23rd October 2014

Great news! After close partnership with key management hardware provider Traka forged over more than 10 years, we’ve struck an agreement today to be acquired by the firm. So eTag Solutions, already the premier provider of electronic key management systems for automotive dealerships, now joins forces with the leading key cabinet manufacturer in the market, to create a brand new combined entity called Traka Automotive. Traka has created this new division in order to increase focus and direct more resources into serving the automotive market in a highly targeted manner.

All our staff will move across to Traka Automotive today and you will see no disruption to your services during the transition period. Medium and longer term however, it is great news for you now that we have access to more resources and a very powerful international distributor network. It also gives us an ability to build new solutions for the automotive market in a way that has been impossible up until now.

Our acquisition follows a period of unprecedented growth for eTag Solutions.  In the last few years we’ve seen electronic key management systems go “mainstream” – being viewed by most modern dealerships as an essential tool for securing assets and improving operational effectiveness.

It is great to be finally offering both the hardware and software elements of the key management system under one roof. It will definitely enable us to be more responsive to market needs and assist customers to optimise their past and future key management investments. So please watch this space for exciting new announcements! Let’s talk very soon.

If you have any questions please do not hesitate to call me on 0845 2252910 or email [email protected] or [email protected]

Yours sincerely,

Paul Smith
Director
Traka Automotive

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

Aftersales on back burner?

2013 saw 2.26m new cars sold from UK dealerships breaking all records. Over 74% of these new cars were bought through finance agreements putting more cash into dealerships’ coffers.

This new car sales bonanza looks set to continue through 2014 - the Society of Motor Manufacturers’ and Traders (SMMT) has just revised its 2014 forecast upwards to 2.4m registrations –promising a 6% rise on an already record year.

With all these positive sales numbers it is easy to see why many dealers are simply focusing on increasing sales volume rather than what they should be thinking about - calculating the lifetime value of each of their increasing numbers of new customers.

Once this figure has been calculated at point of sale, DPs can work with aftersales managers to draw up a strategy for increasing the percentage of each customer’s lifetime value that they can retain in-house.

Using new car sales boom as a platform for rolling out a strategy for securing higher percentage of customer lifetime value

I’m talking now about using the current sales boom to build a long-term platform for higher margin aftersales business, something which far too few dealers are even attempting to do in their quest to process more sales today.

By getting too one track-minded, they are failing to capitalise on the very sales increases they are generating in advance of leaner sales times that must come. They are not placing a high enough value on the whole lifecycle value of each of these new customers.

There should be several things happening during purchase which, in the main, we are not convinced are happening today:

1.      Not enough customer information is being captured at point of sale about why the customer bought the car from your dealership

Questions should be asked such as:

a.      Why did you choose the car you went for?

b.      What went well during the pre-sales process and what did not go as well?

c.       Which aftersales packages did you purchase and which did you not and why not?

d.      Do you have an alternative servicing garage in mind for your new car?

e.      How do you preferred to be communicated with by us (if at all)?

For example we believe that when new cars are being sold that the salesman completing the handover should also walk the new customer around to the aftersales department. Cards can be exchanged and connection established with a member of staff there. That after sales person could even diarise a call for a few weeks hence to make sure the new car has no teething problems. In short the handover to aftersales can and should be done then and there as once the car has been driven off the forecourt the salesman’s connection with the customer is effectively at an end, at least for the next year or two when the finance package stimulates a return trip to the showroom.

2.      This information should be stored on the dealers’ CRM system. Marketing campaigns should then be run to specific types of customers based on their preferences.

For example it should be possible to reach customers which have agreed to you TXT messaging them with aftersales offers specific to that individuals sets of concerns.

So one personalised message might be: “Dear Mr Smith. We hope you are enjoying your new VW Golf. Are you aware that in order to maintain its fuel efficiency at peak level you need to clean/replace X part within 15,000 miles? For the next 2 months we are offering 30% off all servicing costs associated with this part replacement and we will also provide a courtesy car free of charge. TXT xxx if you want one of our mechanics to call you.”

Personalisation pays off

Marketing messages that offer an element of timeliness and relevance and truly add value to specific customers will be the most effective ones and offer the highest sales penetration rates. You should monitor the response and conversion rates relevant to more blanket catch all campaigns like the ones we all get for ‘Preparing your car for winter’ which fail to differentiate your service and generally fail to excite.

The facts are that right now many dealerships don’t offer compelling enough reasons to stay with them for servicing and other maintenance.

The fact that 20% of Mini owners are going to independent dealerships despite purchasing their TLC servicing package which provides all servicing costs for five years or 50,000 miles:    http://www.am-online.com/news/2014/6/23/quarter-of-mini-customers-head-to-independents-despite-already-paying-for-franchised-service-plans/36318/

This is despite the fact that the TLC package is sold to 97% of new owners and is transferrable to the new owner if within the life of the package. This example illustrates the problem – many customers are running a mile to avoid apparently high charges of aftersales and servicing in dealerships and dealerships need to work much harder to win them back. The dealership ought to be checking in with the customer and offering preventative maintenance options in a timely manner through their communications channels of choice. But how many dealerships are doing this in a consistent manner today?

We think the bulk of the real lifetime value of new customers is still walking out of the dealership with the new car, never to be seen again until the finance agreement times out or some other upgrade opportunity arises.

One clear solution is to align aftersales campaigns much more closely with CRM system-held intelligence and multi-channel marketing campaigns.

