Mike Wilson 2020-07-24 02:14:33
WHY EVERY DEALERSHIP – NO MATTER HOW SMALL – NEEDS A CRM
Jeff Watson has done the math. He calculates it costs about $75 to get a customer to call about a car.
Not maximizing the value of that initial contact, he said, isn’t an option.
“That’s like throwing $75 down the toilet,” said Watson, owner of 4 Seasons Auto in St. George, Utah.
“I want to capture that guy’s info. I want to get his name. I want to get his phone number. I want to get his email.”
If a deal can’t be done immediately from that initial contact, Watson wants to be able to circle back – in two months, three months, six months – to try again to turn the contact into a sale.
So how can a dealer make sure that customer’s data is there when it’s needed?
That’s where a customer relationship management tool comes in.
A CRM’s primary job is to make sure dealers have what they need to make that $75 investment pay off in a sale.
Which is why industry experts and successful dealers say every dealership – no matter how small – needs a CRM.
CRM tools give dealers the ability to capture and store the chain of contact with customers. Instead of using post-it notes or scraps of paper to document leads, dealerships with a CRM have a centralized, organized way to manage their customers – and, just as important, their potential customers.
“It gives managers huge tools they’ve never had before,” said Brenna Stansberry, co-owner of Park Marina Motors in Redding, Calif. “It makes everyone aware of every lead.”
The right CRM tool can lead to highly efficient, effective contact with potential customers and capture every communication with them in the sales process.
The right tool can show where your marketing dollars are spent most effectively. It can lower the cost to acquire new customers.
It can help make sure the dealership is in compliance with privacy rules and other legal matters.
And it can, as the name implies, help dealers manage relationships with customers, leading to repeat business and referrals. So why doesn’t every dealership use a CRM? Complacency with their current workflow? Resistance to change? Cost?
AutoRaptor president Howard Leavitt said CRM isn’t so much of a cost as an investment.
Watson compared it to a utility.
“To me, your CRM is just a fixed cost,” he said. “It’s like having the power on. It just has to be there.”
Leavitt, who said his company’s CRM was developed with independent and Buy Here- Pay Here dealers in mind, has worked with dealerships of all sizes, and he knows what can come out of a CRM tool that is used as designed.
“The people who do that succeed dramatically,” he said.
Marlea Meese, sales manager of Shook Auto in New Philadelphia, Ohio, said when salespeople use a CRM to better track customers, they miss out on fewer sales.
“I’m curious why anybody wouldn’t want to use CRM,” she said. “One car deal can pay for your CRM.”
FOCUS ON ‘RELATIONSHIP’
Darren Harris, executive vice president of retail solutions and general manager of CRM for DealerSocket, stressed the importance of building relationships and thus lowering the cost of acquiring new customers.
By capturing as much data as possible about a customer, the CRM (and the dealer) acquires information that can trigger follow-up communication.
Take, for example, a customer who buys a car and mentions he or she has a child who will soon turn 16 and will begin driving in a few months.
Armed with that data, Harris said, the CRM can generate communication to the customer as the child approaches driving age.
That’s the kind of scenario about which VinSolutions senior director of performance management Mark Vickery said, “They haven’t told me they’re in the market – but I know they’re in the market.”
The right CRM, he said, allows dealers to prospect their database for those customers. Having that relationship means a dealer doesn’t have to pay an Internet lead provider to get in front of the newly minted driver.
“At the end of the day, you’re trying to average down the cost to acquire new customers,” DealerSocket’s Harris said. “And that’s what CRM is trying to accomplish.”
WHAT DO YOU KNOW ABOUT YOUR BUSINESS? ARE YOU SURE?
A CRM can provide important information about a dealership’s business that the owner or manager might not have considered.
The system can extract actionable data on customers’ demographics, their average down payment, the cost to sell a car and other information.
A dealer might have a gut feeling or a solid hunch about some of those data points, but “a CRM has the ability to look at that data more intelligently and more insightfully,” DealerCenter senior vice president of sales Jesse Martin said.
One of the most valuable functions of a CRM, experts said, is the ability to track the return on investment in marketing.
An effective CRM can identify how many leads and conversions came from various origin points, allowing dealers to calculate the most effective distribution of their marketing budget.
“A lot of dealers, if they don’t have a CRM, they’re not tracking the ROI from their Internet leads,” said Zach Klempf, CEO of Selly Automotive. “They’re not tracking their sales cycle, their cost per sale.”
In other words, they’re not comparing the cost of getting, say, 12 leads and two conversions from one third-party site and seven leads and three conversions from another.
“If you’re only doing 10 sales a month, you can go back and track where those sales came from,” said Watson, the Utah dealer. “But do you know how many actual contacts you got, how many people called you, how many website inquiries there were and where they came from?
“How else are you going to know if you’re spending your money right?”
And that, DealerCenter director of sales Alex Resurreccion said, is something of a Holy Grail.
“That in itself justifies the cost of a CRM – just being able to look at return on investment from where their marketing spend is going,” he said.
WHY OLD METHODS DON’T WORK
Probably everyone involved on the provider side of CRM has an anecdote about the outdated ways leads have been tracked through the years – Rolodexes, ledger books, index cards…
There’s a reason they’re outdated.
“You can’t humanly remember all of the leads and inquiries that come in,” said Steve Ivey, co-owner of TennMotors in Johnson City, Tenn.
