Retention & LoyaltyBest Practices

For this month, something new. I’ve written this article so you can copy it and have each employee at the dealership sign it. Having written employee acknowledgments of your policies is an important part of a robust GRC program at the dealership (Governance, Risk, and Compliance). If a regulator comes to visit, having this signed acknowledgment in every employee file would help you quell any claims of “willful non-compliance.” Here is it: Regulators are those governmental agencies that have oversight of our dealer operations.   When a regulator calls us or comes to visit, it is usually the result of an unhappy customer(s) – which we have not satisfied – who complains to them. Subsequently, the regulators will ask many questions about our business practices and how we operate. They have the authority to fine us and try to impose penalties to ensure our compliance with the myriad of laws we must follow. Here is a partial list of regulators:   The Attorney General The Consumer Financial Protection Bureau (CFPB) The Federal Trade Commission (FTC) A Member of the House of Representatives (Federal and State) A Member of the Senate (Federal and State) The State Police The Internal Revenue Service (IRS) The Treasury Department The United States Secret Service To understand the depth and breadth of what they look at, please see the attached page entitled “ CFPB Supervision and Examination Process .” (Page 12 of 1814.) While this is a specific page from the CFPB operating procedures, it is analogous to any regulatory agency’s daily operating procedures. We discuss this as our training this month to highlight the continuous cycle of supervision each of these agencies performs when it comes to businesses within their purview.  1. Pre-Examination/Scoping The CFPB is looking for “risks, areas of inquiry, and focus.” From their perspective, this means they are trying to examine those areas where businesses may take advantage of customers. Suppose the CFPB has reason to believe your dealership is not acting within the scope of accepted business practices. In that case, they will “Request and review documents and information needed to begin examination.” That means they will ask for your “internal policies, audit reports, training materials, recent data.”   It’s likely that if they come looking, they will find something. At a dealership and any business, for that matter, when a regulator examines a company, they find problems. Ultimately this will cost the dealership both time and money. One former dealer used to advise frequently, “When you shine a light on any one item at a dealership, you will find issues and uncover problems.” He is right.   2. Examination (offsite and onsite) This section talks about who the regulator(s) will interview and which operations they are going to examine. It further states they will “compare policies and procedures to actual practices by reviewing a sample of transactions.” Further, they will “compare the conduct to legal requirements.” No company wants a regulator to interview employees. With further examinations and this type of unwanted scrutiny, additional issues will be brought to the surface.   3. Communicate conclusions and required corrective action This is when the regulator tells you or mandates to you how you must run your company going forward. If you are not cooperative, they will “pursue supervisory agreement or formal enforcement action as needed.”   This means that the company would have to agree to a written understanding of how the company must operate on a go-forward basis. If a company declines to comply, the regulator will pursue “formal enforcement action,” which means costly court or administrative proceedings in which the company will have to spend a lot of money on attorneys to defend itself. Fines can be “nuclear” as recent dealers were tagged for more than $10 million, $3.380 million, and even a dealer in California who were fined $27 million.  4. Monitoring The regulator will periodically come back to the dealership and examine reports, transactions, and corrective actions which the company has performed in order to meet whatever agreement was reached. So, the regulators return to ensure compliance with all rules, laws, and regulations. If the dealership has not complied, they will bring the company back to court. This may subject the business to additional fines and penalties, and suspensions. This cycle may continue until the company is out of business or is compliant.  Compliance with any regulatory process is cumbersome, time-consuming, and costly, even if the inquiry is for one customer. An example of a written employee acknowledgement:   Our company is educating you as to these issues as we do our very best to run things in a professional manner while satisfying each and every customer. This also serves as a reminder that it is the company’s policy to follow the laws, rules, and regulations which have been communicated to you during your employment. If you find anything out of the ordinary, please report this to your supervisor or one of the owners. My signature below indicates that I: 1. Will comply with company policies and procedures 2. Will ensure that the company’s customers are satisfied with our dealership 3. Will communicate with my manager of one of the owners if I see items that are out of compliance with the company’s rules and regulations 4. I will immediately communicate with one of the owners if I receive a regulatory or media inquiry.  These things, I promise. _________________________ ________________________ Employee Print Name Employee Signature   January _____, 2023 *If you’d like a Word copy of this document, please reach out to me at tomk@bettervantagepoint.com, and I will be happy to send it along to you.  Thanks for seeing things from a Better Vantage Point. For more information:  Phone Number: 757-434-7656  Email Address: tomk@bettervantagepoint.com Website:  https://bettervantagepoint.com Website:  https://alwaysdobetter.com/howwehelp YouTube Channel:  https://www.youtube.com/channel/UC-ytHE0-c5lUJbzm0H4drog LinkedIn Profile:  https://www.linkedin.com/in/tompkline/

