In the decades I’ve been in the automotive industry, I’ve rarely seen a dealerships compete on anything other than price.  After all, it’s pretty easy to compare pricing, especially with the advent of the internet.  Today, more than ever, the consumer has the ability to shop faster, further and with all the tools that strip leverage away from the dealership.  Frankly, we’ve done this to ourselves and, at the same time, failed to address the other differentiators, namely the product.

 

Really?  The product?  Sure, we’re all pulling from the same OEM lineup, but dealerships are selling more than cars and trucks – we’re selling relationships.  And these relationships aren’t limited to “Year-End Clearances” or other seasonal promotions.  The relationships with customers extend beyond selling a car.  They’re about multiple cars over many years to one or more members of their friends and family.  Sell a car, service that vehicle, sell them another car.  We’re only now seeing the early benefits of customer lifecycle management, but it’s clear to me that we’re either in the business of selling relationships, or we’re doomed to push a commodity that marginalizes our unique contribution.  What kind of dealership is yours?  There’s a better question than that – it’s “Why buy here?”

 

Here’s the gut check because, as I mentioned, we’ve done this to ourselves.  The good news is that we can climb our way out of the h*** we’ve been digging – and it begins with the Service Department.  Listen, we’ve sold the vehicle and there’s little chance we’re going to sell the customer another vehicle in six months time.  Still, we can lay the ground work for another purchase years down the road with the months of quality service and care that our Service Department exhibits.  Remember, figuratively speaking, we’re selling relationships, not cars and trucks.  According to data research firm Information Resources, just under two-thirds of consumers (65 percent) say price is becoming more important than convenience in brand purchases. 

 

It’s not to say that price isn’t important.  Don’t focus on the two-thirds who say it is, but rather the one-third who would prefer to pay more for better service and convenience.  With slim profit margins on vehicle sales, price isn’t as big a chasm to traverse as you’d think.  What your competitor can’t compete on is the convenience you offer and the years of quality service your Service Department has provided that customer.  You want that consumer to buy their next car from you?  Then create a pleasurable experience in your service department that adds more positive touch-points.  The better the customer experience, the more you’ll see that customer in your service drive, the more times you’ll inspect that vehicle, and the higher likelihood you’ll be in close proximity when that customer decides that the advantages of a new car purchase outweigh the benefits of repairing the existing vehicle.  Conversely, without great service from your team, chances are your dealership isn’t even being considered by the consumer.  That is, unless you’re willing to beat the price of the competing dealer.  Such a vicious cycle we find ourselves in when we’ve underestimated the true value of customer loyalty and retention.

 

Put down the company punch you’ve been drinking long enough to ask yourself that insightful question, “Why buy here?”  The answers should extract the points of differentiation that you’ll want to emphasize in all your consumer marketing and customer interactions.  The research will only support the cause.  A repeat customer spends 67% more than a new one (BIA/Kelsey) and, according to business analyst ClickFox, 48% of consumers said that the most critical time to gain their loyalty is when they make their first purchase or begin service.  Sure, move cars and trucks, but sell relationships over a lifetime – there’s more opportunity, less competition and clear differentiation.

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Comment by Tom Loyalty Coach Wiegand on February 6, 2016 at 1:56pm

A welcomed post, Tom!  Then again, every discussion centered in true loyalty is a welcomed post!  The relationship must be ongoing and consistent.  Does your Fixed Ops departments have a dedicated BDC?  We tend to overwork and over-pressure Service Advisors #'s measurements that leave far too little time to communicate with anyone who isn't in front of them today, either in person or on the phone. We have to change the business model to meet customer loyalty requirements today from results first, to 'cause' relationships first.  

Comment by steven chessin on February 5, 2016 at 3:36pm

High-line dealers understand their customers put a greater value on their time and convenience - from management down to lot attendants customers and their cars are given more respect - because their business is worth more dollars today and every day. 

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