VinSolutions’ Vickery said the automotive industry has trailed the business world as a whole in the adoption of technology, and independent dealers trail franchise dealers.
It’s telling, he said, when franchise clients end a contract for VinSolutions’ CRM.
“When we lose a customer at VinSolutions,” he said, “we very rarely lose a customer to index cards.”
Ivey said using the best practices he learned from his time with franchise dealerships influenced his mindset when he opened his independent lot a couple of years ago.
“The very first thing we went out and got,” he said, “was a CRM.”
Efficiency is another attribute of a CRM tool compared with any form of paper-and-pen system.
Driver’s licenses can be scanned and the data input without the chance of data entry errors. Standardized forms need to be filled out only one time.
Meese noted the system at her Ohio dealership allows for income and employment verification.
“That’s huge,” she said, “especially when you’re dealing with subprime deals, where proof of income is so very, very important.
“Walking into the deal, you know what the income is.”
Klempf emphasized the importance of compliance as another attribute of a CRM.
“Dealerships are dealing with really sensitive financial information,” he said. “A customer might send a pay stub, a copy of his driver’s license. You do not want that information on your salesperson’s mobile phone. You want it locked down in a system.”
WHAT TO LOOK FOR IN A CRM – AND YOURSELF
CRM tools differ in their configurability – that is, how close to “custom” it will look for your dealership – and their functionality in some areas, such as data mining for prospects.
But the experts agreed there are essentials dealers should look for.
• Mobile capability.
• Integration with the dealership’s dealer management system and other software.
• Ability to track sourcing on Internet leads.
• Scalability, to ensure the tool will continue to work as the dealership grows (or shrinks).
Experts also stressed the best CRM tool is only as good as the buy-in from the sales staff and manager.
The tool must be used to provide any benefit. If the person responsible for buying a CRM can’t or won’t enforce its use among those on the sales floor, the tool will fail.
In every dealership, Auto Raptor’s Leavitt said, the CRM needs a champion.
“In a lot of cases, the person who makes the decision isn’t connected to the sales floor,” he explained. “Since [the manager] didn’t buy into it, guess what? The salespeople aren’t going to buy in to it.”
Added Vickery, “The onus on accountability rests solely with management.”
Ivey said he consults the CRM every day and uses it to hold salespeople accountable to follow up on leads. “I inspect what I expect,” he said.
Meese said her solution to salespeople who aren’t robust users of Shook Auto’s CRM is simple.
“They don’t get Internet leads anymore,” she said. “If you can’t use the CRM, you don’t need to be in the round robin for Internet leads.
“Giving somebody leads who isn’t going to follow the system is like throwing advertising money in the trash.”
CRM providers say learning to use the system shouldn’t be difficult even for those averse to adopting new technology.
“I think it’s less about learning the actual system and the how-tos, and more about the why-tos,” DealerCenter’s Resurreccion said. “It’s understanding why a customer would go from this status to that status, and the importance of not skipping steps and tracking everything you do.
“Once they understand that fundamental aspect of how the cycle works, that’s when they really start to adhere to some of the principles CRM offers.”
The important thing, he added, is ensuring “anyone who works for you understands where the customer comes from and how to have the most effective strategy to get them to a sold customer.”
Vickery said dealers should want a CRM vendor that will not only provide training and ongoing instructional support but also work with them to ensure they’re operating the tool to get the most out of it.
“Are you [as a vendor] going to come to me and hit me between the eyes with what I’m doing wrong?” Vickery said. “Because if the answer is ‘No,’ I don’t think I’ve really got a partner that is going to help me succeed.”
Meese said it’s also important to know what happens to the dealer’s data if the relationship with the CRM vendor ends.
How easy is it to extract the data and claim ownership of it?
But while dealers should understand what happens if there’s a “breakup,” they should also know that, like a marriage, the dealer’s relationship with a CRM requires dedication and commitment.
“You want to make sure you understand it and you commit to it,” Watson said. “We don’t want to switch. That’s a painful process.”
MAKING THE MOVE
Derrick Lopez, owner of KNS Auto in Hasbrouck Heights, N.J., has made the commitment to start using a CRM.
“I think it’s vital to any business today,” he said.
Lopez said he is looking for efficiency – “If I have to invest 10 or 15 hours a week on my CRM, it’s not really worth it” – and for something that will capture data from emerging marketing platforms such as Offer Up and letgo, which he says are becoming the source for the majority of his leads.
Dealers looking for a CRM system need to gather as much information as possible before making a purchase. Consulting with peers in the industry – such a colleagues in a 20 Group – can produce a lot of valuable insight and feedback on the CRM tools available.
Dealers should understand contract terms, including whether the agreement is month-tomonth or year-to-year, possibly with a specific window for not renewing a contract.
Every dealer has specific needs that are musthaves from a CRM, whether that’s ease of use, integration with certain types of software, a text messaging platform, automated emails or other features or functions.
But CRMs are not one-size-fits-all. Small dealers in particular need to be mindful of cost and make sure they’re not paying for features they can’t use. If your dealership doesn’t have a service department, for example, do you need a service scheduler?
Not every CRM is right for every independent
dealer. But the evidence is strong that every dealer – regardless of size – needs a CRM.
It’s time to retire post-it notes, index cards and ledger books for good.
“I think anyone who has used a CRM,” Resurreccion said, “can honestly say they can’t go back to not using one.”
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