Marketing, customer-dealer interaction, and even your website are more than just the sales process, it is engagement with your community. Are you engaging in your language or your community’s language? For your dealership, engaging your community is the best way to grow your business and gain new customers.  There is a great deal of focus on engagement and experience, without covering how you need to engage with your community. If you are like most dealerships, you are focusing on the sales process itself, your reviews, and driving traffic, not thinking about how your website, marketing materials, and even customer interactions can help you grow your business. The car business must go beyond the goal of selling cars—you must connect with people. And when you do so in their own language, they will feel more comfortable buying from you. Brands across the board have been pushed to recreate their marketing strategies and focus efforts on building relationships that are driven by two-way communication.  One of the big questions is how to keep consumers engaged so that when they need your products or services, you are their first thought. To accomplish this, we need a shift in thinking to “Whose interests are being served?” For example, when you are posting on social media, are you posting content that drives butterfly effect engagement from your audience, or are you posting about the product only? By butterfly effect engagement, I am referring to the type of engagement that draws in people your audience is connected to and drives them to engage as well, allowing you to create a brand community. Consider that many potential customers will visit your social media pages before initiating the purchase process, reviews and content can impact the decision process in your favor. Putting out content that is of interest to your community is paramount, an example is Meta marketing content that is solely based on product and deliveries versus what interests your community. If you can scroll through your feed and cannot find anything that supports your local community regularly, you are not building your brand community. Remember, you are recruiting volunteers to champion your business, inundating consumers with sales purchases, and product places hoping to see results is simply disruptive marketing that desensitizes consumers and does not promote conversation. Unlike traditional advertising, which is primarily focused on getting new customers, a community marketing strategy is about connecting and engaging with people to build long-term relationships. It is about making customers feel seen, heard, and important. This type of strategy bridges the gap between the people driving your business, your team, and your customers. A vehicle purchase is no small thing, growing a sense of connection, support, and service within your community allows you to start building relationships before the sales process even begins. Providing value to your community is a great place to start What questions do customers most commonly have during the car buying process, what are some challenges you have helped others overcome, and what do people on your team specialize in? Sharing the details of how you serve and how it benefits the community paves the way for conversations. Participate Your community marketing strategy should take you outside of the virtual world of social engagement and participation in your community. Can you help educate young consumers on how they qualify for their first auto loan, how credit affects a large bandwidth of life or the ins and outs of the buying process? Getting involved early and giving young consumers the tools, they need as they move forward in life is a wonderful way to expand your value in your community. Consistency and accessibility are key Consistency is the foundation for trust, accessibility allows that trust to grow. How easy are consumers able to reach and converse with your team, do your internal processes allow for ease of communication or is there a backlog of calls to be returned and messages to answer? One large component of customer satisfaction is communication, the ability to reach contacts at the dealership amid the sales process, or even worse after delivery, is beyond frustrating to customers. This is a big part of the experience customers will remember when it becomes time to purchase another vehicle or service their current vehicle. Creating ways to engage with your audience in a way that works for them is crucial, whether by phone, text, email or messaging services - being accessible builds trust and impacts customer retention. Tell a story and use images Interaction on your social media posts gets on average 160% more interaction when you use relatable images, take this a step further and focus on telling the story behind the image. Consumers trust and value other consumers' opinions and experiences, share those success stories! Share other sides of your dealership, service, parts, community outreach, and team members - give your content an individualized touch. Consumers want to know who they are working with and look for connections and common interests on which to build relationships.  Over and above long-term benefits in customer loyalty and retention, executing a community marketing strategy can help to reduce your dependency on traditional advertising, often a large chunk of the dealership budget. While not necessarily immediate, this type of strategy will snowball as you continue to grow your audience and engagement. The use of social platform engagement isn’t going away, what you begin building now will impact your future sales and retention. Over the last few years, we have experienced a shift in consumer value, a shift that focuses on people and the community. Building value and creating relationships within your community is a powerful way to engage your customer base and community, create loyalty and trust, and grow your sales and retention - that is if you choose to accept the challenge before you.

