The Breakdown on Customer Relationship Management
It all comes down to customers. Without them, there’s no reason to be in business. The best business plan and greatest product in the world are meaningless if potential customers aren’t located, marketed to, enticed to check out what you’re selling, and convinced to part with their hard-earned dollars—and then catered to with post-sale service and follow-up that keeps them coming back to you.
Managing this extended life cycle of finding, selling to, and retaining customers is a major challenge in any industry, but is especially daunting in the complex business of automobile dealerships, where the relationship is very different than it is with less expensive, more disposable consumer products.
Building customer relationships
Relationship is, indeed, the key word when it comes to customers and cars. It’s a total human experience built on effort, attraction, commitment, follow-up, and loyalty. The experience is not unlike a romantic relationship, when you think about it. Customers must be courted to the point of, if you will, falling in love with the vehicle you’re selling. But even then, before they’re ready to make the long-term commitment, they need to be assured they’re doing the right thing, and convinced that their partner in the relationship (which is really your dealership, not just the car) will be there for them over the long haul when the initial luster wears off.
But let’s not take this analogy too far. Unlike most (we hope) romantic relationships, much of the hard work in the unique relationship dealerships have with customers can be made better by technology. That’s where customer relationship management (CRM) systems come in. These systems take your marketing, social media, sales leads and follow-up, fixed operations, and other aspects of your business and integrate them to form a coordinated, centralized system that, when used to its full potential, increases efficiency, improves accuracy, and minimizes redundant manual effort.
CRM grows with technology
The roots of modern CRM systems go back to the 1980s, when contact management software, as it was initially called, was introduced by ACT! in 1986. It was essentially a much faster, more powerful Rolodex for the computer. More companies quickly joined the contact management market, which eventually morphed into sales force administration (SFA) software by adding database marketing and automation. At this point, the software had evolved into the type of system similar to what we know today, and by 1995, SFA had a new name: customer relationship management, more commonly called CRM.
Since then, the technological advancements of the past two decades have found their way into CRM systems. The earliest CRM software was untroubled by the need for Internet capabilities, but now Web integration, cloud computing, social media, data mining, and much more make for systems of almost unimaginable complexity and power. The capabilities of modern CRM are a long, long way from the earliest “digital Rolodex” it grew from.
But such capable, powerful, robust systems come at a price for users . . . and not just the obvious one of their expense. As with any technological advancement, exclusivity goes out the window quickly when a product or service becomes a business requirement for all players rather than a competitive advantage for just a well-heeled few. So dealerships that thought they could hold out and manage all aspects of customer life cycles the old-fashioned way—well, they really can’t afford to anymore.
Too powerful to tame?
Then there’s the intimidation factor. CRM systems are massive. No one person at your dealership is likely to understand or be able to use every feature or aspect of a third-party CRM solution. Of course, any top vendor will offer the training, support, and follow-up necessary to make sure your dealership is using the system to its full capability, but still, it can be all too easy to let intimidation or other factors keep you and your staff from getting the most out of your CRM.
And for those dealerships who haven’t yet gone the CRM route, the decision to do so doesn’t get any easier as the systems grow more complex to keep up with the changes and advancements of the industry.
Like most problems that seem too big to solve, or even grasp, the answer to getting a handle to modern CRM solutions is to break it down to smaller, more comprehensible components, and to remember what the end goal of the system is for your dealership, rather than getting lost in the millions of minute details that can cause “paralysis by analysis.”
So, to help us break down this complex topic, we spoke to two leading industry experts to get their takes on what a dealership needs to look for in a CRM system, and how to best use it. Thank you to Sean Stapleton, vice president of sales and marketing for VinSolutions, and Bill Wittenmyer, partner at ELEAD1ONE, for sharing their insight and wisdom with Dealer Marketing Magazine.
Dealer Marketing Magazine: Compared to other industries, how sophisticated and advanced are today’s customer relationship management systems for new car dealerships?