In this way all that investment in improving your websites’ look and feel can be put to work to deliver mini-campaigns to boost aftersales alongside the burgeoning inventory or images and descriptions of new and used cars increasingly finding its way onto your website.

Aftersales options also deserve a more significant place on your website but that topic is for another IMD blog post. Watch this space…

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

M-revolution

During the last few months we’ve been noticing a wave of interest in mobile communications and mobile marketing as part of an online strategy for stimulating car sales so we thought we would take a closer look at the m-commerce revolution and what it means for UK car dealerships.

Firstly it’s important to look the key areas that you may need to consider as these are the building blocks of a great mobile comms strategy:

1.      Mobile website

2.      Mobile Wallet

3.      QR Codes

4.      Mobile Apps

5.      Texting

6.      Responsive Email Design (RED)

Mobile Website

The key is to have a website which views well on mobile devices including tablets, smart phones and laptops. You should also tailor content so it’s easy to read on the move. Adding a well-flagged Click To Call (CTC) button on the mobile site for example is likely to be a big winner for mobile users who are busy and don’t want to search through a site for contact details. CTC; according to new statistics from the Google Think Insights published in Auto Retail Bulletin this month; is one of the most-used features on the mobile search engine results. 70% of mobile users have used CTC to reach the businesses they’ve found via their mobile. More importantly for sales departments, 61% of mobile searchers say that this option is most important at the purchasing phase – at the end of the sales cycle.

So the calls that are coming through off Click To Call buttons are likely to be red hot leads – quite possibly in your area right now looking to book a test drive or even buy a car. CTC is also valuable for mobile search ads – producing an average click through rate increase of 8%.

Location-based promotions & information provision

There has been a great deal of innovation going on in areas like location-based offers which could now be considered for application in dealerships. So for example Apple has begun installing iBeacons in many of its US stores. These sensors are placed on tables that hold Apple products. They allow customers to sign up for a notification on their iPhone to receive more pricing and features information on the product that customer might be looking at. The technology could be used to:

·         provide customers with details on upcoming workshop sessions on new products

·         locate customers waiting for Genius Bar appointments

·         presenting relevant adverts and promotions related to products that are close by.

For those looking at their phone regularly (and that’s most of us now) this could definitely assist the in-dealership experience and create an engagement which browsing customers might not otherwise get. Location-based offering, supported by information provision to the mobile, would seem to be something which dealerships ought to be looking at as part of their mobile strategies.

QR Codes

QR codes have, for some time, seemed like a solution looking for an application. However, if they can be used to provide mobile users with access to data and downloads which they value, then we think they can deliver real value to dealerships.  Directing mobile browsers from the QR code to your website’s front page is not good enough. But if you could use the QR code to push customers towards your new Mobile App for car configuration or car financing, then this would seem to be a great way of engaging them. For example, have you thought about putting QR codes on the specification/pricing sheet in the window of each of your used cars on the forecourt for customers to scan and read more about the vehicle and financing options in depth when they get home?

Mobile Apps

We predict an explosion of the development of mobile apps geared to helping provide customers with timely and easy-to-grasp information to assist their buying decision-making on the move. Much more on this in future eTag blog posts.

Texting

Texting deserves special attention in the mobile strategy as it has clear application for car dealerships. Clearly you will need to set guidelines for style and content of text messages to customers, even scripting key messages that might be used regularly. You can monitor and control what texts are going backwards and forwards by running all messaging through a central console. Several service providers offer these. Look out for a solution which automates opt-out permissions; tracks text transcripts; and provides user documentation designed to reduce compliance risk.

You will also need some familiarity with upcoming EU Data Protection legislation which is about to affect direct marketing and communications with customers. If the current proposals go through, then businesses will have to ask all customers for explicit permission to use their personal data for day-to-day activities currently taken for granted. Companies who can demonstrate that customers will get real value in return for their data will be the ones who thrive under the new rules.

But once the management systems have been put in place, texting has clear advantages for delivering timely information to customers. Messages like: ‘Your Vehicle is Ready’, ‘Your part is now in stock’, ‘there is a new special offer on the car you were looking at last time you were in’, ‘your MOT is due for renewal next week’ or ‘we’ve valeted your car free of charge’; if sent in a timely manner, are likely to be very helpful and will inspire genuine customer loyalty.

Responsive Email Design

Responsible Email Design (RED) is worth considering that if you are doing eNewsletters and other outbound email-based communications regularly. You must design these for reading on small format smart phones as over 50% of them will be viewed and read in this way now. Mobile-specific design expertise can enable you to get your communications right. Have a look at: http://www.campaignmonitor.com/guides/mobile/design/. There are lots of RED software offerings out there now and your email marketing provider should also offer their own mobile-specific RED templates.

There are lots of things to consider so I thought I would leave you with a few technical tips for RED for mobile:

·         Single-column layouts that are no wider than 500 to 600 pixels work best on mobile devices. They’re easier to read, and if they fall apart, they’ll do so more gracefully.

·         Links and buttons should have a minimum target area of 44 × 44 pixels, as per Apple guidelines. Nothing is more unusable than clouds of tiny links on touchscreen devices.

·         The minimum font size displayed on iPhones is 13 pixels. Keep this in mind when styling text, because anything smaller will be up scaled and could break your layout. Alternately, you can override this behaviour in your style sheet (do so with care).