Disruption is about change. In the automotive industry we usually connect the word disruption to some up-and-coming vendor program, product, or new technology. When really disruption comes from how these things introduce new habits, adjust how you communicate, and/or change your approach. You may not need new products, services, or technology to create a disruption in your market, all you may need is to reflect and change. Technology is not the disruption; it is a confirmation of needs which are waiting to be filled. With technology having affected the way people consume and engage, becoming a force of positive disruption in your market is well within your grasp. Retail automotive has a never-before-seen opportunity to show with clarity how it has evolved to rise to the consumer challenge to “do better.” No longer is the showroom a place with fancy-suited strangers and cold metal, the most competitive dealerships are bringing the showroom, and their people, to their customers, creating more open and sustainable relationships. Social media has given us a spyglass into the lives of others, making people realize their own humanness is not so abnormal. Consumers are driven to engage with individuals and business they feel they know, trust, and relate to. Further reenforcing that people buy from people, and relationships matter. The key to disruption is not missing the point of disruption. Stop doing what you have always done. Consumers are clear about their needs, how to meet their needs and expectations, are we listening? They do not necessarily need more technology; they need more communication with clarity. Your customers expect their in-dealership experience and online experience to be cohesive. They want a process that is mindful of the buyer, a business that is community-aware and, believe it or not, a long-term relationship with you. Disruption is a mindset; it is when you genuinely care as much for the people you employ and the people you are selling to as you do your sales. Disruption mindset starts with leadership, it is creating the culture for employees that mirrors the experience you want for your customers. It is building long term relationships with your customers by fostering long term tenure with your employees. You’re thinking, all that’s great, how do I achieve disruption? Here are a few areas you can easily check yourself in and create positive disruptive change within your dealership: 1.      Does your employee culture reflect the experience you desire for your customers? 2.      Do your customer’s in-dealership experiences and online experiences feel cohesive and transition smoothly? Does it feel like a singular purchase experience? 3.      Do you have a social presence sharing outside of what you earn a profit from? Is it a place your customers return to after the sale? 4.      Is your dealership website a virtual showroom only for vehicles, or is it also a meet and greet for your staff? 5.      Are you actively listening to your customers' needs and expectations? “But tackling some of those would be like opening a can of worms.” Open that can of worms, friend. Without conquering these things, none of the disruption you achieve in your market will be sustainable.  

