The One% Partnership

The 1% Effect on Customer Retention

• Dave Bownes & John Leitch • Season 1 • Episode 12

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In this episode Dave and John are back chatting with Lyn Howdon about all thing’s customer retention. 

A subject all too often seen as a sales challenge we bring to life that there are opportunities across all departments to support and drive improvements in  customer retention.

To find out more about what we do visit:

www.haynesoliver.com 

SPEAKER_01:

Welcome to the 1% Partnership Podcast. This is a podcast about incremental gain, focusing on automotive aftersales. We'll talk about our backgrounds, our experiences, and how 1% gains can impact on your business. Welcome back to another 1% Partnership podcast. I'm back with my good friend John and also with the wonderful and very glamorous Lynn. In our previous podcast, we talked about, well, we talked about sales, which was an admission by John and I that we're certainly not sales experts and we needed someone that had in-depth knowledge. So that's why we invited Lynn onto the podcast. But we also wanted to talk specifically about retention and how retention is on the performance of your business, the longevity, the sustainability, all of those great things that we only really think about when things start to maybe go a little bit quiet. So Lynn is most... definitely an expert on retention when in fact i don't know of anybody that can talk as fluently as she does about all of the different challenges and different ways of thinking to actually retain those customers within your business so i guess i'm just going to throw it open lynn talk to me about sales retention or sales customer retention what what is it what does it mean what to our listeners and more importantly what to John and I need to know about retaining customers within the sales environment.

SPEAKER_02:

Well, good morning, John, and good morning, Jay. It's a great question and one that is frequently asked and has been for years and years. Retention in sales is something that has become more prevalent, I guess, again, in the last 12 months with the Chinese brands and all the new entrants to the market joining the UK market. It's become even more important for those established brands in the UK to focus on retaining their own customers because now they've got more choice. What is retention in sales? Retention is a huge, huge question. And it probably means something different to every single person that's going to be listening to this podcast, to be fair. Holistically, retention starts with having a strategy. So right from the top level, a business needs to have a strategy that is the backbone through sales within their dealership. They need to know what their level of expectation is, how it's going to be expedited through process how their people are going to be trained, what their value proposition is to their customer regarding retention as well as just a business proposition. So you can break down any one of those into a million pieces and probably still never get to the bottom of answering the question, what is retention in sales? I guess in its very, very simplest form, it's a customer that purchases a vehicle from you that does so again in the future that's its simplest form but everything that surrounds that obviously is very fragmented depending on which way you look at it and how you measure it

SPEAKER_01:

right so there's lots of different things that can feed into retention then or impact on it customer satisfaction being one if you're not treated well then you're not likely to come back it is as simple as that

SPEAKER_02:

absolutely it will start with how does a dealer measure retention Do they measure it by brand retention, finance retention, dealer retention, salesperson retention? All of the above.

SPEAKER_01:

So you've just mentioned several things there. So brand retention, let's just understand each of those that you've just said. So what does brand retention mean? What is that?

SPEAKER_02:

Okay, I'm a brand A dealership. A customer buys a car from me and I want that customer to come back and buy the same brand A from me next time.

SPEAKER_01:

Bingo, right, I've got you. So that's retaining the customer in the same manufacturer's vehicle.

SPEAKER_02:

Yeah, regardless of how they purchase the vehicle, whether it's cash, finance, whatever it may be.

SPEAKER_01:

And actually, that might also... not be good for my dealership, but could be good for the brand because the customer might move location or choose to go and buy a vehicle from another branded dealership.

SPEAKER_02:

Absolutely. Brand retention is measured usually at both dealership level and brand level. But brand level, the OEM will have the true brand retention figure because it takes on board exactly the scenario you've just given, regardless of where that customer buys brand A from, whether it's in the north, south, east or west that customer has been retained as a brand advocate

SPEAKER_01:

yeah the manufacturer's not bothered about where they buy it they're just bothered about the fact that they're buying it okay right that makes sense so what were the other things that you said so you said brand retention

SPEAKER_02:

finance retention

SPEAKER_01:

so what just explain that what's that what does that mean

SPEAKER_02:

captive finance houses so those that are attached to the manufacturers and standalone banks that fund dealers are very focused probably more so focused on retention if the customer comes into brand day and buys a vehicle on finance be that pcp or higher purchase That finance company wants to retain that customer's business the next time they change the car. They're less worried about what brand the customer buys as long as it's funded through the same source, either the captive or the bank.