Sean Stapleton: The automotive CRM is growing and changing at a rapid rate because we’re all focused on keeping pace with today’s car shoppers. We’re dealing with a unique, rapidly changing customer base to begin with, especially compared to customers in other markets, and a single sale is never the end goal if you’re really serious about success.
The CRM has to help dealers easily tackle complexity. It has to follow customers all the way through the interest, evaluation, purchase, ownership, and repurchase phases. It has to serve as the dealer’s secret weapon for continuous relationship building. And it has to be compatible with today’s multi-device, highly mobile, highly social marketplace.
Bill Wittenmyer: I would consider them highly advanced. In fact, much more so from the aspect that there are so many robust components that are either integrated or available for integration into the CRM in the auto industry. For example, data mining tools, the advanced day-to-day usage tools like desking and mobile desking, and fixed ops tools like lane management and service marketing all need to work together and integrate at a high level to be successful. CRM is more than just customer retention management and it always has been, but in this industry today it’s about customer facilitation and transaction efficiency as well as process enhancement.
DMM: What components should a state-of-the-art CRM system for auto dealerships include in 2015, given the technology and knowledge available?
SS: All of your profit opportunities across your dealership should integrate seamlessly: A big example is your service department. Make sure the CRM exchanges info with that department so you can make the right offers to the right customers and increase your fixed ops revenue. This will naturally help with relationship building, too, as your service customers will feel like you truly know and understand their unique needs.
Secondly, speaking of knowing your customers, the CRM should integrate with all channels they prefer to use. Your website, where they hopefully do their shopping and service scheduling, is a big one. Don’t lose any of that behavioral data. You want call tracking—desktop and mobile—all logged and accessible in the CRM, too. Same for email, social media—everything they use to interact with you should be a part of the customer record.
BW: Successful CRMs are based around, and [are] robust and flexible enough to fit, the processes that the dealership already has in place. In other words, it should not be limited to a fixed set of tools or methods. It should be customizable enough to handle any process from the basic operation of customer follow-up all the way to sophisticated multidepartment interaction throughout the entire process of the sale and beyond.
Communication tools (both internal and external) must be robust and technologically relevant to maximize customer acquisition and retention. Available functionality like dealer-branded loyalty apps, mobile appraisal and trade assistance, and self-service payment options all allow the customer to communicate in a way that is convenient for them, which is crucial in today’s market.
A state-of-the-art CRM today should also be about a multitude of options for dealership staff with the least amount of log-ins and the most amount of built-in tools that seamlessly integrate with each other. Multiple tools controlled by multiple vendors that do not communicate with each other, simply put, will not maximize a dealer’s return on investment [ROI].
DMM: Do you think most new car dealerships are sufficiently utilizing CRM in their business strategies, and in the cases of those that are not, why aren’t they?
SS: In a word, no. And there are many reasons. It’s sometimes training issues, staff turnover, things like that. But mostly I believe dealerships take a “set and forget” approach to their CRM, when in fact it has to evolve with the customer, with technology, and with the economy.
Not every dealership has a dedicated resource in charge of maintaining the CRM and training employees on new capabilities. That’s a necessity, truly, and it should be someone who truly understands your dealership’s unique challenges and objectives. Someone who can rally the troops to embrace the power of evolving technology.
BW: I think that most dealerships are utilizing CRM in some way. “Sufficient” is a broad-spectrum word and subject to perception. In my opinion, all dealerships could utilize their solutions to a higher degree. In most cases, it boils down to time and accountability. We have a tendency to allow ourselves to become burdened with other things than managing activities and holding ourselves and others accountable, which is where our focus needs to be.
This lack of focus happens during successful periods when we are busy and profitable. A few years ago, when the industry was struggling, every lead was crucial. Today, as the market continues to make strides, I think that many are not as focused on what they may consider granular items. There are certainly some dealers who are doing a great job and moving into third- or fourth-level in their CRM usage and process. These stores are at the very high end of the success and profit spectrum. But they would be quick to admit that even they could do even more based on their experience. They know firsthand the difference between just having a CRM versus using their CRM at a high level.