·         More than ever, keep your message concise, and place all important design elements in the upper portion of the email, if possible. Scrolling for miles is much harder on a touchscreen than with a mouse.

·         When possible, use display: none; to hide extraneous details in your mobile layout. Elements like social sharing buttons may be great in the desktop inbox, but aren’t always easy to use by the recipient on mobile devices.

When mocking up an HTML email or template, our advice is to create two sketches or wireframes - one of the desktop/webmail layout and one of the mobile layout. Keep in mind where your Call To Action button, such as ‘View deal’, appears on both layouts. Is it immediately visible when the email is opened on a smart phone? Or does the recipient have to scroll down in order to see it?

Do you see strong potential for mobile in your dealership or do you still think it’s too early to invest more senior management time and marketing budget?

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

Stock levels may have risen too fast in last 6 months

After a record year for new car registrations in 2013, many have poured cold water on 2014’s prospects. The statisticians have been fretting about the rise of stock investment by UK dealers which rose 13% last year, tying up an additional £60,000 in an average dealership according to profitability specialist ASE.

The size of used car stocks increased by nearly 10% in 2013. ASE is watching carefully how this additional stock of cars translates into profit over the next six months. There is a real risk that the over-supply of used cars that has been building up in recent months will start to suppress prices which are currently commanding average gross profit margins of a healthy 12%.

Overall the average dealer made net profit as percentage of total sales of 1.4% last year, up from 1.02% in 2012. But the longer term picture, as outlined by ICDP in its 2013 edition of the European Car Distribution Handbook, is that both aftersales volume and value across Europe as a whole are declining, according to ICDP’s latest predictions:  https://www.icdp.net/our-services/publications/publication.aspx?pub=10052.

How will dealers buck this aftersales decline and where else will they be able to find sales and profit margin?

Business manager looks like a good investment

We believe the increase in sales over the last year now needs to translate into an increase in the sale of service plans for used and new cars to insulate dealers from potential falls in used car margins.

To this end, dealers need to look to hire a good business manager if they have not done so already. Trend Tracker points out that dealers employing a business manager have a finance penetration 5% higher than those that don’t. The fact that nearly three-quarters (74.2%) of all private new car registrations in the 12-months to September 2013, were sold with finance or leasing arrangements, says it all. PCPs and other personal lease products had a particularly strong year.

The signs are positive, as car parcs swelled last year so did absorption levels as more service plans were sold and after sales received a significant shot in the arm – increasing by several percentage points through 2013, boosted by marketing initiatives such as vehicle health check promotions; better tracking and retention of customers post-sale through use of CRM systems; as well as promotions of new car service plans and MoTs.

There has been widespread frustration about manufacturers’ wider application of fixed pricing for maintenance packages but dealers still found themselves able to vary servicing packages according to the age of the vehicle and cost of labour and workshop loading. There will need to be more of the same in 2014.

Interactive mobile revolution

The other big area of investment this year will surely be in improving the online buying experience. AM carried a piece last month on augmented reality which offers an easier way for prospective customers to look at the specification of cars and really get ‘under the bonnet’ of a potential new car online.

Augmented reality apps use the camera of a smartphone or tablet to overlay information, images, video and web links on top of static images or printed pages. Now that sales of tablet have exceeded 20m in the UK and mobile internet usage is set to surpass PC-based access this year, 2014 is surely the time to start planning for improving your online stores’ mobile browsing experience.

Website visitors are increasingly expecting to be able to click into 2D images and hypertext links to more information. In this context augmented reality views of cars displayed on dealer websites makes absolute sense so that the engaged customer can view specification details or upgrade options by hovering over the area of interest on the car and then clicking in at will.  It is also important to consider the customer journey from there so that, for example, once a car and series of upgrade specifics have been selected, the visitor can be taken through to an online order sheet to analyse the resulting impact on the total cost and monthly payments. Building up the online customer journey; by making it more visual, entertaining and joined up; will surely be a key goal for DPs this year.

Summary

Industry analysts predict that there are tougher times ahead for main dealers particularly in after sales volume and value Europe-wide. UK dealers will have to work harder than ever to stop customers moving their servicing to the independents.

As well as investment in engineers and equipment for their workshops; they will also need to look to hire business managers to focus more heavily on F&I; while also investing in improving the experience for online visitors, especially these coming in from mobile devices. It’s important to recognise that more than three-quarters of pre-sale research by car buyers is now happening online and the number of visits to dealerships per car sale continues to fall – now sitting at 1.4 down from 4.5 visits per sale in 2005. Customer buying habits are changing fast and dealers need to get with the online retail revolution fast or risk losing out.

What else do you think is important for UK dealers to focus on to avoid after sales volume and value declines which ICDP predicts? Do let us know.

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

A skim read of AM and other dealer-focused trade magazines in recent months might fool you into thinking that UK car dealers are operating in a buoyant market in which they can do no wrong. New car sales are set to exceed original 2013’s sales forecast by more than 200,000 units, hitting 2.25 million registrations by year end, up from 2.04m in 2012. It gets better, the National Franchised Dealers Association (NFDA) recently reported: “the market will remain strong in the New Year as consumer confidence continues to grow as the UK economy continues to recover.”

With positive numbers emanating from most major groups and city analysts indicating that many publicly listed groups like Vertu Motors are under-valued; it seems likely that these groups will have more shareholder funds to invest in further acquisitions in 2014. Yes – the large chains are going to continue to expand, the consolidation trend may even accelerate as we slip slowly out of the deepest recession since the 1930s.

