‘Check Out’ the Competition to find your Competitive Edge?

When customers call into you banding rates about “I’ve got this APR” and “I’ve got that APR” and you run around after them trying to match the deal to get the business whilst cutting your own profitability, have you ever stopped to think “I wonder if this person is telling the truth?” or “Sometimes I wonder why I bother doing all this work for very little return”? Then, in some cases, after proposing the deal to every finance company you deal with, you manage to ‘scrape’ the person through who was supposedly ‘Squeaky Clean’ and been offered this wonderful rate? Frustrating isn’t it, however, when was the last time you paid a visit to your local bank or building society to find out what level of service they have to offer and what rates they actually quote you whilst sitting in front of them. Have you called the Alliance & Leicester or Tesco’s to obtain a quote or try to get finance, to see if their ‘Headline Rate’ is as attractive as they make out? My guess is that not many of you have done this for some while now, if ever. Nearly every advertisement you see has got this marvellous ‘Headline Rate’, however, the magic words “Subject to Criteria” always appear on these, my advice to you is don’t forget this as in some circumstances it can make a difference of 7 percentage points!

Visit Your Competition

Let me share a recent experience with you. I was carrying out a business manager’s course and one of the tasks set during our course, is to spend a couple of hours finding out exactly what the competition is really like. The delegates visited a number of local banks & building societies to see the level of service, how quickly questions were answered, and what quotations were given, the information required & how long it would all take. The results of which were staggering.

One Bank advertising 9.8% APR actually quoted the equivalent of 16.9.
When asked how long it would take to get an answer another said “within 48 hours”.
One building society would not consider you for their rate unless you had a mortgage with them.
Another bank virtually insisted you had to take the protection otherwise you wouldn’t be accepted.
Product knowledge in all, bar one bank, was poor.

This list is not exhaustive, however, it really is an ‘eye opener’ when you consider how many people call into your dealerships banding figures around without realising how much effort it could take to get the rate suggested in advertising or literature. Now it may be that the branches visited were particularly poor, however, it just goes to show how often you underestimate your own professionalism and hunger for your customers’ business.

Visit Your Competition

With the bank that actually came out quite good during the visits, the main thing the delegates realised was that they had to offer a faster, more professional service than this provider and set up a credit line quickly. They also realised the importance of getting in front of the customer during the first visit to the showroom to ensure this is achieved. Therefore, they had to ensure that their salespeople were qualifying correctly and involving them from first point of contact.

How do you feel?

To emphasise the point of setting up a credit line immediately, how do you or your salespeople feel when they are applying for Hire Purchase, a personal loan, or a mortgage? Think back. Do you start to wonder how easy will it be for me to get this? Do you start to analyse yourself and think “Well, I’ve only been in my new job for six months due to moving to gain promotion?” or “My last two credit card bills were paid late because I was on holiday, or working away from home.” All these points, and more, are going through your customers mind when they call into see a vehicle first time. They are not aware at this stage how much they will get for their trade-in vehicle, and therefore do not know how much to borrow. Ensure the customer is introduced immediately to the business manager and, even if you cannot get a firm commitment, set up a credit line. Then by the time (if not before) they get home you have called them and said, “Your finance has been agreed, which colour would you like?” How do you think that customer would feel? In nine out of ten cases, as long as the car was right, the customer would take your finance. You have just saved them the hassle of ‘phoning or visiting their bank & if the payments fit their budget, you have just earned another finance case. You tend to forget the level of service, which you can provide. My advice to you is “Don’t”.

A good friend of mine applied for a loan with a top direct lender recently, and they were virtually insisting he took the payment protection. After stating he really didn’t require this (all be it the fact he is self-employed and should really take it) the loan was turned down. He has a credit history that is second to none, and owns one property outright. He was accepted by another finance company automatically, without question. This was a real situation, and he would not approach the direct lender ever again. You cannot be more convincing with your customers than when you use a true story.

Get salespeople to visit

Check your competition by visiting, or calling, at least one institution per week. More importantly get your salespeople to visit as well. After all they are normally the ones who come to you stating; “Mr & Mrs Bloggs have been quoted X by their bank, you’ll need to do better than that to get their business”. Yet half the time they are not aware of the level of service offered by the branches. You are great (well some of you are) of keeping regular checks on your local dealer competition; however forget to look at the finance companies.

Loan Forms

You can organise a credit line very simply for every customer because of the low level of information required. Keep loan application forms from the banks, building societies and off the web sites to show how much more information they require. For example, credit card details with outstanding balances, whether you have pension arrangements, savings plans & their balances, store cards & the outstanding balance, other loans & Hire Purchase agreements & the balance outstanding. These are just to name a few. You don’t need all this information. Tell the customer this and prove, by showing them leaflets collected, that you know what you are talking about.


Competitive Edge

Your ‘Competitive Edge’ over the competition is that you can offer a quick and efficient service without the need to ask all of the information that the banks, building societies require. Use the information gathered and most of all:

Visit or make enquiries to your competition regularly.
Ensure your salespeople visit the competition as well as yourself.
Look at what is bad about the competition and how you can use this to your advantage.
Look at what is good about the competition and how you can improve your service to give you an advantage.
Remember how it feels when you go into buy goods and apply for a loan, and what you require. Your customers’ needs would probably be similar.
‘Headline Rates’ are to attract the initial ‘phone call, and in a lot of cases the customer doesn’t get the advertised rate.
Ensure you are introduced to the customer after the first point of contact and set up a credit line in all cases.

