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Customer relationship management - Check out Tesco to generate ‘extra’ profits

For an example of what CRM is all about, you only have to look at Tesco and all those ‘extra’ benefits it’s obtained by drilling down into consumer behaviour. From its roots as a food retailer, the company has exploited its bank of customer information - via ‘loyalty’ cards - to branch out into clothing, electrical goods, financial services….well, you name it and Tesco now sells it.

Study the enterprise shown by Tesco and other top retailers and it becomes clear that automotive dealers have a lot of catching up to do.

The most important aspect of CRM is of course ‘relationship’.  A relationship is a connection and this connection, in a business context, is usually between a person and a business organisation. If CRM is to be effective, the business needs an insight into customers' wants, needs, lifestyles and behaviours so that it can develop a strong relationship with them. If the business achieves this goal and uses the information effectively, it will:

  • Provide better customer service
  • Attain new customers
  • Increase customer loyalty
  • Increase sales conversion rates
  • Achieve marketing efficiency and effectiveness
  • Increase transaction margins in all areas

So how can a dealership achieve these rich rewards?

Research shows that most dealers operate on a transactional basis with customers and prospects.  This means that the focus is on the ‘need of the moment’ rather than on a range of customer requirements over time.  For example, many dealers ‘sell’ an MOT or a repair without considering the next service or the next vehicle. 

Good CRM is not just the domain of high-tech multi-nationals utilising complex and expensive IT technology and systems; it is the lifeblood of every business.  Basic CRM systems could be operated using paper alone; the issue is not the technology but the recognition to regard every customer’s touch point as an opportunity to build a relationship.  Service advisors talk to customers about their vehicles, but not about the customers themselves.  Sales executives embark on product presentations without knowing who customers are, and without asking enough questions about customer’s wants and needs.  It is therefore no surprise that dealer databases are devoid of the essential ingredients of effective CRM, and contain only the contact details that are required to invoice the sale of the vehicle or the service provided. 

If good CRM is at the heart of business success, what can a dealership do right now? 

The answer depends on the strengths and weaknesses of the CRM system in place today, and therein lies the first issue on the road to improvement.  Many dealership managers are often unaware of the extent of the problem, the size of the lost opportunity and the action that should be taken.

Carrying out a CRM health check is a great starting point, and it’s important that the dealer principal is personally involved. Consider current behaviour and processes at each customer touch point, for example:

  • How complete are the customer records stored in the DMS and in any paper-based systems that may support the DMS?
  • What information about customers’ wants, needs and lifestyles are known or not known as the case may be?
  • What information is required but is never asked for?
  • Consider each customer-facing role
  • Are front counter parts staff building the database, or is everything invoiced as a cash sale’? 
  • Do service advisors record the vehicle user’s details or just those of the contract hire or leasing company? 
  • Do sales executives record the contact details for every sales opportunity?
  • Does any diary system ensure that follow-ups and next actions are not missed?  Does the system contain long-term as well as short-term actions?
  • What management controls and checks are in place to ensure the dealer team carry out these actions?
  • For the next product launch, would it be possible to identify target prospects other than by the type of vehicle that they bought last time?

Having evaluated the situation, it is then possible to develop a CRM strategy that involves the whole dealership.  In this way the jigsaw is pieced together by the team as a whole, and can be updated as customers’ needs change over time.

Will Landon is specialist projects manager with TTL consulting, established 10 years ago and working exclusively in the automotive industry, focusing on improving dealer performance. For further information contact Nikki Perham on 07971 784905 (website www.ttlconsulting.co.uk).

Loyal to the cause

Even in the internet age, customers still love to find organisations to which they can be loyal, according to a new book about the relationship between businesses and their customers.

The book's findings contradict the common view that consumers are increasingly fickle and are apparently never more than a mouse click away from buying from a competitor. As co-author Lyn Etherington explains: “In today's confusing and fast-moving business world, consumers are frequently bewildered and stressed by too much choice.

“Our research shows very clearly that consumers - and business-to-business customers - are delighted when they find a supplier they like, trust and feel really comfortable about sticking with.”

Central to the authors’ argument is the principle that there is a definite similarity between the loyalty people give to their friends and relatives, and the loyalty they bestow on organisations they trust. Such organisations are highly likely to be able to win a 'price premium', because these loyal customers attach greater importance to quality than to achieving the lowest price.

The book includes observations from people who head organisations that are known for winning customer loyalty. For example, Sir Terry Leahy, chief executive of Tesco, is quoted as saying: “What creates loyalty is how much we understand your life, and what we do that helps your life.”

Customer Loyalty, a guide for time travellers, is published in hardback by Palgrave Macmillan (Recommended price: £25).

ACTION POINTS

  • Define the objectives of your CRM strategy. What is great Customer Relationship Management to you?
  • Design how your system needs to be structured and work to deliver great CRM.
  • Agree what information is required and when.
  • Provide coaching support to staff who are not confident in asking the right questions.
  • Implement processes that enable the information to be stored and used to generate on-going sales opportunities. This could be as basic as utilising best practice customer profile documents or could involve more effective use of your DMS.
  • Shift the focus from product to customer. Encourage staff to spend more time understanding customers’ needs and expectations before presenting products and solutions.
  • Present benefits not features.  Help customers to see how your product or service meets their needs and their lifestyle, before asking them to buy it.
  • Build a database that contains a complete record of the contact details, needs and buying motives of your customers and your prospects.
  • Segment the database to enable cross-selling and accurate targeting of customer groups.
  • Schedule a range of meaningful follow-up activities for each customer and prospect to continue to build rapport, and to develop the relationship.  Make these contacts timely and relevant to the customer’s needs, not just your needs.
  • Conduct regular reviews of processes and procedures to ensure that your CRM objectives are being achieved; without these checks you can guarantee that they will not be achieved!