Consumers can swap out their vehicle every few months for another vehicle offered by the fleet operator. The fleet operator absorbs the risk of finding a new owner for that vehicle either within its subscriber base or elsewhere.

The only company I know pursuing the serial ownership model is Fair, Scott Painter’s new venture. Fair is basically a flexible, used vehicle lease. The payment on Fair actually goes down over time, encouraging consumers to stay in the vehicles longer. This makes a lot of sense with the lower depreciation curve, switching costs and remarketing costs.

At end of ‘lease’, Fair sends the vehicle back to a dealer for a regular lease remarketing cycle. Dealer has first right to purchase before upstream and downstream remarketing. 

Barriers

The primary barrier for the pool model is driving utilization; actively finding subscription holders or consumers to utilize idle vehicles.

For serial ownership, the primary barrier is the high remarketing cost associated with frequent vehicle turns. For example, in traditional leasing the vehicles turn in 36 months, so the associated $1200 hard and soft remarketing costs amounts to less than $40 per month and can usually be recovered in the next vehicle sale.

If under a subscription model, vehicles turn every three months and similar remarketing techniques are used that would amount to over $400 per month, reducing subscriptions to a “rich person’s toy”, as Edmunds rightly stated.

Dealer Preparation

Under either scenario, dealers can take steps immediately to strengthen their capabilities in four areas that will be critical for subscription success.

1. One-to-One Relationships. Dealers need to proactively match buyers and sellers every time a vehicle changes or becomes idle to replace traditional marketing costs or stimulate utilization. To do this, dealers need to expand their contacts beyond subscribers and active customers to others in their PMAs who may be interested in available vehicles.

2. Loaner Fleet Management. Most dealers do not efficiently manage their loaner fleets, with vehicles poorly matched to service completion. Few dealers have the infrastructure to efficiently handle consumers signing in and signing out vehicles like daily rental companies. Integrating loaner and subscription fleets would be one way to solve utilization and remarketing costs.

3. Diversifying Used Vehicle Sales.  Increased used-to-new ratio, particularly CPO and previous loaner vehicles, provides more internal remarketing options, reducing outside expenses and providing opportunities to recapture potential subscription losses through future sales on the same asset. Expanding used vehicle sales broadens the dealership appeal, more precisely satisfying the needs of existing customer while attracting new prospects.

4. Update Service Model. Subscription models will place a premium on managing unscheduled down time, allowing maximum revenue generation from each unit through expanded service hours and a stronger throughput focus. While consumers do not explicitly measure unscheduled down time cost, the associated inconvenience is a large service venue selection driver.

Implications for Dealers

Serial ownership is the most likely model to emerge at scale. It is unclear how a pool model is going to improve on the existing daily rental model and places the availability risk on the consumer, undermining the core value proposition.

However, many studies indicate consumers would like to churn vehicles more frequently but are prevented by economics and an unpleasant sales experience. While serial ownership does not inherently fix the economic challenges, it encourages OEMs and dealers to collaborate on finding a solution and does facilitate a frictionless vehicle transfer from the consumer perspective.

Should serial ownership subscription emerge as a viable ownership model, we see dealers, particularly multi-franchised groups, advantaged to provide the service.

First, dealers have more options to drive remarketing costs and utilization by integrating subscription fleets into their used vehicle inventory and loaner fleets. Secondly, multi-franchise dealers can offer subscribers the broadest possible vehicle access. Finally, dealers have the infrastructure to cost effectively service the vehicles over and between subscription terms.

While we see many hurdles to overcome before subscriptions go mainstream, dealers can invest in the core capabilities to succeed should that time come, and doing so will reap more immediate rewards today.

Scot Eisenfelder explains how tailwinds are affecting independent repair facilities and why it's more important than ever to have strategies to protect dealership service business in part 2 of this 2 part video blog.

Most dealers know how many cars they sell on a weekly, monthly and annual basis. But if I asked you how many new customers you acquired this year, would you know the answer?

On the service side, you probably know how many ROs were closed last month and how much revenue was generated, but do you know how many new service customers you acquired? How many of those ROs were customers that you sold a vehicle to

In this business, we talk a lot about improving the customer experience, but if you’re going to run a truly customer-centric dealership, a mindset shift is needed. It’s natural to track numbers related to revenue, but if that is your only focus and priority, it will show in the way you conduct business with your customers.

Selling a car is more than a transaction. It’s an opportunity to develop a new relationship. Let’s give an example of a “sell the car” mindset vs. an “acquire a customer” mindset.

John and Suzy are both on your lot looking at cars. John lives 50 miles away and visited your store because he heard you’re having a sale and you have the vehicle he wants. Suzy lives five miles away and is also looking for a deal. Who gets the better deal?

