Auto Dealership Best Practices


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Four articles published in 2010 based on reviews of best in class dealerships in the UK.

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Auto Dealership Best Practices

  1. 1. Best practice: AM Awards focusTraditional and e-marketiBy David Bale, of MSX International in service and sales – as long as the relationship This year MSX International with the customer is maintain and not re-created ed was again delighted with the everytime they walk in. All awards entrants had number and the quality of significant initiatives to profile customers andapplications for the AM Awards. 2009 was a ensure that every sales and service event was apredictably tough year with most business plans good one: ‘No questions asked’ money back guar-structured around customer retention and antees on car sales if the customer was unhappy;maintaining realistic positions in the market. servicing that was planned to fit a customer’s busy Award applicants again showed vast amounts of lifestyle and not just planned to optimise work-professionalism and attention to detail that allowed shop loading.them to fully exploit all areas of opportunity. All entrants exhibited the same high regard for Undoubtedly scrappage was the single identif- employee retention. Huge focus on initial candi-iable factor that affected performance in small car date selection, then focus on analysing theirsegments. In some cases there were customers performance, then similar focus on training toqueueing up to buy new cars. drive the correct performanc e. Staff churn in these In other areas focus was always on customer dealerships was similar to other organisations, butsatisfaction and improving process around lead the churn was on newer and less skilledmanagement and existing contacts, through the employees.lifecycle of vehicle ownership. In summary it is clear that, if your sales person The winners demonstrated a clear strategy for stays for a significant period and your customerstheir specific market. need long-term attention your sales person estab- This article is one of a series for AM which reflect lishes a pipeline of existing relationships thaton the best practices in 2009 and how they ensured supports the target you are setting them.success. The articles focus on six areas:�� Marketing, e-marketing and lead generation Lead creation is not an exact science�� New, used and fleet car retailing But award winning entrants did show the�� Customer focused service process essential feature of lead creation is constant�� Streamlining bodyshop process and improving attention to improving feedback across allCSI marketing channels.�� Parts sales - retail and wholesale growth Marketing activity can be broadly split into three�� Customer retention areas: �� Traditional marketing A customer is for life and so is a sales person �� E-marketingIt has long been recognised that the sale of a car �� Call centre activityis a single event, but over the lifetime of a single It is important that these three areas have to becustomer there is more opportunity than this, both completely integrated, but in analysing approach
  2. 2. New car News Best News digest Used car Showroom Recruitment AM market practice market contactsing and lead generation and best practice it is possible to take each one Being visible in the community at shows and separately. shopping centres generated initial leads. But visible, modern, well located showroom and service Visibility press and promotional campaigns premises were still used for drive-by leads. All the successful campaigns were built around a clear value proposition for the customer. Even in E-marketing the recession there were a number of good oppor- The website is the obvious central point for this tunities around which a marketing campaign could activity. All applicants focused on the same areas be developed: Servicing specific vehicle age, for the base website: segment profiles or developing themed campaigns �� Simple landing page with corporate identity and for example. Campaigns were also structured, clear links to website areas and search engine based on detailed customer feedback. Consistency optimisation with daily analysis of web traffic and integrity across all channels for each campaign �� New cars sections making full use of available was essential for success. OEM marketing material, significantly not redi- Larger dealer groups developed a non- recting any lead directly to the OEM or using their automotive group corporate identity often around vehicle configurators family values, but always endeavouring to empa- �� Used sections making full use of quality photo- thise with their fleet, small business and retail graphs and video to present vehicles with access customers. This was coupled with an aggressive to online appraisals, GAP, F+I, green costs and tax media calendar to deliver the campaigns in a timely calculators. `Make us an offer’ attracts a click manner. through to a sales person. Campaigns were structured, based on detailed customer feedback