“The purpose of habit is to remove that action from self-negotiation. You no longer expend energy deciding whether to do it. You just do it.” - Kevin Kelly, '68 Bits of Unsolicited Advice' You may have never thought of it this way, but problems at dealerships usually walk through your office door on two (2) legs: Either with customers or with employees. It’s always best to tackle these two-legged issues promptly, as otherwise, they can quickly escalate to regulatory challenges or, worse yet, lawsuits. I’ve seen it happen again and again. There are two main ways to confront problems as the dealer principle: You can personally manage the issue itself, or  You can manage the problems through well-trained employees who are empowered to fix them Your operations will be smoother for you if you choose to embrace your employees’ ability to handle the day-to-day concerns.   One of the most powerful tools you can teach your employees to deploy is effective and strategic emotional intelligence, i.e. the ability to understand, use, and manage emotions through communicating in a positive way. Your managers should understand this skill so they can effectively convey even difficult information to your customers.   The best way to change the communication style within your team is for you, as the leader, to model the use of your own emotional intelligence, whenever possible.  Here’s an example from last week. I was at a dealership group that wants to empower its managers to resolve customer problems through improved emotional intelligence. Together, the owners and I dug in with an action plan and dedicated a day to one-on-one sessions with all key stakeholders. We trained and practiced to ensure the managers understood the concepts and opportunities and could employ emotional intelligence tools effectively.   In this intimate training, we focused on a top-tier issue:  How to De-Escalate Customer Problems and Build Trust (To prevent problems at a dealership, this is step one and is the most important training for employees.) During one memorable session, with just the three of us in the room, one of the managers seemed particularly fidgety, wouldn’t make eye contact with me, despite being only three feet in front of me. He looked at his watch, then looked at the floor, and then looked at his watch again...then, stared at the floor.  Clearly, something was bothering him. (Let’s call him “Anthony.”) Me: Anthony, you look like something’s bothering you. Are you okay? Anthony: Yea, it’s nothing. Don’t worry about it. Me: You look uncomfortable. (When you label the emotion of what someone is feeling, it is disarming.) Anthony: Naw. Sorry, let’s continue. Me: Anthony, I can tell something’s wrong. Please let me what it is so I can help you. Anthony: I apologize (looks at his watch)… let’s keep going. Me: Do you need to be somewhere else? Is that why you keep looking at your watch? Anthony: It’s not about work. Don’t worry about it. Me: Where do you need to be? Anthony, I fix problems; it’s what I do! So please tell me what’s up so I can help. It turns out Anthony had an appointment at the post office to have his passport interview. I asked how long he had been waiting for the meeting (knowing everything is still backed up because of COVID) and he indicated he waited about six (6) to seven (7) weeks for the meeting.  I asked the other manager in the room if Anthony could go to his appointment and I could train him later. And, that’s exactly what ended up happening.  There I was, training about using emotional intelligence, and in that moment, I needed to deploy the very same tool, so Anthony could learn about emotional intelligence! Yes, Anthony should have told his boss about the appointment weeks in advance, days in advance, and the morning of his appointment so we (all) could have avoided the herky-jerky start-stop. When someone is feeling boxed in, they quite often don’t think clearly, as Anthony displayed. (I’m certain he had pressures at home and was told, “you’d better not miss this appointment.” At least, his face indicated that conversation had taken place.)  So the moral of the story is: Use emotional intelligence when managing your employees and deploy these tactics to resolve customer and employee problems. Train on specifics and remind everyone to recognize the emotions at play under all situations. Then, you won’t have to remind yourself of this. Happily, it will be habit. You will just do it!