A salesperson with a “sell the car” mentality might look at John and think, this guy lives in another town so I’m never going to see him again. I will discount $500 off MSRP just so I can make the sale. That same salesperson might look at Suzy and think, this woman lives so close by, there’s a good chance I can get her back in here. Therefore, I won’t give her as good a deal as I gave John.

This mindset is the exact opposite of what it should be. With this mindset, you will never see John or Suzy again.

A salesperson with an “acquire a customer” mentality will offer the bigger discount to Suzy because she does live close by. If you can get Suzy to become a regular service customer and/or repeat sales customer, her lifetime value as a customer will far exceed that of John’s.  So, it makes more sense to give her the discount and make the effort to acquire her as a customer.

Even better than a discount off MSRP is another type of incentive that establishes an ongoing relationship. For example, a service incentive. I’d rather give $500 of free service or aftermarket accessories than $500 off the cost of a car. You still make the sale and you have the opportunity to introduce her to your service department.

The same mindset shift can apply to your service department as well. Many dealers run conquest campaigns offering large discounts to consumers outside their PMAs. What is the point? You might get some ROs but you are not acquiring new long-term customers. With this type of marketing, you are buying transactions, not investing in relationships.

On the other hand, if you offer customers within a 15-mile radius a compelling reason to come in, you are creating opportunities to build long-term relationships. Coupons work well but I wouldn’t always rely on discounting tactics. For your best and most loyal customers, free loaners cars, movie tickets and other value-added offers can be incentive enough.

To build a customer-centric business, a fundamental shift in mindset is required. Instead of focusing on the number of cars sold, ROs closed and gross revenue generated, focus on how many new customers you are acquiring and how to retain them.

Scot Eisenfelder explains how tailwinds are affecting independent repair facilities and why it's more important than ever to have strategies to protect dealership service business in part 1 of this 2 part video blog.

From a consumer perspective, access to loaner vehicles is a major factor in service location choice—both in terms of franchised dealer versus independent repair facility, and among franchised dealer locations. Loaner vehicles help to overcome the inconvenience of having to drive further for service, and from having to wait at the dealership or make alternative transportation arrangements.

From a dealer’s perspective, placing consumers in loaner vehicles takes tremendous pressure off service throughout. A “waiter” is much more sensitive to service delays than a consumer returned to their daily routine in a loaner vehicle. In addition, a consumer with a loaner is more likely to approve an additional service request, because the unexpected additional time without their vehicles won’t affect their schedule.

Sounds like a win-win situation. Yet many dealers have not embraced loaner programs, and often limit them to the minimum requirements of the manufacturer. Rather than view loaner vehicles as a strategic asset that improves the customer experience and gives them a competitive edge, dealers focus on the expense, difficulty of managing the fleet and on the occasional customer who misuses the service.

Here we’ll address these three common myths about loaner programs.

1. Loaner programs are too expensive

The real issue here is that the expense is immediate and easily recognized, while the benefits are more subtle and long-term. For this reason, dealers have a hard time determining the right investment. In addition, most dealers fail to build processes that optimize the return that can be gained from loaner vehicles.

For example, loaners should be an explicit closing tool to convert additional service needs. When confronted with “no,” try offering loaners instead of discounts, particularly to waiters. Also, loaners can be used on an ad hoc basis to relieve waiting room pressure when operations fall behind, rescuing dissatisfied customers. Scheduling multiple shifts and expanded weekend hours also streamlines loaner utilization, reducing the cost per RO.

Instead of viewing loaner vehicles as an expense that needs to be managed, view them as tools that can help maximize service revenue and improve the customer experience.

Calculate the incremental cost of each loaner vehicle and estimate whether you generate sufficient incremental ROs or RO dollars to cover the cost.

If not, think about trade-offs that hold as much value as possible; e.g. expand coverage to your best customers only or in key situations, such as the last visit before warranty end.

2. Managing a fleet requires too many resources

Most dealers are not skilled in managing fleets, which is why many still outsource this function to Enterprise. Poor fleet management and infrastructure contribute to unnecessary expense and result in an unsatisfactory customer experience.

A fundamental shift in mindset is necessary. At most dealerships fleets are managed by controlling the overall budget, not by viewing what form of alternative transportation best meets the need for customers and helps to maximize long-term dealer profitability.

To those of us who rent vehicles nearly weekly or have used Zip Cars, it’s difficult to understand the antiquated sign-out and sign-in procedures at dealerships. It’s time to look into new technologies that facilitate a convenient process. Use technology to drive higher appointment rates and better understand when loaner access limits appointments, so that you can reduce the bottleneck.

Besides, when subscriptions become a meaningful part of the industry, dealers will have to become experts in fleet management, so you might as well start practicing with loaner fleets.