So why worry I hear you say? But underneath the positive growth charts there remain deeper concerns which have been brought about by changing customer behaviour. Dealers are not immune from the paroxysms that have already hit high street retailers up and down the land. You guessed it: we are all going online to do our research and plan our big ticket purchases – new and used cars included.

But what should a dealer be spending their hard-earned money on to ensure they are seen online and remain visible in their core catchment area - capturing the interested buyer early and making sure they buy from them rather than the one down the road or out of area? One area where investment is badly needed is digital marketing and thankfully there are lots of suppliers with expertise in our market that can help you including Razsor and Greenlight.

But if you are investing more heavily in online marketing, something has to give now most of us are operating close to industry average return on sale margins of 1.3%. One of the areas that they might choose to hold off on is that dealership refit which your manufacturer may be asking you to fork out for.

A recent paper from automotive analyst ICDP encourages UK dealers to push back on expensive refit requests in favour of getting some more fundamental issues right – namely customer service: http://www.am-online.com/news/2013/12/18/car-dealers-the-property-timebomb-/34117/

Deeper reading of ICDP’s research findings uncovers another potential point of friction between manufacturers and franchisees: namely their attempts to micro-manage franchises in the area of customer service through enforcing top-down standards, bonus structures and CSI scores. ICDP observed that these systems are actually part of the problem rather than the solution. Their research from talking to customers that have recently bought new cars this year reveals a very different picture from published CSI scores. One part of the problem is the heavily bonus-orientated dealership sales force which sets up a dynamic which encourages individual success over team work and joined up thinking. Handovers between different people in UK dealerships can be poor or non-existent. Staff turnover runs high because the best salesmen go where the best bonus is on offer and dealerships tend to spend less on staff training as a ‘survival of the fittest culture’ starts to pervade. When compared with the US dealerships, too many UK dealers still serve up a pretty shoddy and disjointed customer experience as a result.

If the Apple Genius Bar customer service experience is the new retail customer service benchmark then the first thing that needs to happen in dealerships is to increase base salaries as a proportion of overall packages - decreasing the amount salesmen have to sell day in day out to take home a decent wage. I know this sounds potentially expensive but we would argue it’s better to spend more money, time and effort on getting your most important and influential asset right – your people – than on flashy interior design refits.  This is clearly only possibly if you have utter confidence in the strength of the brand you are selling and the sales potential of the locality you represent. If these fundamentals are in place then these sorts of changes can be made. Manufacturers themselves can help by giving their dealers the confidence they need to make these sorts of changes for the good of the business longer term.

Successful dealerships like the Arbury Motor Group (profiled in AM this month) seem to marry a hard-edged focus on the numbers with strong people skills, even fostering a family-business mentality that looks after its people.  We’ve met several dealerships with enlightened recruitment policies. Some like CJ Automotive http://www.cjautomotive.co.uk are hiring based on attitude. Previous automotive experience is not critical in ‘front of house’ roles as long as they are able to look after the customer and have a can-do attitude. 

From people to place - surely one of the key things about a dealership is its locality i.e.  its proximity to a large enough catchment of potential car buyers? So I would argue that dealerships need to work harder to market themselves as a company that is embedded in the local community.

Clever digital marketing techniques, like those espoused by the likes of Razsor and Greenlight, offer the potential for dealers based in, say, Hemel Hempstead to dominate the searches on the brands and models they sell made by online enquirers within 25 miles of Hemel. But once you have their attention, you need to get engagement. We’ve talked before about the need to offer appealing online content in previous ImproveMyDealership blogs so we won’t reiterate this here. Whatever the idea to pull the customers in, the objective must be, to be considered as a ‘destination’ to experience the prospective car earlier in a buying cycle which generally begins online today.

There appear to be other common routes to financial success.  A higher focus on F&I is definitely part of this picture. Financing, insurance and trade-in value options and calculators all must be offered on your website. Products such as PCPs have worked particularly well for many dealers in recent years, partly because prices of used cars (especially those 2-3 years old reaching the end of contract periods) have generally gone up and stayed up. In this way dealers are also able to offer a wider range of options to visitors to their dealerships. Other large chains have diversified into higher margin prestige cars and found growth that way.

Yet most dealers do not appear to have fully arrested the industry-wide decline in service revenues: http://www.motortrader.com/latest-news/dealers-urged-reverse-absorption-decline/,  so that today even the most well run dealerships have overhead absorption rates settling at 60% which is a full 20% below ASE’s benchmark percentage. To top this, new car sales margins remain razor thin. Arresting the after sales decline will surely be on the 2014 To-Do lists of many dealer principals.

So our 2014 Top 6 Priorities for Dealer Principals are:

1.      Push back on manufacturers’ premises refresh demands

2.      Consider re-balancing remuneration levels more in favour of salary if you detect your customer experience is disjointed and an everyman for himself culture is pervading the sales floor, invest in training and process to improve the customer experience

3.      Invest in digital marketing to engage with prospective car buyers before they arrive at your dealership

4.      Look closer at F&I sales and provide more options and flexibility to customers – offering them information and calculators online so they can educate themselves a little before coming to branch

5.      Develop a strategy for building your profile locally – both online and on the ground. More events, test drives, online videos, social media comms activity with lots of customer feedback will all help drive up the positive profile of your dealership

6.      Consider new ways of packaging and marketing your after-sales offers to new customers to improve those absorption levels. Service Plans are an obvious starting point but there are other ways you can personalise your service. Personalisation is a word we’ll be hearing a lot more of in 2014…..

