During the past few years, Business Development Centers have emerged as the alternative solution to expensive advertising and promotions. Dealers have learned that it is more cost effective to sell to existing customers rather than advertise for new customers. Keeping your customers requires tying together a number of factors in a cohesive convergence. There is no magic formula out there, but there are a few keys to success:
· Greater execution of value-driven processes
· Migrating from a price-based to a more value-based marketing model
· A communication blueprint between the dealership and the customer
· An incentive for dealership personnel to understand the importance and value of customer retention
Are High CSI Scores Enough?
High Customer Satisfaction is not enough. In their book "Enterprise One to One," Don Peppers and Martha Rogers delve into the effect CSI has on customer retention and market share. Consider the following: AT&T has been studying CSI for many years and undertook some groundbreaking research in this area. They discovered that one of their products scored a 97% satisfaction rating with the customers in Pennsylvania, but only a 78% ranking with the customers in New York. However, and this is a big however, the product was losing market share in Pennsylvania while gaining additional incremental share in New York! The less-satisfied customers of New York were actually gaining greater market share growth for AT&T than the more satisfied customers of Pennsylvania. This paradox between product satisfaction and market share has been an ongoing argument for many years.
The AT&T study concluded that there were three factors that affected CSI and market share growth trends:
· Customer satisfaction is no guarantee that you will improve your financial results or your market share in your area.
· Only the "top box" checked off on a CSI report means anything to market share improvement. This means only exceptional satisfaction may keep your market share from shifting away to other similar product offerings.
· Customer satisfaction is only relevant when compared with your competitors. Only when your scores are measured relative to the competition's scores can you expect a market share shift. AT&T discovered that there was a direct correlation with an uptick in their relative satisfaction versus their competitors and market share conquest.
It is expected that New Yorkers would be tougher on the scores than Pennsylvania folks, but only when they ranked the competition even lower did they get market share growth.
What does this stuff mean to an automobile dealer? You can't bank on the power of CSI scores to move the dealership into a higher market share dynamic, so you have to look at the other aspects of your business.
Why Do You Need a CRC System and
Manager to Retain Customers?
· All customers are equal, but some are more equal than others. It pays to spend most of your energy nurturing your best customers.
· A CRC system makes salespeople keenly aware of the potential represented by the customers they already do business with.
· It helps the dealership force-even if it is by default-create and structure a business retention strategy.
· It will make you decide what to do with customers who are not called by your current salespeople because they are not motivated to do so. Do you turn these customers over to your stable and reliable sales staff or transfer them to a Customer Retention Center?
· It makes you reallocate your orphan customers-when they become orphaned-to either a Customer Retention Center or to your stable and reliable salespeople.
Steps to Using Technology to Retain Customers
1. Decide who will call customers-salespeople or a call center
2. Determine who is the right person for your CRC manager
3. Determine the pay plan for your salespeople and CRC manager
4. Create a job description and hire a CRC manager
5. Plan your customer contact strategy
· Customer retention
· Customer defection
· Sales prospects and Internet leads
· Customer loyalty
· Target Marketing
6. Install the technology you need
7. Monitor your success
8. Maintain your database
There are two basic structures in a BDC or Customer Retention Department-one is a team of telemarketers (Call Center) with a manager and the other is a CRC Manager working with the salespeople.
The Call Center approach has many advantages if done properly. If experienced telemarketers are employed, then you will have a smooth and "canned" presentation that is easier to control. The cost is greater since you must pay these employees and someone to manage them. Since they normally work set hours, it is also easier to control how many customers are called and when.
Using a CRC Manager takes a little more effort, but the lower cost and closer customer contact will justify your time. A CRC manager usually costs the same as the Call Center Manager, but that is your only cost. Using the salespeople to make the calls costs you nothing since the additional commission expense is offset in a reduction in advertising costs. This type of customer contact creates a "relationship" between your salespeople and the customer that can last a lifetime. The basic questions you need to ask are:
1. Do I have a group of 4 or 5 salespeople who could be my "test" group for this program?
2. Do I want to employ the type of salesperson that looks for repeat business instead of a "one-time" sale?
3. Do I want the lower-cost alternative?
If yes, then consider the CRC structure with salespeople making the calls.
Sandi Jerome is the manager for consulting service for Jeff Sacks & Associates. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3. sjerome@dealeronline.com