  3. 3. Best practice: AM Awards focus Service sections on websites had the most vari- Blueprint MSX International ation. There was no consistent list of features In Europe, MSX International owns eight across all sites. The best websites allowed service regional hubs covering 28 countries and booking online and enabled online review of service delivers automotive services at European history for clients through their login-access. and local level in 28 different languages. Others had extended warranty and service With more than 16 years’ presence as an propositions. Most sites had service schedule automotive retail networks solutions information and telephone numbers and email or provider in Europe, MSX International chat options to access service reception. supplies more than 1,200 automotive Social networking media such as Facebook and experts in Europe to OEMs, NSCs and Twitter were being experimented with. Other dealerships. mechanisms, such as ezine-type newsletters or customer favourites car search settings seemed Skilled staff to be better at producing true leads. MSX International applies proven automo- Associated marketing, links to other sites within tive processes (ISO & 6-Sigma) to manage the community and links to non-automotive life- all types of service and operates under SLA style type sites were used to attract local leads of and KPIs. All staff are skilled and trained in the correct profile while stand alone sites away matters like brand environment, culture from the main site were used to attract new, non- and history, dealer networks’ specifics, loyal customers. Amongst the metrics used to automotive, technical and customer measure websites’ success, conversion was the handling. most interesting. Conversion rates of 0.5% to 3% were quoted, but in all cases it is the improvement MSXI Dealer in conversion rate as the site is established rather The technical platform MSXI Dealer, than the actual value that creates the return on consisting of our service management tool, investment. The least considered metric was the Book IT, and our lead management time for any page to load which in some cases platform, Sell ITis a highly effective solution was still too slow to maintain customer attention. for increasing service, aftersales and repair The essential feature of websites demanded by revenues and professionally handling sales customers was integrity and consistency. The best leads. entrants had solved the problem of establishing It enables MSX International to approach internal content management teams, updating the current and lapsed customers at the website daily and ensuring data was only ever optimal times within their vehicles’ lifeycle entered once to avoid inconsistent information. so that the experts can pro-actively book The best entrants had also solved the problem service appointments, conduct promotional of fully integrating their e-marketing into their campaigns for accessories, extended other activities with essentially a seamless flow warranty and sell additional new, used and from website to call centre to sales or service fleet vehicles. reception without a customer having to call twice or ever repeat their request.
  4. 4. New car News Best News digest Used car Showroom Recruitment AM market practice market contactsVirtual case Best practice: The pre-requisites directly up to 8% of leads for new and used of efficient lead management vehicles sales. Traditional marketing, in combination with e-marketing and call centre activities, Stage 2: Lead assessment and generates additional interactivity with the qualification customer where consistency is vital. At this stage, every incoming lead from the Dealers with the same lead quality can have channels described in Stage 1 is assessed for vastly different close rates and in this race data clean-up and data enhancement. Leads there is no room left for second place – are are then qualified for the processing stage. all dealers equally armed? The main difficulty here is that an ‘industrial’ lead factory actually runs using many different Stage 1: The lead factory data sources and IT systems. These need to The traditional direct marketing method communicate together, often by dedicated combined with showroom activity isn’t interfaces. sufficient for sustaining dealer business when Stage 2 usually includes monitoring and new vehicle sales are dropping. In addition, the history processes in order to enable tracking product mix of new vehicles is generating of every lead and maintain confidence in the lower margins and putting additional pressure lead management processes for the sales on the sales volume bonus. executives. E-marketing can efficiently complete development of the potential lead pool with Phase 3: Lead processing one major constraint: even if the leads from Having a regular flow of qualified leads is a the internet actually have the same quality as necessity that has no value without the highest any other source – and this isn’t usually standard of lead processing in place until the admitted – they have to be qualified and close of the sale. This is discriminatory and processed extremely fast, ideally through unfortunately still not well implemented by managed call centre activities, in order to every dealership, especially for leads coming reach the optimal conversion rates. from multiple sources, such as the internet. The aftersales activity, very often relayed in a secondary position, has actually the best quality cost ratio per lead for the dealerships, having a highly implemented customer contact strategy. For instance, a customer lifecycle management programme driven by aftersales is capable of generating a continuous flow of leads in aftersales, but also can contribute