Do you have any other priorities for 2014 to halt shrinking margins and falling overhead absorption levels?  Do let us know.

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts (which we will issue every 4 weeks) on exploring avenues to efficiencies and higher profitability for dealerships.

I recently read an article by the BBC’s long-standing global business correspondent Peter Day. The piece was based on the BBC Radio 4 programme he hosts called World of Business. Entitled The World Turned Upside Down it elucidates Day’s reflections based on conversations he has had with leading business thinkers over the last 10 years. Its central thesis is that we are at the start of a post-industrial revolution – an era in which the business winners will be those that can precisely meet the needs of many, many small groups of like-minded individuals – an era of Mass Customisation: http://www.bbc.co.uk/news/magazine-23990211

He contrasts the newly emerging era with the industrial revolution and specifically the founder of Ford Motor Company, Henry Ford, who pioneered efficient mass production and mass distribution. To be a major company you needed to sell your products to the maximum number of people wherever they are in your home market and around the globe.

The techniques of mass production and mass marketing pioneered by Henry Ford are still being played out by big business in the West today. But the nature of manufacturing, in the developed world at least, is changing now that manufacturers have worked out that no matter how much they improve production methods; build standardised parts; and cut prices through the supply chain - they can never compete on price with the developing world: the BRIC economies of Brazil, Russia, India and China, for example.

So what is the future of making things in the UK and the rest of the developed world I hear you ask? The answer appears to lie in focusing on creating systems and machines to help us customise products cost-effectively; work more collaboratively to innovate – globally if necessary; and of course listen to customers more acutely to ensure that we deliver exactly what they want, when they want it.  With all these elements in place, mass customisation is possible. The final key ingredient is high quality. We must achieve that to differentiate ourselves from the new mass producers.

If you delve into the world of manufacturing and industrial automation today, much of the focus is on building production line machines which are capable of rapid retooling and reconfiguring so that products, including cars, can be mass customised. One article I read in a leading industrial automation title Drives and Controls highlighted mass customisation in action at an industrial automation components business called Danfoss where, for over 10 years, “Instead of mass-producing large numbers of standard products and stocking them in warehouses where they wait until an order has been placed”, they instead manufacture individually tailored products to order. Many of the products they manufacture are shipped within 24-hours of orders for them being placed:  http://www.capsule-group.com/digital/dac/B310/files/assets/basic-html/page26.html

It’s impressive stuff and clearly requires very sophisticated IT systems combined with precision engineering. Robotics is increasingly used on production lines for this reason.

Stepping away from ‘big manufacturing’, Peter Day talks about the idea of being able to ‘draw and print’ highly customised products. He sees 3D printing as an enabler of mass customisation. It also uncovers why firms like Google have become the business megastars of the age while many dotcoms went by the board.

Google sees the world as all businesses need to see us - the consumer - as individuals or at least small groups of individuals. As one Silicon Valley-based dotcom pioneer Joe Kraus said to Peter Day: "The 20th Century was about dozens of markets of millions of consumers. The 21st Century is about millions of markets of dozens of consumers."

Does that also mean the era of mass media communications is also over? Again not immediately but it is changing as the digital world offers us a whole lot more choice in what we read, listen to and watch. It naturally fragments the audience so mass advertising for example is not as valuable today as it was 10 years ago – the audiences for even the most popular TV programmes are just smaller than they used to be. Even UK national newspaper circulations continue their inexorable declines.

So if all this is happening around us, can we not take some of the lessons learnt in manufacturing or by Google, into a service-led world of car dealerships? I believe the answer is yes.

My advice is start by thoroughly understanding your customer-base. What is their new and used car history and aftersales buying history and what are they not buying from you?  Work out why they are not buying. Use everything at your disposal to gather this intelligence – online surveys, questionnaires completed in the dealership or from home.

Once this has been completed and analysed, begin to segment your customers into meaningful groups. So one group might be ‘first time car buyer prospects’, another ‘loyal used car buyer who does not currently buy servicing from us’ etc.

Once this work has been done you can begin to analyse how they would like to be communicated with – are they interested to know about the latest offers on regular servicing or financing options, for example? Tailor the communications specifically to these pools of customers. Don’t be afraid to get to know them much more than you do today. Some of the feedback will be negative but you cannot engage with them more effectively without properly understanding what makes them tick.

Take the example of how many golfers buy golf clubs today. The clubs are custom made to suit the height, weight and swing of each individual. The top five brands have built specialist high tech fitting facilities in golf shops to provide this facility. If you are serious about golf you are likely to go with one of those five brands but at the same time the clubs you get are customised so no two sets are exactly the same. The customer becomes the focal point. The buying experience becomes both an enjoyable and educational one. That sounds like a great model for buying a car.

What about extending that customisation into how you communicate with your customers? Allow them to configure the way they engage with you. Do you track and record every interaction with them and use this information to ‘describe’ them?

Vehicles are already highly configurable, but are your aftersales services equally so? Are your servicing and finance products available for consideration and purchase online? Are they supported with an online chat facility? Can you take service bookings online around the clock? If not, why not now that we are all organising our lives via the web from almost the moment we get up to just before we head to bed?

