Disruption is not ‘the new normal’, it has always been normal, delegates at the AADA National Dealer Convention Auto-IT Breakfast heard.
In his address ‘Mobility is and always will be the Dealer’s business’, guest breakfast speaker, Charles Mills, said we now live in the era of ‘Relationship Commerce’ and Dealers should focus on forming the long-term relationships customers desire rather than the short-term profit imperative.
His company, RoaR, stands for ‘Return on a Relationship’, and Mr Mills said ‘relationship’ is the key word Dealers should concentrate on. He said Dealers put far more resources into attempting to attract new customers when all the evidence points to a greater return from keeping existing customers happy.
Meeting increased customer expectations is the challenge Dealers now face.
“Customer expectations are incredibly strong. RoaR lead data in Europe tells us if we take care of a customer lead inquiry within an hour, we have a strong chance of closing that lead. Anything longer than an hour and you’re going to have a problem closing that lead. It used to be if you took care of a customer lead within six hours you were doing great; now it’s down to an hour,” Mr Mills said.
“Customers are able to share their experiences and access those experience views online. Whether it’s Facebook or Google, that information’s out there. Customers understand how our stores are operating; customers are making decisions based on our performance, which they’re seeing on Google, Facebook and even manufacturers’ and Dealers’ own websites where customer reviews are available.”
With sales grosses continuing to come down over time, Dealers need to look for other means of monetising their relationship with the customer.
“The big grosses we used to get…those are going away. What does that mean? It means we need to work harder, longer, to get more of the money from the customer…we need to do customer revenue management,” Mr Mills said.
“It means we not only do their service or maintenance, but we need to get the tyres off the cars – and when we get tyres off the cars we start seeing other opportunities too. In America we gave up the tyre war a long time ago; now we’re clawing it back. We’re getting that tyre work back, and once you take the tyres off the car and get it up on the lift, you see more opportunity for business.
“We have to get each of those transaction opportunities as part of this revenue management, so that we can actually get more of the money we used to get in our grosses, over the lifetime of that customer.
“At RoaR this idea of trying to get more money from a relationship, an individual customer relationship, we call it relationship commerce. And relationship commerce works on both sides of the equation. If the Dealer is focused on having great relationships, so they’re getting money from the customer longer, then the customer’s benefiting big because the Dealer is focusing on their needs. And when the Dealer’s focusing on their needs customers are delighted – customers feel like the Dealer sees them as an individual, not just a number.
“The (European) data tells us that reviews, reputation and previous experience are the number one reason for customers to be selecting a dealership.
“A delighted customer will recommend you four times a year. Customers who aren’t delighted, not so much. So, again, it’s not just about the money you get from that individual customer; it’s their ability to share with their friends and families that you’re a great store and they need to be doing work with you.
“We feel so strongly about it that we named our company after it. We need to be looking at ‘what is our actual return on a relationship?’ So, independent of that relationship that just focuses on the car or then later on it becomes actual mobility services subscriptions, we still want to understand ‘what is my share of that customer’s relationship in that particular space? What is my percentage of that customer’s relationship in that industry?’”
Mr Mills said it was important to look not just at the revenue side of the relationship, but also to understand the cost of maintaining that relationship.