  5. 5. Best practice: AM Awards focusTapping into thelocal SME marketfor new car supplyBy David Bale, of MSX International �� Dealer capability to transfer this into the local This year MSXI was, once retail experience based on a structured local again, delighted with the marketing strategy number and the quality of �� Comprehensive analysis of the potential andapplications for the AM Awards. target customers in the local market It was a predictably tough year for the industry, �� Securing a structural and consistent conquestwith most business plans structured around and loyalty management processcustomer retention and maintaining realistic �� Hard workpositions in the market. This article is the second of a series of six Used car saleswritten for AM magazine which reflect on the �� Establishment of a fully integrated used carbest practices employed across the industry in business process (from active purchase to2009 and how they were used to ensure professional marketing and sales)continued business success. �� Effective financial and residual value Below we will focus on the retail sales process management, applying a dynamic pricing modeland look in more detail at one of the areas that �� Effective marketing and sales fromgets quite a lot of attention from all OEMs in professional demonstration at point of sale totoday’s saturated market – the so-called small effective usage of e-selling possibilitiesfleet business. When looking at the car sales side of Customer retentiondealership activity, it is straightforward to identify �� Customer relationship management, B2Cthe following critical success factors within the and B2Bnew car selling process: �� Event driven CSI measurement, even at dealer level New car sales to private customers�� Brand and product attractiveness Sales management �� Manage the sales force through clearEffective fleet programmes that objectives and continuous follow-up andperform competently and coachingconsistently turn the fleet business �� Setting up a robust system with a set of KPIsinto a profitable source of revenue and follow-up
  6. 6. New car News News digest Best Used car Showroom Recruitment AM market practice market contactsWinners of this year’s AM Awards celebrate at the glittering awards ceremony earlier this year�� Implementation of best practices (change opportunity for business improvement. Targetedmanagement) and strategic fleet management, as well as�� Sustainment of actions offering business improvement, also optimises dealer processes and leads to more efficientWith all the generic lessons learnt in the area of processes sales at dealership level, the remainder ofthis article will focus on the specific customer Fleet as a profitable source of revenuegroup of fleet and best practice in this area for Effective fleet programmes that performthe establishment of a completely structured and competently and consistently turn the fleetmanaged fleet sales process. business into a profitable source of revenue. It is For many dealers additional fleet revenues and possible to achieve an improved performancesales are still under-exploited. The business and a higher profit. But there is a tendency toeither appears too complicated or is not seen as focus on large fleet sales, which are usuallyrelevant to a particular brand, or is just not part managed very professionally with strong supportof the standard business operating process. from the manufacturers. After scrappage, the turnover of the automotive Typically these programmes also come with aindustry runs the risk of stagnating. Fleet busi- low margin, commodity-based pricing structure.ness is very often neglected as an area of The small fleet – companies running five to 10
  7. 7. New car News News digest Best Used car Showroom Recruitment AM market practice market contactsvehicles – has not been in the focus of the on the small fleet area, the key to success isdealer network. This potential customer group cold acquisition and meeting the customers onhas postponed the sales in the financial crisis their site.and now has to renew its fleet in a short time. This needs to be embedded in a strategically designed process which ensures reliable Supporting the fleet customers’ business collection and tracking of performance successA number of basics are covered when looking at indicators.the best-in-class dealers, who are successful in These web-based sales tools show a detailedthe area of fleet or small fleet sales: analysis of any salesperson’s development and�� Detailed analysis of the fleet market or in the performance. All relevant information such asrelevant segments fleet manuals, sales information or key�� Understanding the applicable, functional performance indicators are maintained there.features of vehicles (load capacity, overall Fleet data should be