Even Peter Day is unsure exactly how the new era of mass customisation will pan out for a service-led economy such as the UK. But surely if we continue to innovate by creating new service offerings; get closer to our customers; tailor our offerings to more accurately meet their needs; and treat them more as individuals, then you too can deliver the service equivalent of mass customisation?

Do you think it is possible to ‘mass customise’ your service offerings or is it just about putting out more and more communication across more and more( largely digital) channels – hoping that more will stick?  Weapon of choice: blunderbuss or laser-guided missile?

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts (which we will issue every three weeks) on exploring avenues to efficiencies and higher profitability for dealerships.

Declining aftersales revenue

During the last few weeks there has been a good deal of comment about declining aftersales. Some of this discussion has been fuelled by recent aftersales-focused conference entitled ‘Future proofing your business’ which is run by the Auto Retail Network.  ARN also ran an extensive market study http://www.auto-retail.co.uk/report/future-auto-retailing-2013-2023 which uncovered the fact that 80% of auto retailers are now worried about sustaining aftersales revenues as 61.5% recorded falling absorption rates - multi-franchises being hardest hit.  More details can be read in the October issue of Auto Retail Bulletin this month.

One way customer comms

One of the keys to increasing aftersales is getting closer to existing customers and using phone, email or TXT-based services to remind them of service milestones and offers.  But is one way ‘push’ communications enough today for customer communications?

Interactive comms

All the evidence points in the direction of more interactive, visual and social media-geared communications being the new best practice for building customer relationships and inspiring their loyalty – especially when it comes to reaching out to the next two generations of car buyers -  Generation Y and the generation after them, aptly named  the ‘Connected Generation’: http://www.newworldofwork.co.uk/2011/02/25/how-to-prepare-for-the-connected-generation%E2%80%99s-transformation-of-the-consumer-and-business-landscape/

These groups have grown up online. They were early adopters of smart phones and tablets and they are starting to use these devices to make larger buying decisions – including buying their first used or new car from your dealership…or not.

With this in mind, we looked around in the trade media to see what advice is already out there for dealers looking to tap into Generation Y &C market and those a little older (‘Gen Xers’) who have grown used to researching and buying most things online. We picked on a few that caught our eye below...

Visualisation

The September issue of Auto Retail Bulletin has an article on the importance of using pictures in Google adverts as these generate substantially higher click through rates (CTR) than text only ads, according to a new report by online advertising expert Marin Software.

Making a story highly visual is definitely an emerging theme in marketing circles now. In one piece in this month’s US-based Dealer Marketing Magazine http://www.dealermarketing.com/internet-marketing/online-marketing/3197-video-in-the-modern-dealership for example, there is very good guidance on using videos to entice a new generation of car buyers through the show room doors.  The author of this piece, a US-based video production specialist, tells us that car buyers are 55 times more likely to interact with a video message on a website than with conventional text and images. 

He advises embedding videos into email blasts and social media marketing pushes.  He also advises dealers to shoot video inexpensively ourselves. He even provides a shopping list of equipment to buy.  Our own research into this area has uncovered many UK video production companies offering top rate videos for as little as £500 each. It is possible to shoot up to 4x 5-minute professional quality videos in a day using a professional team, thereby reducing the per video costs further.

Video offers

It would make sense to offer video walkthroughs of the ‘offer of the month’, ‘car of the quarter’, ‘latest launch’, even the’ used car deal of the month’.  Videos of your aftersales team at work with professional voiceovers which reinforce your focus on quality aftercare or proactive maintenance can also be a great addition to a showroom digital display and your website. And the great thing is that this sort of video production really should no longer be beyond the pockets of most franchise dealers.

And the consequences of not becoming digital marketing savvy look likely to extend well beyond sales losses and into reputation damage if we don’t react quickly enough should customers have something to complain about. We have seen several examples of where big businesses have been damaged by customers that have been unhappy with service that they received.

Power of Social Media Comms

Many of us will have seen the ‘United Breaks Guitars' YouTube videos which were inspired by United Airlines baggage handlers’ poor treatment of a little known Canadian-musician’s guitar while in transit across the States.  Dave Carroll took his complaint onto YouTube, following rejection of his requests for compensation and an apology from the airline, after one of his guitars was broken.  Today that first song (of three he has created) has had over 13.5 million views and the airline’s reputation has been severely damaged – all because of one poor experience by one customer which were spread through Social Media to millions around the world, watch it and weep: http://www.youtube.com/watch?v=5YGc4zOqozo

Another article, written up by the BBC http://www.bbc.co.uk/news/technology-23943480 and the Daily Mirror amongst others in the last month, shows the potentially negative power of social media communications if used against a company.

This time it was BA which was ‘in the dock’ for losing a bag and then failing to react quickly enough to find it. The resulting paid-for tweet complaint was picked up by Twitter news feed Mashable and thence made it into the mainstream media and digital marketing ‘blogosphere’: http://simpliflying.com/2013/promoted-tweet-against-british-airways-airline-customer-service/ and even into our very own Auto Retail Bulletin.

24-hour customer service age

ARB suggested that 24-hour customer service is fast becoming a necessity for dealership groups in the internet age where a single Tweet can become a big problem overnight. Take the nightmare scenario where there is video evidence of poor employee behaviour then the chances of an indiscretion like this one going viral via YouTube are dangerously high:   http://cardealermagazine.co.uk/publish/dealers-mercedes-caught-driving-along-dual-carriageway-with-bonnet-up/76611?utm_medium=email&utm_source=Blackball+media&utm_campaign=3162373_Car+Dealer+newsletter+-+October+8&dm_i=1NHP,1VS3P,94RSQS,6R1GC,1 .  

