It is tough being a dealer today. Competition is fierce. Brands continue to add new models. Manufacturers make ever-increasing demands as market-share wars escalate. Customers continue to demand more. And the influence of outsiders on our industry continues to increase. These realities make it damn hard to successfully compete at times, and the environment is not going to get any easier, anytime soon.
It is not an industry for the weak. Dealers need dedication, commitment, financial resources, guts, and a little luck.
Having said all that, many dealers today are thriving. They are achieving some incredible results and enjoying the fruits of their success. Still others are struggling. They struggle to meet market share. They struggle with customer satisfaction. Consequently, they struggle with profitability. Which raises the question: "Why?"
The difference is simple
For many years I have been in the fortunate position of viewing the industry as an objective advisor. I have witnessed the great, the good, the not-so-good, and the downright ugly of this industry. And what I have observed is that the great and the good not only do things right, they also do the right things.
That is not the case with the not-so good and certainly with the ugly. It is not a question of degree; in my experience it is simply a question of outright understanding and execution.
The most important elements of this business are market share, customer satisfaction, and profitability. The dealers that actively understand that fact and the sub-elements supporting these three critical factors are the leaders of this industry. Those that do not are being passed by and their future is in jeopardy. The markets are just too sophisticated and the cost to play is just too high for some to continue in the longer term.
It is not a question of size but rather of understanding and execution.
I realize the issues I have raised may not be new to most of you and many of you firmly believe that you live and breathe these concepts. In fact, I have not met an unsuccessful dealer that did not believe that to be so. But when I look behind the curtain, they clearly do not grasp the intricacies of the concepts and thus don’t have the ability to execute. Remember that to be successful you must both understand and execute. If both are not present success cannot be achieved.
Customer satisfaction misunderstood
Customer satisfaction is one area that I find many dealers misunderstand. Over the years, organizations like J.D. Power, Maritz, and DesRosiers have accumulated much data about customers’ wants and desires. Surveys have been sent out, results tabulated, score cards developed and CSI programs designed.
Brands have designed survey performance benchmarks and held dealers accountable to meet those standards. Many have tied dealer awards and compensation around meeting or exceeding those benchmarks. It is not a bad OEM strategy: set a goal and reward those that meet it. In some ways however, this approach could be misguided if the questions or survey methodology do not meet local market characteristics spot on.
Notice I said local market characteristics. What I have found over the years is that the great and the good have a very solid understanding of their market and have learned to meet their local market expectations. This is one reason why, for example, a very successful rural dealer acquiring an urban store often underperforms in that milieu and vice-versa. The markets are different and what worked out-of- town is not working in-town.
Retention and loyalty are true measures
While satisfying customers is critical to our mutual successes and is the one bread-and-butter goal we need to consistently achieve every day, the true measure, in my opinion, is customer retention and customer loyalty. Retention is where a customer keeps coming back to your dealership over and over again as a repeat customer. Loyalty is where a customer has strong positive experiences with your dealership and holds you in very high regard as a trusted supplier, whether they currently are doing business with you or not. To be clear, I am referring to your dealership here and not to the brand since retention and loyalty to the brand are not good for you if you don’t have the customers.
Customers unfortunately come in all shapes, sizes, personalities, moods, knowledge, negotiating desire and ability, reasonableness, self-awareness and financial strength. That is a lot of things to balance for each and every customer. Then there are in-store customers and on-line customers. Dealers have a much better chance at satisfying the customer if there has been an on-going relationship, rather than trying to satisfy a conquest customer. Familiarity is an important factor on both sides of the equation.
Internet changes the game
The Internet has introduced a whole new set of values and behaviours into automotive retailing that many of us did not bargain for when we started out. Customers today have new expectations of our performance and a whole new definition of tolerance. They also have new methods of sharing their opinions and spreading the good and bad about their experiences in our stores. Forget CSI surveys; how about blogs and social web-sites?
Consistency, honesty and a sense of relationship are important factors to repeat customers and essential to create loyal customers. This means that customer-satisfaction skills must be exercised in all departments of your dealership and in all mediums. Our ability to cross-sell our customers is totally based on how satisfied they are with their recent experiences in doing business with us. A botched oil-change or a web-site that is not updated with current, up-to-the- second information could be the primary cause for customer defection. If the customer does us the courtesy of talking to us at all, how the dealer reacts to that customer’s reaction could also be a cause for customer defection.
Long-term view
All too often dealers take a very short-term view to dealing with customer issues. The great and the good always have a long-term view. In my experience, the not-so-good and the ugly consistently take a short-term view. Some dealerships have a pay-me-now-at-all-cost attitude towards their customers. With customers being harder to retain and acquiring new customers not nearly as easy as it used to be, this attitude has to change.
As dealer principals it is critical to genuinely understand what is happening at all the customer interface points within your both your physical and virtual dealerships. How a customer is treated can mean the difference between earning thousands of dollars from this customer over time and earning nothing. I have observed that in the not-so-good and the uglies there is often a large disconnect between what the dealer says he believes and what is in fact happening within the walls of his dealership. In the great and the good dealerships dealers have a much better understanding of what is happening at their dealership.
Retention trumps CSI
The customers you retain are the one sure-fire measure of your customer satisfaction. If you have high CSI scores and low retention I would say to you that you do not have true customer satisfaction. If you are not tracking customer retention at your dealership you are missing the boat when it comes to understanding your dealership’s customer satisfaction.
You are either not doing things right or not doing the right things. It is time to turn that around so that you are doing things right and also doing the right things for your customers and ultimately for yourself.
Charles (Chuck) Seguin, C.A. is vice-president, business management at TSi Auto Solutions Inc. and can be reached at (905) 415-2635 or via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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