What was learned in Part 1: “Customer Loyalty --- Will you still love me tomorrow?

1. Customer satisfaction, experience and retention are measuring sticks attempting to keeps customers engaged and ‘possibly’ coming back; no real love being shared!
2. Customer Loyalty is new to the landscape, not yet measured, not yet a force to be reckoned with by either O.E.M. or dealerships, yet, by golly, it is by customers now!
3. Customers want personal relationships with business persons of business to consider loyalty to them and the business, yet we haven’t loved them enough to earn it.
4. The WIIFM current culture is hitting a brick wall with the rise of social media, digital communication, and the millennial generation. 

Today

A DME article in May/June 2012 Fixed Ops Magazine titled “The Changing Service Loyalty Landscape” revealed very interesting customer loyalty statistics comparing dealerships (23%) with independent shops (26%) and aftermarket shops (21%) separately.  The comparison results appear yawning.  No one is paying attention to customer loyalty!  But, customers are!

DME also revealed in this same article via AAIA 2012 Digital Aftermarket Factbook, that an additional $34 billion service spend is expected over the next 3 years (we are a year into it).  Doing simple math, if 100% of this additional $34 billion were to come equally to every franchised auto dealer it would add up to an additional $2 million per rooftop! 

What Does This Mean

Edwards and Associates (E&A) recent study revealed “Dealer Service Market Share” continues to shrink every year since 2008, from 27.5% to 21.1% in 2012.  Within their study is was also stated that during this 5 year period the IRF and Aftermarket share grew 40% and dealers decreased 23%; a 63 point downward swing for dealers. 

Why?  E&A reported industry data for Dealer Service Market Share during the warranty period: Year 1 = 90%, Year 2 = 60%, and Year 3 = 16%. 

Customers are keeping their vehicles longer and as the warranty period concludes dealerships have consistently been giving away larger chunks of share that now sits at a whapping 86% of their Dealer Service Market Share to the IRF/Aftermarkets.  The average vehicle on the road today will require more than $12,000 in repairs and maintenance, of which the majority will be spent in years 3 onward, and our dealers are giving the vast majority of this opportunity away with zero improvement visible on the horizon.    

What Causes This Downward Spiral Loss?

WIIFM instant gratification is the rule of the day goal; mine and my managers.  In sales it is: I’ve got them hooked, reeling them in, sell it now, deliver it now, all before the ether wares off.  The art of the sale!  So cool am I.  In service its: I’ve got them hooked, reeling them in, sell it all right now, pay the bill, see yah, next! 

Example - Sales

Today is a good day for me!  My ego is bursting. I just made a sale, great gross!  My chest is puffed out.  I’m on everyone’s good list at the moment.  I just wish it could be this easy every day.  Customers are typically so fickle.  I’ll never understand them; don’t care to try.  I just want another easy sale like the last one. Oh boy, here’s another one now.  I’ve got them landed on a vehicle, worked numbers on the trade, been to the desk a couple of times; boy, this couple sure is wishy-washy!  They tell me they’re going to “think about it,” and be back in touch tomorrow.  Now, my manager gets up off his butt and tries to stop them from leaving, throwing out some additional offer or something, all to no avail.  They leave.  Will you still meet me in the morning?

Example - Service

In service it is:  I’ve got this woman customer in for an oil change and telling me she’s experiencing a vibration at 50 miles an hour and to check it out while she waits.  Oh boy, this will be an easy sale.  Twenty minutes later I go stand over her in the waiting lounge and tell her she needs an alignment, the tires are unevenly worn and should be replaced, front brakes are needed, power steering appears a bit tight needing to flush the fluid as does coolant, and we can get all this done now for $1,150.  The woman gulps, catches her breath and asks the advisor to give her all this information in writing.  He tells her he’s reading from notes.  She doesn’t budge on her request.  The writer begrudgingly complies.  The woman then calls her husband on the phone.  She then tells the writer just complete the oil change.  The writer barks back that her vehicle is on the alignment rack.  She stands firm.  She’s only paying for an oil change.  The writer comes back with the items typed out and total price.  She tells him she’ll review the rest with her husband later and let him know tomorrow what, if any other work she’ll have them do.   Will you still meet me tomorrow?    

Retention’s Perfect Storm

It is expected the millennial generation will experience retention’s perfect storm through to its death!  Everything about retention is price-driven.  The earlier statistics, if not downright shocking and alarming to every dealership and every business person within the dealership, your dream world is spinning the retention perfect storm faster with zero chance of survival remaining on your current course.  Retaining customers on retention’s price isn’t working.  Oh, you think it is in sales, but service is defecting at alarming rates.  Dealer Service Market Share shrinkage isn’t stopping; hasn’t turned itself around. Doing what we’ve been doing these past 5 years expecting better results hasn’t worked. Eliminating loyalty eliminates the need for sales people, and we’ve been eliminating loyalty! 

Millennials’ don’t care much working in current culture of dealerships and don’t care much doing business within their current culture either.  What makes them tick?  They want clear dealings.  They want you to earn their loyalty, not play with them over satisfaction or retention.  This generation has a real sense of managing their wants and needs, wanting a culture of inclusion.  They ask the right questions and want the right answers. They want to be wanted.

What are our options?

For business persons of business remaining in their WIIFM world-view of instant gratification, you will either be extinct soon, or convert and conform to a WIIFT (Them) world-view and earn every customers loyalty for life.  Businesses can only chase retention, while business persons must earn customer loyalty.  Retention is price-driven.  Customer loyalty is completely personal relationship-driven.  If business persons do not keep customers loyal to them; game over! 

Coming

In Part III, titled: “Customer Loyalty --- Will your SHARE me tomorrow?” I will share the singular proven (seven consecutive decades) business strategy, the world’s most proven business system and aim to get every business person and business progressing in the correct direction, and the best learning environment and method of delivery to gain and retain every customer loyal for life with every business person of business.  They will share you everywhere with everyone they know!

Summary

1. Dealer Service Market Share shrinking every year since 2008 is a leading indicator of service spend continuing to gain steam in the IRF/AM segment, while continuing to lose steam in franchised auto dealership business. 
2. Customer defection from dealerships in years 3 and onward will have devastating consequences to retailing of new and used going forward.  With near zero effort extended to keep customers loyal, we will lose them and not get them back.
3. Millennial generation hold hope of life or sure death of retail depending on actions we take immediately to gain and retain customers loyal.
4. There are 50% less automotive business person sales personnel in dealerships today compared to 20 years ago.  This percentage will drop at a much faster rate over the next few years if loyalty does not take front and center stage. 
5. The future, starting now, will either prove a personal loyal relationship between business persons of businesses with customers and prospects, or a near automated system of a dealership business without personal relationships that soon take Dealer Service Market Share down through the teens in percentage, declining to near nothing.  It is time for business persons of business to rise up and take complete command of their every contact and relationship with every possible customer and prospect --- like starting today!  Or else there will be no one to meet you tomorrow --- because they are not loyal to you!