The is story caught the eye of the BBC, Car Dealer magazine, MotorTrader.com  and many more and was potentially very bad news for the dealer employing the errant Mercedes driver who failed to close his bonnet while speeding along an A road.  Of course if the Mercedes dealership in question had not reacted quickly to suspend the employee concerned it could have been a good deal worse.  If that story touched a raw nerve and you are worried about your Group’s exposure to the risk of poor driving of vehicles pre-sale or during servicing, you might want to look at an eTag key management solution http://www.etagsolutions.com/secure-and-audit-keys.aspx which will provide you with a verifiable audit trail of key users if misuse of vehicles is uncovered.

Summary

It is fair to say that social media communications and other digital marketing tools and techniques have a growing role to play in stimulating new sales as well as maintaining closer links with customers and reacting faster to complaints which can ‘go nuclear’ quickly with the aid of social media comms today.  The time to embrace all this has arrived. Failure to communicate at ‘internet speed’ is probably already damaging your bottom-line today but it could also undermine your hard won relationships with your regular customers tomorrow.

Do you feel as though you are taking advantage of all these new marketing and customer service tools today? Or do you still think that you have more pressing things to do to boost sales?  Do let us know. 

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts (which we will issue every three weeks) on exploring avenues to efficiencies and higher profitability for dealerships.

During the last few weeks there has been a good deal of media attention given to National Franchise Dealers Association (NFDA) Trusted Dealers ‘10 Points of Difference’ for used car sales operations: http://www.trusteddealers.co.uk/10-points#point-9 which is gaining support across the dealership world ahead of a potential backing of the code by Which? (previously known as the Consumers’ Association) and Trading Standards.

The 10 points of difference are a great start. To summarise quickly, all franchised dealers that want to be in the Trusted Dealer scheme must prove the following:

1.       Nothing to hide: All cars must be background checked to avoid inadvertent trading of cars that have been stolen, involved in serious accidents etc.

2.       No nasty surprises: All cars must be bought legitimately and every vehicle is checked to make sure there is no outstanding finance on it. The dealer must own the vehicle the customer is buying off them

3.       Every inch. Every car: All cars must be subject to a full mechanical inspection and faults rectified before it is delivered to the customer

4.       The clock never lies: No ‘clocking’ of cars will be done. This is effectively theft as it is misrepresentation of the car by giving it a lower mileage than the reality. The result is often that servicing is not done at the right time and serious maintenance changes like cam belt replacement will be done late and put the whole engine at risk

5.       Try before you buy: All Trusted Dealers need to offer a proper test drive of the car they are planning to buy

6.       Passed with flying colours: All Trusted Dealers will make sure there is a minimum of 3 months MOT on a used car, many offer a full year’s MOT today.

7.       Not a care in the world: Trusted Dealers offer a warranty or guarantee with used cars so that if there is a problem shortly after delivery it can be taken back and rectified free of charge

8.       Trade in and trade up: Trusted Dealers must welcome part exchange and use that as a contribution to the purchase of your new car.

9.       See yourself in it: Every used car from a Trusted Dealer comes with a full professional valet inside and out

10.   No need to stretch: Trusted Dealers must offer you finance to purchase your car. All Trusted Dealers must also offer service plans which mean that you can budget your servicing costs monthly or even pay upfront as you purchase your car.

There are no doubts that the NFDA’s Trusted Dealers 10 Points of Difference scheme - if it is promoted well and the consumer is educated to look out for its badge - offers a great benchmark for best practice when selling used cars in the UK.

We liked it so much, we decided to take the concept of standards into our area of specialism – key management in dealerships - and apply them to see what high standards in dealerships’ handling of customer keys might look like.

We came up with the following, which we believe constitutes Best Practice Key Security:

1.       Remove all personal keys and give them back to the customer before taking your vehicle keys

2.       Label your key (ideally with your name and registration) so that it can be found if misplaced

3.       Replace your key free of charge if we lose it

4.       Store your keys in a secure cabinet whilst not in use

5.       Keep a secure audit trail of when and who used your key whilst with us

6.       Never keep your key with your vehicle unless someone is working on it

7.       Only allow authorised users to access to your keys

8.       Offer the ability to review the usage of your keys on request, in a fast and simple-to-understand way

9.       Return your key and vehicle to you in a timely manner

10.   Treat your key as if it was one of our own.

Once we had drawn up this 10 Point Plan for Best Practice in Key Management we were acutely conscious that for it to work we would have to persuade dealers of its value - as many of them may not immediately be able to offer all 10 assurances and might need to invest in training and equipment to achieve it. We also knew we needed a system for monitoring standards, awarding certificates and stripping dealerships of these certificates if they failed regular audits of their key management standards and policies.

In short, we realised fairly quickly that the sort of charter mark we were looking to launch only works if it is backed, enforced and marketed by a relevant standards body with a strong following just as the Trusted Dealers scheme is by the NFDA.

Do you think key management should have its own Standards Charter?  Would conformity to an agreed set of principles and processes help your dealership to stand out from the crowd?  Please feel free to post your comments – if there’s a positive reaction, we will set up and promote an official Key Standards Charter on your behalf. At the very least, what this exercise illustrates is that every interface with the customer in a dealership is valuable. Procedures and standards for all of these interactions need to be set with a view to meeting or exceeding customer expectations. And they need to be backed by an organisation the customer can place their faith and trust in.