SPEAKER_01:

Okay, so similar to the brand retention, but from the financier's perspective, the bank or whatever that might be.

UNKNOWN:

Yeah.

SPEAKER_02:

The finance houses do go one step further because they measure retention by finance product. So they will measure anybody that's taken a PCP type product and those that then again go with a PCP type product last time. And if they go from a PCP to higher purchase, for example, that might be lost retention in terms of PCP, but actually it's still finance retention in terms of the captive or the bank.

SPEAKER_01:

Right, so they're still financing the vehicle purchase through the finance house, but they're financing it with a different product. And I guess that's because those different products will have a different value to that finance house. Right, okay. I'm learning stuff here. This is absolutely brilliant. So that's brand retention, finance retention. So what were the others that you said?

SPEAKER_02:

Dealer retention.

SPEAKER_01:

Dealer retention. I think this one sounds like it'll be easier to get our heads around, but go for it. You'd

SPEAKER_02:

think, wouldn't you? You'd think. But then most dealers today are part of groups. There are obviously independent new and used car dealers out there, but primarily they belong to a group. And it is a question that I am currently asking through Think Academy Services, and that is, if you're part of a group, let's say, Dave, you're a Skoda dealer and John, you're a Mercedes-Benz dealer. Dave, if I buy a car from you today, but when I renew, I choose to go and buy a Mercedes from John, but you're part of the same group, do you see that as a renewal or a lost sale?

SPEAKER_01:

Okay, yeah, you're right. It's not as straightforward as I first thought.

SPEAKER_00:

It's probably both.

SPEAKER_02:

It depends what you measure, John, but you're absolutely right. It is both. For Dave, who's the original supplier and dealer, it's a lost sale. But he probably, here's the thing, he probably won't follow me up because I've stayed within group. He won't follow me up in the same lost sale way that he would to somebody that went to a different group. But John then obviously has got my business. John will see it as a new sale because I've not been to John before. But Dave, you don't really see that as a lost sale or

SPEAKER_01:

a renewal. So with complete fear of opening up a rabbit hole for us to go down, do you know or have you experienced, do dealer groups have group level policy that supports a dealer in understanding how you track that? Because again, that's a little bit like the manufacturer and the finance house. The dealer group just wants to retain it within the group. They're less bothered about where they buy it from so is there policies in place that says this is how you should measure that

SPEAKER_02:

you'd like to think so and i'm sure there are are they evident to the dealers within the group it still doesn't stop you from smarting having lost a sale dave it doesn't stop john from being joyful about having gained a customer from you but at group level they would view that in the same way the brand would versus the dealer So you stayed within group. I am happy with that. But again, when you get to dealer level, dealer retention is what you as a dealer principal or operations manager is looking for. You want the customer that buys the car from your dealership to stay with your dealership, even if that means I buy brand A from you. But when I come back, I renew into a used car, but from your site. is it still classed as retention? Because if you've got separate new and used car managers, again, the new car manager will feel like he's lost the sale to used cars, even though it's the same dealership.

SPEAKER_01:

And there was me thinking this was just about getting customers to come back.

SPEAKER_02:

There you go.

SPEAKER_01:

In my very simple, simple mind. It's so much more complex. Okay, so there's definitely a level of complexity within that. And then I think you said, was it sales exec retention?

SPEAKER_02:

So as a salesperson, every car I sell, I think that customer is never, ever going to buy from anyone else ever, ever again, bar me. And when they come back, it's my day off or I've switched brand within group or switched to a different dealer within the group and I don't get that sale. that's not retention for me as a salesperson. So when a salesperson switches roles or switches dealerships, they've pretty much given up every sale they've ever made.