DMM: How well have social media components been incorporated into today’s CRM solutions, and what can be done better to incorporate them in the future?
SS: Social media is a goldmine for data. We can learn vast amounts about our customers through monitoring their social media activity, and we can use that to tailor messages accordingly, using the same channels they prefer.
BW: I don’t think CRM success is a question of social media components being incorporated. It is more of an execution question. Social media is an area where there are still a lot of opinions, all of which differ. The reality is that social media is for social—not for business. If it were, it would be called “business media.”
Dealers still want to equivocate advertising dollars to sales, and that can be difficult to track under traditional methods in our business. I believe that some dealers think using social media outlets to broadcast specials, ads, or incentives is less expensive, if not free, and therefore it must be a better return on advertising investment.
I disagree. I believe that most consumers are not looking to social media for automotive incentives. There is a disconnect between what we are doing in our CRMs versus what is incorporated into our social media strategies, and they most often don’t align with what normal social media decorum dictates.
DMM: CRM software is often perceived as difficult to understand and use. What is the general state of staff training on and usage of CRM systems at dealerships — is it sufficient, and if not, what steps can be taken to improve it?
SS: The CRM has evolved dramatically, and it’s not slowing down. Technology has advanced so much recently, and the user experience is nothing like it used to be. The best automotive CRMs out there are very intuitive, and don’t require as much how-to training. It’s more about strategy; how you use the CRM to build lasting relationships, how you use it to understand every new channel your customers are using . . . that’s where training is essential now. But I believe any dealer would find a good CRM easy to get the hang of.
BW: I think that the training that is available industry-wide through CRM providers as a whole is very strong. However, there are many challenges that exist.
First, every dealer wants training implemented differently. In many cases, they want to use their existing process or, worse, they want reinvent their process during the install. We are in such a now business that many dealers don’t take the time to prepare adequately for the CRM install. Deciding to do wholesale changes to workflows, templates, or even communication strategy while the trainers are on-site is counterproductive. Anything that detracts from actual CRM training and implementation will confuse your staff and minimize buy-in. As clarification, this is a great time to reexamine your processes and change any that may not be working, but do it in conjunction with your CRM partner—prior to the arrival of the trainers.
Next, many dealers will attempt to save a few dollars and opt out of training and or set up. In most cases, and I can’t speak for the other companies, we will not do an install without trainers on-site. It’s such an important, intense and culture-changing process in an industry that does not adhere well to change. In many cases, the dealership is learning to deviate from extremely long-standing processes using new software, and the in-store training that goes along with that is imperative to its success.
DMM: Technologically, what areas in today’s integrated CRM systems for dealerships have the most room for development?
SS: I’ll give you two. First, data integration. Faster, easier, more thorough interpretation of and access to customer data is critical, and I see a lot of innovation coming our way in that regard.
[Second], user experience. If it’s easy to use, it gets used. Automotive has come a long way here, but I predict big advancements in CRM user experience. The less time you spend wrestling with your own user experience, the more time you can spend improving your customers’ experience. That’s what’s going to affect your retention rates, your return on investment, and your overall revenue.
BW: I think that all areas are in an advanced state, but if I had to choose an area that could improve from a technology perspective, I would say it’s fixed operations. This is still an area that does not use CRM as a whole, generally relying on direct mail and other outdated methods of communication. Many stores don’t even have a dedicated website for their service department. These decisions most likely stem from the current profitability of the department, but should be made by examining the available tools in the market and how they could increase future profits.
Tools like service lane applications that provide a transparent and seamless experience for your customers, data mining solutions that perpetuate the sales-to-service-to-sales cycle, and communication/website integration will go a long way to taking fixed ops to where it needs to be technologically.
What is your take on the state of automotive industry CRM? Has your dealership’s system worked to your expectations? Dealer Marketing Magazine wants to know what areas of the CRM topic you’d like to hear more about for future articles. As always, we welcome your thoughts, comments, and questions on this or any other topic via Twitter (@DealerMarketing) or by email to firstname.lastname@example.org.