recorded and evaluatedeconomy, breakdown cover options, out of hours on the level of outlet, dealership and dealerrepair policy etc) group level. This modular system architecture�� Competitor analysis and a strong enables permanent access to all relevant fleetunderstanding of the local market information and the centralised data�� Market share analysis (previous years) management.including root causes The success of a project and its initiated�� Analysis of the fleet sales process, specifically actions is directly related to the consistentin the area of small fleet business, and review of implementation of the defined aims. It ismarket specific offerings (SWOT) important to involve all affected departments�� Selection of customers, based on specific and employees in the process.criteria: For optimal results, the sales manager willPotential focus on the most important information, suchParticipation in commercial segment as results of mystery shopping or CSI ofFinancial strength new vehicle delivery schedules and quantity ofInitial lead qualification via call centre results achieved in the last two years.�� Additional purchase of customer data and The customer segment of small fleet,customer segments analysis especially, is a business that has had insufficient�� Dealer salesperson 100% dedicated to an focus, both from the dealer side as well as from“active“ role in this process the OEM side. We can clearly see plenty of�� Sustainability follow-up through KPI initiatives and focus for this at the moment.measurement Some of the above may be helpful for you in further developing your organisation’s ability toCompetent, effective, achieving the target grab the potential in this business area.The most important tasks for the successfulsmall fleet sales executive are the analysis of the On the small fleet area, the key topotential (internal and external data) and address success is cold acquisitions andacquisition in the commercial sector. Especially meeting the customers on their site
  8. 8. Best practice: AM Awards focusPutting customers’ needsat centre of your businessBy David Bale, of MSX International If we assume repeat business in dealer car Industry-leading directors sales stems from customers that are happy with and general managers the way they have been treated then we have to have shifted their focus to look at techniques and process used to ensure aftersales retention, satisfaction in the aftersales process.actively engaging within the service sector oftheir respective businesses over a number of Customer satisfaction and vehicle receptionyears as the importance of aftersales has Have you made the correct ‘zero hassle’increased. provision for your customers? Each customer These are some of the views of dealers who will have individual requirements. These will onlyentered for the Excellence in Customer Services be understood at the point of booking via aaward that clearly identify a customer telephone or face-to-face conversation at servicesatisfaction theme. reception.�� “The customer is at the heart of our business” Offering a courtesy car often involves forward�� “Honesty, truth integrity and family values are planning that could be avoided if you arrange toessential to our business” pick up and drop off customers’ cars – ideally at�� “Keeping our customer happy is our number times to suit their daily routine and not a busyone priority” workshop plan. Another technique to avoid�� “Our greatest asset is our existing customer” courtesy cars includes special offers, possibly�� “Only customers that score nine out of ten or including family or friends.higher are loyal promoters of our brand” Are your customers greeted by name? This is Customers’ expectations are extremely high in often possible, but requires that you paythe service sector, their purchases in most attention to the cars that are pulling into servicecases being distress rather than desired. parking bays. Top performing dealers understand this and Dedicated bays within view of the serviceknow they have been selected as the supplier of reception area can assist with this approach. Thechoice; their ongoing mission is to exceed highest success rates using this method areexpectations and enhance the customer linked with a dedicated meet and greeterexperience. employee, feeding the key data to the service team prior to engaging with the customer‘Offeringforward planning that caninvolves a courtesy car often directly upon arrival. The latest technology can assist with thisbe avoided if you arrange to pick up approach in busy aftersales operations usingand drop off customers’ cars ’ registration plate recognition as each customer