3. Customer abuse is rampant

While some consumers do abuse the service, most drive the car respectfully, pay their tolls and return the vehicle in a timely fashion. Habitual abusers should be removed from the program. Fortunately, these are the exceptions.

To help reduce abuse, it’s important to convey a clear, positive message to your customers up front. Ask them to respect guidelines so that the vehicle can be made available for others. This is better accomplished online than in person and separated from the formal contract. People are more likely to read and acknowledge simple guidelines on their computers than on paper when buried in paragraphs of legalize, when they are anxious to go on their way.

The most frequent abuse is not returning the vehicle in a timely fashion. Again, we should start with clear expectations and then look internally. Is it reasonable to expect the customer to return the vehicle before 6pm when we notify them at 5pm? The better we keep consumers informed about the actual completion time, the better they can plan their redelivery.

Second, we need to look at alternatives, such as Uber vouchers or pick-up services to handle situations such as airport runs or when a customer brings a vehicle home because the dealership missed their promise time.

Loaner cars are a strategic asset that give dealers a competitive edge. With proper management, technology and processes in place, they don’t have to be a resource drain. Loaner vehicles improve the customer experience and can help boost long-term, incremental service revenue. 

Scot Eisenfelder explains the three buckets that service customers fall into and how best to reach out to them.

CEO & Executive Chairman Scot Eisenfelder shares his opinion on Facebook's importance to automotive marketing.

On average, dealers capture just half of the necessary service work that needs to be performed on vehicles that come into their service lanes. This is a big leakage point that has a direct impact on service revenue. It also offers tremendous untapped potential.

In addition to acquiring new service customers, it’s important to focus on maximizing service potential from the ones you have. To be clear, I don’t recommend trying to upsell every customer or sell unnecessary repairs. If that’s your strategy, all you’re doing is compounding the problem.

Addressing this leakage point requires knowing why it happens in the first place. In my experience, most customers decline service for the following reasons, in this order:

Trust: I’m not sure if I really need this repair or not, and I don’t know if I can trust you.

Timing: I wasn’t planning to leave my car here today/more than one day, and I need my car.

Affordability: I only budgeted $300 for this repair, and now you’re asking me to pay $750. I don’t have the money right now or I’m not emotionally ready to pay for it.

It’s important to distinguish affordability and budget from price. Most customers coming into your service department know that you’re not the cheapest option in town. When a customer buys into your dealership value proposition, there’s a good chance they won’t go home and shop around to save $50 or even $100.

Think about it. You have a customer who bought into your initial value proposition. They brought their vehicle to your store. They were willing to buy some services from you, but not others. They have a need, even if they don’t realize it. You are prepared to fill this need.

All the ingredients are there for you to capture that business. So, what’s the best way to stop the 50 percent of unsold service repairs from leaving your service department on a daily basis?

Communication.

Start with electronic multi-point inspections (MPIs). A perennial problem most dealers have with the MPI process is that advisors and techs are compensated only for the work they do, not for doing the inspection. It needs to be ingrained that if they do the inspection, they are paying themselves.

An effective MPI process has five parts to it:

• Identify all the work that needs to be done.
• Have a quality conversation in a timely way with the customer about the recommended services.
• If the customer declines, identify the reason. Is it trust, timing or affordability?
• Offer a solution for the reason. If it’s trust, show visual proof of the repair with photos or videos, if at all possible. If it’s timing, offer a free loaner car. If it’s affordability, offer a payment solution.
• Continue the conversation for the 50 percent of the time when the customer says no.

It seems pretty simple, but communication is not something that registers as a high priority for many service staff. Conveying or relaying information, sure. Communication as in conversations that help to build relationships, not so much.

If you want to continue the conversation with your customers, it’s critical to have a tablet that helps your staff perform the MPI in an effective manner. A tablet can help to identify the work that needs to be done and it can be used to sell the recommendation, preferably with menu options.

The tablet also needs to be integrated with your CRM. I’m guessing that about one-third of dealerships right now use tablets for the MPI process. Yet in most dealerships, those tablets aren’t integrated with the communications system.

One of the most important reasons to capture the data in the tool is so you can use that data effectively downstream. It’s the data that helps you continue the conversation with the customer, which is necessary in order for you to re-capture that 50 percent of unsold service.

This is where most dealers fall down in the MPI process. Lack of continued conversations with customers. With an integrated tool, your CRM will prompt you to email, text or call the customer to remind them to come back in for service.

In your follow up communications, don’t just try to sell your customers. Offer solutions to their objections. Educate them on the importance of having the repair done, whether it’s a safety issue or because it will help to prevent bigger, more expensive problems down the road.

Tablets are more than just tools for capturing data. Their biggest benefit is that they can help your staff communicate, build relationships and overcome objections, so that you can turn unsold service into revenue.