We all know that referrals represent our greatest opportunity for peak profits and predicable growth. As Mark Zuckerberg has acknowledged, “People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.”  There is no other business strategy that can provide the compounding results that can be realized through executing the right referral strategy. It’s simple math. With only half of your customers providing just a single referral every two years, your business doubles every three years.  Unfortunately for most teams, their strategy is simply to ‘ask for a referral.’ This too often leads to an awkward experience with many people avoiding the exchange altogether. There is a better way! With the right referral strategy customers actively share your message and support your business. If you are ready to get more referrals now, ask yourself these five questions: 1. Are my customers capable of referring business? In order to be capable of referring business, your customers must remember you, remember what you can do, and remember why people choose you.  Our customers might know how we’ve helped them and why they said yes, but that doesn’t mean they know all the ways in which we can help. We cannot expect our customers to remember us and how we can help each time an opportunity arises unless we’re in regular communication creating engagement, sharing successes, and continually providing value. Thankfully this can be accomplished with minimal effort leveraging old tools in a new way. You already possess the contact methods and the mediums. The next step is to marry automation with personalization to maximize each interaction and compound your results. Professionals who get more referrals now, execute a next level strategy that ensures they stay top-of-mind, they stay connected, and they stay relevant. 2. Are my customers compelled to refer business? Customers that are compelled to refer business are all motivated by one or more of the following three factors. First, these customers genuinely like us. When you align and connect with your customers on a personal level they not only gladly say yes, but they gladly tell others why they said yes as well. Second, these customers enjoyed a remarkable experience. They did not just have their expectations met; they had an experience worthy of a remark. What is unique and memorable about what you do and how you do it? For some it is a special gift, for others it is a special gesture, for some it is a special service, and for others, it is as simple as a special greeting and goodbye. Third, these customers genuinely want to help. These customers might want to help you because they want to see you succeed, they might want to help the people they are referring because they want to save them from an alternative and potentially bad experience, or they might want to help themselves because of an incentive or rewards program that you have in place. Professionals who get more referrals now, execute a next-level strategy that compels and drives their customers to openly share their experience. 3. Do my customers know I want them to refer business? When conducting a next-level referral workshop, I often ask the class to think of a business they recently worked with where the representative met their expectations, where their experience was positive, and where their needs were met. Then I ask the individuals to raise their hands if they have referred business to that company and representative. To no surprise, very few, if any hands go up. The purpose of this exercise is to demonstrate that doing a good job does not equal referrals.  When it comes to getting more referrals now, good is never good enough! We have to ask for referrals, and then we have to continue to ask. This is accomplished by having purposeful conversations at the time of sale, after the honeymoon period, and around key dates on the calendar. A cornerstone of these conversations is the personal referral story crafted in the workshop. Each persons’ referral story is unique to them, but every story helps customers emotionally connect, conceptualize the value, and convict themselves to refer business.  Professionals who get more referrals now, execute a next-level strategy that creates an environment where customers know that referrals are wanted, important, and beneficial to all. 4. Is it easy for my customers to share? One thing is for certain, if we make it awkward and difficult for our customers to refer business to us, we can expect little to no referrals. Technology plays a role. With that said, there is a lot that can be done with your existing technology, without having to invest in anything new. Aside from technology, there are three things you can do to make sure it is easy for your customers to share your message and refer business.  First, ask at the right time. Whether it is at the time of sale, or at a later date, there is a best time to ask. At the time of sale, it is not when you are signing agreements, or when you are saying your good-byes. When you follow up with your customers at a later date, it’s not on their birthdays, or when the new programs and incentives come out. The best times to ask are times where we can have a real purposeful conversation that strengthens our connection and compels our customers to act. Second, always put your customer first. One of the reasons why so many people feel awkward when asking for a referral is because they shift the focus from their customer to themselves. It doesn’t have to be this way. The focus should remain on the customer the entire time. After all, there is much that our customers stand to gain from referring business. Lastly, ask for the right number. One. Just one! One at a time. Too many people ask their customers to identify multiple people who might be interested. In this situation, the focus shifted away from the customer long ago. If a customer wants to refer more than one person to you at one time, great, but I recommend only asking for one. Invest your energy into that one, and it will turn into three more. Professionals who get more referrals now, execute a next-level strategy that makes it easy for customers to engage and refer business. 5. Do I share? The final question to ask yourself is: who am I referring business to? There must be people with whom you’ve conducted business that are worthy of a referral. Think about all of the people you’ve worked with over the past year both personally and professionally. What if all of those people were capable of referring business to you, were compelled to share their experience, and knew exactly how the act of referring business benefited everyone involved? One thing is for certain, when you refer business to these people, they will seek to refer business to you. Maybe not right away, but eventually the Law of Reciprocity will kick in. When you invest in the success of others, more people will want to see you succeed as well. Prioritize your efforts and begin referring business today. We all know that referrals represent our greatest opportunity for peak profits and predictable growth. Unfortunately, for most teams, their strategy is simply to ‘ask for a referral.’ Too often this leads to an awkward experience, with many people avoiding the exchange altogether. There is a better way. It all starts with answering the five questions above and executing a next-level referral strategy. If you want to build greater influence in your market and double your business every three years, focus on getting more referrals now! If you believe in the power of referrals as much as I do, reach out and share your experience. It would be my pleasure to connect.