  9. 9. New car News Best News Used car Showroom Recruitment AM market practice digest market contactsWhen it comes to servicing, customers’ expectations are extremely highenters the site, the key data is populated opportunity, without inconveniencing theautomatically into the service advisers’ computer customer.screen, enabling them to create an immediate Are your customers ‘over’ upsold? The shortrapport and instil a confident professional answer here is probably not, but a customer isapproach. going to be interested mainly in their car repair so a balance needs to be struck here. Customer satisfaction through the service Increased investment in new technology suchAre your customers fully updated with progress as electronic vehicle health check systems was athroughout the service? This is often well necessary cost, leading to an increase incovered by telephone as any additional work is identified converted work, enabling betteran opportunity, but there may be other occasions measurement, reporting visibility and servicethrough the day to maintain a dialogue that team accountability, award entrants reported.ensures a satisfied customer. Again, this is on anindividual basis by customer. Customer satisfaction at handover and beyond The best performing dealers generate the You can’t control what you can’t measure.majority of their upsell revenue by ensuring they When it comes to customer experience at touchcan complete additional repair work the same points the more important question is can youday, in place of reporting and attempting to over measure? All applicants last year had CSIrebook the vehicle back in. analysis that showed where they needed to focus Recognised best practice identifies the need to and then, predictably, analysis that showed howleave 10% daily allowance within the diary applying that focus showed capacity to maximise the upsell Continued
  10. 10. New car News Best News Used car Showroom Recruitment AM market practice digest market contactsCertainly, all customer touch points need to be price matching option to win aftersales business,analysed and CSI used to improve the touch similar to the incentive widely offered to potentialpoint, but there are other underlying aspects to car sales customers.consider. For example, how can your customer Lastly beware the tendency to ‘over process’be sure they are getting the best price from you? any customer on vehicle handover. It is wrong toThe only way a customer can benchmark pricing assume that every customer will just acceptthemselves is to shop around. There may be perfect paperwork when they pay and pick upways you can start to manage this process for the car. There will be questions that servicethem. You can price match tyres using your reception cannot answer.competitor’s websites, for example, ideally with Robust handover techniques are always linkedthe customer present while waiting for you to to a detailed overview of what work has beenestablish pricing. completed during the visit. Not only does this Volume dealers demonstrating the strongest instil high levels of customer confidence, it buildsimprovement in CSI ratings assign their service the rationale for their invoice value leading to anadvisers to look after each customer from increase in trust and opens the doors for repeatintroduction through to handover, ensuring that business.all points of contact are made directly by one Particularly explain the things that have beenadviser. carried out for free, such as vehicle health The idea originated in the prestige sector and checks or manufacturer recall cross references.demonstrates that all customers now expect apersonal and dedicated approach to their needswhether they drive a Ferrari or Fiesta. ‘Robustlinked to a detailed overview always handover techniques are Many dealers are now offering a guaranteed of what work has been completed’
  11. 11. Best practice: AM Awards focusDistinguishing featuresof a bodyshop businessBy David Bale and Martin Harris, of MSXI These three fundamental features must be Automotive body considered when collision repair best practices repair is a challenging and processes are reviewed. business with features that Crash repair business trendsdistinguish it from general car aftersales. More collision repair businesses are considering Firstly, collision repair business volume is not and applying for manufacturer approvals orpredictable in the way aftersales service can be. recommendations and Kitemark accreditationAftersales service can target potential revenue Complex technology, including constructionbased on cars’ profiles within an area of materials and electronics in modern vehicles,influence. Seasonality (daylight saving, winter are problematic for non-specialist, all-makesmonths and bad weather) are areas where repairers with a growing trend towards highercollision repair patterns can be established. rates of vehicles being written off. SomeCrash repair manufacturers are now responding to the lossbusiness volumes rely heavily on OEM and of revenue by introducing schemes to supportinsurance company relationships. repairers with additional parts discounts and Secondly, crash repair work is not specific. subsidised safety-related items such as airbagsVehicle damage assessors are required to and control units.accurately assess each job and no two jobs are Marginal write-off cases are referred to thethe same. There is not the option of a straight manufacturer, enabling them to offer supportmenu pricing approach. which in turn leads to increased vehicle repairs. Thirdly, the nature of collision repair itself Rapid repairer buy-in is essential and timediffers from aftersales service. Typically a car in critical in these cases, as delays increase thefor aftersales service will complete one repair costs to insurance companies and reduce theprocess, but collision repair will need to move likeliness to convert incremental repairs. Athrough a number of repair stages: strip, panel successful case will improve turnover and profitrepair, paint and finishing and refit. Each of these for the collision business.stages needs to be optimised to ensure high Repairers need manufacturer approval toutilisations and profitability. access these types of activity.‘Some manufacturers areadditionalsupporting repairers with Marketing and business development Bodyshop operations applying last year for theparts discounts and subsidised AM Bodyshop of the Year Award all showedsafety-related items ’ active marketing and establishing their own