That is why I was really encouraged to read in MTN a couple of weeks ago about how Jaguar dealers have come out top of the JD Powers Dealer Satisfaction Survey for the second year running: http://motortradenews.com/mtnb/050/#4/z , largely because they understand as Jeremy Hicks, Jaguar Land Rover UK MD said that their “dealer network is the most important point of contact we have with our customers”. The Survey recognises dealers for good service including friendly and efficient and value for money service. Dealers that want to sell more and hold onto more after-sales business could do a lot worse than drawing up and living buy a standards charter of their own for all aspects of interaction with customers.

We believe setting standards, living by them and communicating them effectively to staff and customers alike, is the bedrock of any customer service improvement drive in dealerships. More power to NFDA for its Trusted Dealers scheme. Let’s hope used car dealers nationwide continue to sign up and promote it.

We will return to many of these themes in more detail in future posts so please sign up for our blog or check back to this site or www.etagsolutions.com   for the latest thoughts and tips on finding routes to increased profitability.

Welcome to the Improve My Dealership inaugural blog post. Yes we too recognise the power of self-publishing, entering and stimulating the big debates in the UK car dealership world. We’ve decided to focus Improve My Dealership posts (which we will issue every three weeks from now on) on exploring avenues to efficiencies and higher profitability for dealerships.

On the flip side, we will not be afraid to tackle the issues which might damage profitability if dealership management teams do not address them. Our posts should act as a digest for busy executives that do not have enough time to plough through AM, ARB, MTN and a myriad of other online trade titles which we will draw from. I hope you like it. If you do please spread the word and sign up at the top of this page to receive future posts.

I was reading through the 2012-3 financial results of some of the biggest names in the car dealership world and what strikes you is that - for many of these firms - scale continues to be all-important for progressing in the UK market.

For example Inchcape was able to continue growing this year even while margins and profitability fell away.  Its H1 2013 financials revealed an increase in sales in its UK retail division of 4.8% to £1.12bn but a trading profit drop by 0.9% to £33.5m. Inchcape sold its Ford businesses to Group 1 Automotive in February and invested in facility upgrades. For more on this go to ARN at: http://www.auto-retail.co.uk/public/02-08-2013/record-first-half-inchcape?utm_source=Inchcape+H1+2013&utm_medium=News+Alert&utm_campaign=Inchcape+H1+2013

Inchcape is preparing for the installation of BMW sub-brand ‘ibrand’ infrastructure at five UK BMW locations for a Q4 launch and completed major VW corporate identity upgrades at Wirral and at Swindon. Before the end of 2013 it will complete enlargement of its BMW, Mini and Motorrad retail centre in Sunderland and a full upgrade at BMW Norwich.

Size and heavy exposure to less mature markets – most notably China and the Asia Pacific Rim down to Australia – are clearly bolstering Inchcape Retail’s financials and enabling it to continue investing in the UK market, even as margins do come under pressure.

And UK dealers that are investing in discrete parts of the market - and principally those operating at the prestige-end of the market - are enjoying real growth. Perhaps is should be no surprise that HR Owen has set up a new Lamborghini dealership: http://www.motortrader.com/latest-news/hr-owen-lamborghini-dealership/ in Pangbourne recently. Almost simultaneously it turned in strong interim profits - up 23% on the previous year - and also picked up Motor Trader Dealership Group of the Year Award this summer: http://www.motortrader.com/industry-news/hr-owen-profits-surge/ . At the prestige end, other groups have also been investing in growing their BMW estates: http://www.am-online.com/news/2013/8/6/bowker-bmw-reveals-750-000-expansion-plans/33389/

So what has HR Owen been up to apart from cashing in on the growing luxury market and increasing its used car sales by 24%? Areas hinted at in the piece including improving procurement systems and other ‘business processes’ and adopting a ‘multi-channel approach to advertising’ (for this read heavier investment in building its online presence and securing online sales).

Perhaps HR Owen’s directors have been reading one resource I regularly turn to for new ideas in our market – US online title DealerMarketing which recently detailed how one US Chrysler Jeep Dodge dealership had benefitted from ‘video SEO’: http://www.dealermarketing.com/internet-marketing/search/3106-dealership-profile-branhaven-chrysler-jeep-dodge-ram?utm_source=DM+Weekly+2013-06-20&utm_medium=email&utm_campaign=DM+Weekly

There is no doubt that for top UK dealerships, scale is only part of the equation for securing continuous and profitable growth in a highly competitive market.  Other keys to profitable growth appear to be knowing your market intimately; looking for new brands and vehicles to help serve that market better; as well as engaging more deeply with customers and prospects (at whatever stage of the buying cycle they are in, see: http://www.dealermarketing.com/bizdev/crm-solutions/3107-four-tips-for-turning-be-backs-into-sales?utm_source=DM+Weekly+2013-06-20&utm_medium=email&utm_campaign=DM+Weekly ) and through whichever channel they prefer to use. Deeper engagement through social media, ‘video SEO’ as well as investment in other online marketing activities, is also becoming crucial to help the customer find their way to your door.

We will return to many of these themes in more detail in future posts so please sign up for our blog or check back to our site for the latest thoughts and tips on finding routes to increased profitability.


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