Sometimes you forget just how professional you are, and the level of service you offer. Pressure is on to achieve targets and there is more competition around in the market. However, sometimes you are all guilty of giving away rate just because the customer has told you what they are getting, without checking all the facts out. Evaluate your competition regularly and this will certainly gain you extra finance cases along with increased earnings in the long term.

CRM comments

What does CRM mean to you?

Last month’s article on Customer Relationship Management generated a lot of interest from some of our readers. So this month we asked some of the country’s top dealers and manufacturers, including Martin Conlon at Motor Distributors Ltd, Merlin O’Reilly of Merlin Motor Group and Michael Herbert of Windsor Motor Group, what does CRM mean to you? Essential to success in the 21st Century business world? Or simply the latest management buzzword?

I don't view CRM as a buzzword”, said Michael Herbert, “however it may have become one. CRM encompasses a large number of functions within our business, some of which I believe we do well and some we can improve. We must continuously strive to do them all better because our future business is so dependent on repeat custom.
“Within The Windsor Motor Group, we have a dedicated team who manage the database and the direct mail part of our CRM programme. We keep in touch with our customers on a very regular basis about new products, new offers, service reminders, warranty reminders, etc. We also generate anniversary listings on e-mail for salespeople to use to keep in touch with previous customers on the anniversary of their purchase.”
Michael added: “One area I believe that we could improve is CSI information. We don't ask our customers often enough if they were fully satisfied with us, whatever their requirements were – be it a service, body repairs, car hire, sales, etc. Manufacturers tend to do this from time to time, but not in a way that gives us regular and accurate feedback on all aspects of our customer care. Naturally we do an element of CSI research, however this is an area earmarked for improvements.
“CRM is now an integral part of managing a modern day motor dealership. Done badly is nearly worse than not doing it at all. Done well, it improves the image of our industry and the dealership in particular.”

Clearly aftersales is a key driver of CSI, as it’s one of the main reasons customers have for coming back to the dealership they bought their car from. But having closed down their service department last year, Merlin Motor City no longer has this opportunity. One of the things Merlin O’Reilly has done to address that is hold a €5,000 cash prize raffle every three months. Everyone who buys a car is eligible to enter, but they can only claim the prize if they actually turn up to the draw.

“After they’ve bought their car we write back to them and invite them to come back for the raffle”, says Merlin. “On the day we have a check-in desk where you register and your name goes into two main draws – €5,000 for everyone who’s bought a car, and €1,000 for everyone who’s taken a test drive. We also have a dozen other prizes like DVD players, bottles of wine, etc. We do the raffles on a Sunday, so there’s a bouncy castle for the kids as well. Most people bring somebody with them, even if it’s not their whole family.

“The first time we did it we got 82% of the purchasers, which was great. I’ve never seen as many people in a garage as when we have the raffle, it’s much bigger than any dealership opening I’ve been to. We’ve even had people cancelling weekends away to attend! We’ve done three so far and have another one planned for late September, on the same day as the All-Ireland final.

“Because the raffle does interfere with sales. There could be 1,000 people here, so it can be hard for new customers to get attention. The people who have come for the raffle aren’t necessarily looking to buy a car now either – everybody leaves as soon as the last ticket is drawn. They are only there for the chance to win some cash.”

From Merlin’s point of view, it is more of a thank you in advance – rather than waiting 27 months until we want to do business with them again. In that sense it is a bit of a gamble, he says but at least it gets them talking about the garage that evening, whether they are in the pub or having dinner with relations or friends. “You can’t beat the power of a good referral”, he says. It seems to have worked – in fact the concept has already been copied, twice by local garages.

“One of the main reasons we introduced the raffle”, says Merlin, “was because we were starting to question the value of newspaper advertising. I noticed that sometimes if we missed the copy deadline for the ad, our unit sales over the weekend would be no different. So instead of giving the newspaper €3,000, why not give the money back to some of the people who have actually supported us? It is probably a more targeted spreading of the word than a page in the paper. Salespeople can use the raffle as a closing tool as well.

“In fact we have just had our best period this year and we didn’t spend a single cent in the papers in the past four weeks!” That is an alarming statistic.

Another statistic that will be of great interest to everyone involved in the retail motor business comes from some research just completed. It was conducted by e-GoodManners, who produce an internet-based sales diary system and it clearly shows the value of keeping in contact with customers – which is what CRM is all about, according to Martin Conlon, representing VW and Audi Ireland.

“CRM is about staying in touch with the customer”, he says. “Not by farming it out to somebody else, but through the actual person who sold the car keeping in personal contact. That is hugely important in the car business.

“But what we’ve found through market research is that one of the big weaknesses of dealers in Ireland is that they don’t keep in contact with the customer. Both between the order and delivery, and after they have taken delivery. Customers often think the salesperson has forgotten about them. Whereas if a salesperson does follow-up and does phone back customers, they particularly appreciate it and are much more likely to buy the car from your dealership. That’s why we are encouraging our dealers to take up e-GoodManners”.

e-GoodManners, and systems like it, are designed to make the salesperson and the sales department more productive, by ensuring all potential customers are followed up effectively and by increasing test drives and other activities that have been proven to increase sales. And because they are PC-based, they enable the dealership and manufacturer to get a more accurate picture of what is actually going on in the business compared to paper-based manual diary systems.

What the eGM research has identified, in a project conducted for one of the UK’s biggest manufacturers, was that 4%+ of the total sales of dealerships using the eGM system happened after the sixth pro-active follow-up sales call. It’s clear evidence of the link between consistent customer follow-up and incremental sales. As we approach the final quarter, make keeping in touch with customers and prospects a top priority for your business – not just to sell them a car today, but to make sure they come back to you when they are ready to change.