  12. 12. New car News News Best Used car Showroom Recruitment AM market digest practice market contactsMore collision repair businesses are applying for manufacturer approvals and Kitemark accreditationbrand within their local market area. A range of production of an accurate assessment.initiatives were employed from standard Correct estimating is a combination ofadvertising to e-media activity. Smart repair and experience, business knowledge, accuratewheel refurbishment are field type activities that reference information and, importantly, a highcan generate revenue locally. Targeting local level understanding of electronic estimatingcompanies’ fleets is an opportunity for a reliable systems. Vehicle assessors must also be awarestream of small and smart repair type business. of repair methods and a variety of incremental The benefits and increased profitability from sales opportunities.electronic vehicle health check systems in theservice workshop sector is now being applied The lean journeywithin the collision repair sector. The contents of Within the repair process itself, the bestthe health check can be adjusted to reflect the collision repair facilities have fully implemented adifferent services collision repair centres have to lean continuous process improvement typeoffer, such as smart repairs, wheel repairs or approach using IT management solutions insteadparking sensor sales. of visual aids. A number of software solutions are now All stations were rigorously maintained in aavailable, some even utilising mobile technology clean and tidy order via 5S. Process trackingenabling estimators to complete checks away systems were used to ensure that bottlenecksfrom the bodyshop. and gaps in daily activity at each point were identified quickly and minimised. The importance of accurate estimating Improvements in vehicle repair trackingThe one part of the collision business process software are helping collision repair facilities tothat must be completely accurate is the monitor and improve repair efficiency. This helpscustomer invoice. A structured and thorough the business in two key areas.inspection of the vehicle is essential for the Continued
  13. 13. New car News News Best Used car Showroom Recruitment AM market digest practice market contacts Management teams are able to produce andreview progress reports, identifying bottleneckswithin the repair cycle. This helps to plan andplace resource where it is needed. The collisionfacility operator is in turn able to react toincreased and decreased resource requirementsas the seasons change to maximise efficiencyand improve profitability. Customers can be kept up to speed with theprogress of their vehicle repair using trackingsoftware, providing updated estimations of whenthe repairs will be completed. In the mostadvanced systems customers can be informedautomatically as the car moves into the nextstage of repair, improving customer satisfactionthrough robust and consistent communication. Some bodyshops differentiate themselves byhaving the ability to take on specialist repairs orspecialist equipment for prestige brand repairs.Irrespective of this, the lean journey is seen asessential to running a profitable bodyshop. Repair StandardsThe industry agreed specification for vehiclebody and accident repair is PAS125. PAS125 can be implemented without the PAS125 details minimum requirements for Kitemark, but its presence allows customers tocompetent personnel, appropriate and well- be sure a crash repair site has beenmaintained equipment, suitable repair methods independently audited to ensure the safe repairand quality for repair materials. It also covers of accident damaged vehicles.processes and procedures to ensure the safe On top of the PAS125/Kitemark standards arerepair of accident damaged vehicles. the brand specific standards for manufacturer The BSI Kitemark is a certification scheme approved bodyshops. There is generally a lot ofwhich demonstrates that a company meets the common ground between PAS125 andrequirements of PAS125 and the Kitemark manufacturer specific standards and the trend isscheme protocol. BSI qualified trained auditors to make PAS125 a core component ofensure compliance on an ongoing basis. manufacturer specific standards. There are concerns in the industry regarding‘The leanto running a asessential journey is seen the content and interpretation of the standard and audit. These concerns will be reviewed byprofitable bodyshop’ the PAS125 steering group.