Here’s some good news – well, maybe. Customer Retention started to get some real attention a few years back and that was great for our business. Really great and way over due, if you ask me. But, what really bothered me was the reason it started gaining all of that increased focus. You see, most of the factory gurus had finally decided to put an end to the old CSI scoring fiasco, since most of us had figured out how to make those numbers be whatever we wanted them to be.
So, the factory decided to go after a new target – and that target was, as most of you know, Customer Retention. They figured out a long time ago, that if they tie enough money to a target, dealers will do whatever it takes to reach the goal (and if they don’t reach the goal, then they don’t have to pay them – how cool is that, for them). And, since the old concept of CSI scores got so manipulated and abused and didn’t really do what they wanted it to do – they decided they would pay for Customer Retention scores instead of Customer Satisfaction scores.
Now, I have to admit, when I first heard about this new direction they were headed, I was really excited about it. Finally, I thought, after all of the years we had been talking about Customer Retention, something was actually going to be happening this time. Surely everybody would understand that retaining customers could grow their business and not only get customers to come back and spend more – but, it would also earn a nice bonus check from the factory. The idea was simple – do what is right, take care of the customer (and I mean, really take care of them) and make sure they came back to your store for service and/or to buy new vehicles. When they did return, everybody won! Yeh, baby – that’s what I am talking about.
But, (and I know you could tell this was coming by the way I built that last part up), there was a major flaw in their plan. While it makes total and complete sense to retain customers, do what is right, make sure they are happy, make sure they come back and never want to go anywhere else because of the way you do business… I found a nasty little fly in the ointment. The numbers were being played with. But how, you ask, could anyone manipulate the factory’s seemingly simple, real-world equation? A customer comes in for service, spends money, leaves happy, comes back and spends money again…a simple case of a retained customer right? Wrong. Click your heels, Dorothy, you aren’t in Kansas anymore. There was more to the story.
While it seemed to me (and I guess the factory, too) that this was the one thing nobody could cheat on – some guys (and I won’t name names) began finding ways around the normal, common sense rules of “do what is right and retain your customers”. Just as intelligent thieves concoct elaborate, complicated and almost fool-proof plans to commit major crimes – there are among us folks that would rather spend their (valuable and limited) time trying to beat the system. Folks spending time manipulating these numbers, just like you know they did the CSI scores, instead of doing the right thing and making the system work for them.
What am I talking about, you ask? How could they beat this one – it seems impossible. Ok, say you have a good grasp on the way the new plan works. Customer Retention, as the factory typically sees it, is described as a series of recurring customer pay events within a given time frame. So if a customer comes in today, spends money in service and then returns again within 12 months (depending on the manufacturer), and makes another customer pay service purchase – that is considered to be a recurring customer pay event and , in turn, you would have created a ‘retained customer’. Ding, ding, ding – ring the bell man – we have reached our goal for Customer Retention, right? But not so fast, bub. I have heard of and met dealers and service managers that have figured out several different ways to beat the system and here’s just a small sample:
A customer comes in for a warranty repair, and that’s all, no customer pay service. So that wouldn’t count as a customer pay event and that customer is not technically “retained”, and that sucks. So, now get this – the dealership “charges” the customer for something inexpensive on a customer pay repair order, and then charges the expense to pay that repair order to policy – you know, goodwill for the customer, because the dealership is just the nicest place on earth to do business with, right? What am I talking about? How about a set of wiper blades, a key fob battery, resetting an oil monitor light, adjusting tire pressure, adding nitro to tires…all at no charge to the customer? But, they created a customer pay repair order (customer pay event) that the dealer then charged to policy. And, sometimes, the customer didn’t even come in to the store; they would just pull names out of history, write a repair order for some small customer pay purchase and charge it to policy.
Now, don’t get me wrong. I am not ratting anybody out – I’m not! And I’m not writing this because I think the guys that are doing this are bad guys or cheats. The car business is just full of creative, motivated, aggressive, no excuse, goal-crushers that are simply trying to make money. I understand that, hell I am one of them. I am writing this because I want you all (including the factory) to think about what you are doing here. Doing the right thing shouldn’t have to be tied to a bonus from the factory. They do that because, quite frankly, that is the only way they think they can get you to do it. In other words, it is their way to control their outcome and decide which guys get to buy more stores. I get that and most of you do too – and it’s okay. What really bothers me though is that for years we all talked about Customer Retention and how important it was to growing our stores and really moving the needle. Now, you have a chance to do what a lot of other “real dealers have done that get it” and have put processes, systems and products in place to improve Customer Retention. My message is, that this is your chance to do the right thing because you know it’s right, not because it’s tied to another factory bonus program. And that really is my point behind this article.
So, to the ‘cheaters’ (creative guys): stop spending so much time trying to beat the system and start spending more time doing what you know is right to help grow your business. Make sure you and every employee at your dealership understand that Customer Retention is not just a pair of buzz words or the topic for an annual meeting. Get serious about retaining customers and stay focused on it every single day. When you really, really, really decide that you want to retain every single customer and you realize that you will stop at nothing to get your customers to come back when they need service, parts or a vehicle – that is when you will see the real bonus – and it is much bigger than the factory’s spiff. I promise you!
And don’t fake it, go do it, and do it for real. Make sure your customers know you care. Make sure they see it in the way you operate your store, how nice your customer service staff is, how clean your waiting area is, how competitive and convenient you are and how you reward them for their loyalty. Make sure you put in some kind of an ongoing program that keeps your store “top of mind” so they don’t forget about you – and make sure you give customers real reasons to never go anywhere else. Go ahead, do it, you know you can do anything if you want it bad enough – so want it bad enough, ok? What’s it going to take to ‘get you’ to ‘get this’ idea?
Alright, I threw the rock, made some guys mad, and it hit some of you (I hope) if you needed to be hit. So, now it is up to you. Do what you know is right. Do what you know needs to be done. Get involved – get engaged with your customers and your employees. Let them know this wasn’t just a fad and that you are serious about Customer Retention because it is the right thing to do to build your store and your future – not just because the factory is pulling the strings and forcing you to do it. And let them know that if any of your people ever come up with some scheme to manipulate the factory’s metrics that this is not just about the numbers – it is about changing the way your entire organization embraces the concept of retaining customers and building for the future.
If you get nothing else from this article at least think about this:
If your employees are constantly figuring out ways to take advantage of the factory or your customers – you can rest assured that they are also figuring out ways to take advantage of you and your dealership. Remember: if you play with fire, eventually, you get burned!