Most dealers have Courtesy Transportation, or CTP programs in place, with the support of their respective manufacturers. What dealers may not be aware of though, is that these programs are increasingly using Connected Car technology to track and manage the vehicles enrolled in them. Not only does this new technology create opportunities for better fleet management, but it also has the potential to create some exciting new revenue opportunities for dealers in the very near future. The same platform used to operate CTP can be used by dealers to operate Rental programs, Alternative Financing programs, or Demonstrations. Connected CTP Programs Manufacturers are increasingly equipping new vehicles with built-in telematics equipment. In 2021, over 90% of all new vehicles will be equipped this way. Fleet owners have long recognized the value of built-in connections for fleet management applications. Fleets can more accurately track vehicle location, maintenance needs, mileage, and driver behavior data using a built-in connection and centralized fleet management. Vehicle manufacturers are increasingly bringing connected fleet management tools to their CTP to let dealers more closely manage these fleets as well. These programs, operated by companies like  TSD Loaner ,  Connexion Telematics ,  Bluebird Auto Rental Systems , and  ARSLoaner , all enable Dealers to more closely manage CTP vehicles. Dealers can easily enroll vehicles from their inventory into these systems and then track which ones are rented out, how many miles have been driven, how much fuel is being used, and whether any of the vehicles need maintenance. In the event that one of the vehicles goes missing, it can also be located. To get the most out of Connected CTP, dealers should take full advantage of available reporting, such as: Mileage alerts to prevent vehicles from being used past OEM program mileage limits Fuel Usage, to recoup fuel costs Rental History, to identify which vehicles are over-and under-used Over-Time alerts, to identify vehicles that have been kept longer than planned Tolling Alerts, to recoup toll costs Some programs also include remote lock/unlock commands, giving the dealer the ability to easily help if a CTP customer gets locked out. Taken together, dealers can use these tools to significantly improve the efficiency of their CTP.   New Revenue Opportunities While Connected CTP can be useful in managing costs today, they can also create a platform for dealers to easily try out new revenue models. Technically, any connected vehicle on the dealer's lot – new or used – can be activated and managed from the same platform that is used to manage CTP. That creates some interesting possibilities, such as: Short-Term Rentals Any connected vehicle on the dealer's lot could be enrolled and offered as a short-term rental. The CTP platform could easily bill the rental customer for time, mileage, fuel used, tolls, etc., at a rate negotiated by the dealer. Rentals could be for use by individuals or businesses or could be offered to Uber or Lyft drivers. Dealers should seek information & guidance from their providers & OEM partners. Some of the providers mentioned above already offer integrations that can result in immediate revenue opportunities.  Alternative Financing Models The same CTP platform could also allow the dealer to experiment with alternative financing models, such as subscriptions or "loan to own." The platform can easily track vehicle usage, apply a metered price by day, month, or by mileage, and can apply additional charges for fuel, tolls, and maintenance. In the event vehicles need to be recovered, they can also be located. The platform built to enable a Connected CTP can easily be adapted to operate these programs, as well. Demonstration Programs The dealer's CTP platform can also be used to offer vehicles for demonstration. With the roll-out of Electric Vehicles, for example, many customers may want to have a trial of an EV before committing to an all-new method of propulsion. Any other vehicle on the dealer's lot can also be offered this way, with mileage and usage easily monitored for follow-up with the customer. These new applications are not yet widely deployed to dealers, but dealers should be aware of the potential of Connected CTP and press their manufacturer sponsors and platform providers to bring these capabilities forward.