SPEAKER_01:

Yeah. Unless they forged a very strong relationship with a customer and the customer is willing to follow the person as opposed to the product.

SPEAKER_02:

Yeah. It's just like a hairdressers, right? So if you've got a favorite hairdresser in a salon, for example, and that hairdresser moves to a different salon, you may well follow that hairdresser in fact i would go so far as to say you're probably more inclined to follow a hairdresser than you are a salesperson

SPEAKER_01:

yeah because i guess the product in the scenario of the hairdresser i'm trying not to laugh when we're talking about this and for the listeners that know john and know the other side of john's life where where john actually uh has a hair salon but the the irony being john is follicly challenged much the same as me so i'm not having to dig about that the fact that john has no hair and has a hair salon this is i think lynn's done this particular analogy on purpose to i think it's fair to say the

SPEAKER_02:

only one follicly versed in having a owning the salon here would be me

SPEAKER_00:

absolutely absolutely i've got to say though genuinely as much as i'm as much as i'm laughing you're absolutely right and we we see this we see this in uh my lovely wife carol's industry when um in her salons we see uh new stylists coming in and they'll bring clientele with them we see some stylists moving on and taking clientele with them so you're absolutely right it's uh it's a great example of being loyal and retaining your clients great do

SPEAKER_02:

you know you've hit the nail on the head there john because that's the difference The client of the hairdresser is loyal. That hairdresser may do nothing to retain that customer's business when they move, but the customer, through experience and through emotion, is loyal to that hairdresser. That's the difference in the automotive industry between loyalty and retention. you can work your socks off to retain as many customers. But if that customer doesn't have an emotional connection with the salesperson, the dealership, the brand, the finance house, whatever it may be, they will not remain loyal.

SPEAKER_01:

That is interesting because that comes back to the old adage of people buy from people. But the difference between, and I know we kind of laughed about it, but actually it is a quality analogy. The difference between the hairstylist is the product that they're selling is their ability to do the job whereas in the sales environment as we're talking about it with an automotive the product is the vehicle itself so there are other factors that might influence that loyalty as well vehicle reliability for one you know does it break was it right when I picked it up whereas the hair stylist is completely invested in the product that they create. I don't know, that's certainly how I've got it going around in my mind. The product is more owned by the individual in the hair stylist than it is in the salesperson selling the vehicle.

SPEAKER_02:

When you come out of a, and this might be news to you both, when you come out of a hairdresser's, you want to look how you anticipated you were going to look and feel good about what has happened. Now, feeling good about what has happened is not any different than somebody buying a car or a motorbike or a commercial vehicle, they want to come out feeling that they've had a win. They've got the deal that they thought they were going to get, if not better. They've got the vehicle that meets their expectations, if not better. They've got the finance product that suits their lifestyle, if not better. So it's similar in those respects. But I think, I guess the difference here is the hairdresser changes your personal appearance. Well, I guess a car does that too, right? So, I mean, you want to be able to say, John, I bought a brand new car. Come and have a look at it. It's amazing. It does this. It does that. You can change the ambient lighting inside to one of 64 different colours. Whatever floats your boat when you buy a car, whether it's performance, peace of mind, comfort, whatever it may be, you want to feel that you've achieved that and that's what you've bought.

SPEAKER_01:

It feels to me, and this is in this particular analogy, the one feels more transactional than the other. Whilst they're both emotive, one feels more emotive than the other.

SPEAKER_02:

I'll tell you where the hairdresser wins here, shall I? Before you leave that salon, they say, would you like to book your next appointment?

SPEAKER_01:

Everything. Locking them in.

SPEAKER_02:

When you leave sales, they'll say, we'll give you a call in a day or two just to see how you're going with the car. Not, can I make an appointment to give you a call in two days' time? Let's put it in our diaries now.

SPEAKER_01:

That's interesting, because there's a strong link to some of the challenges that after sales have about how they do or do not manage their customers in that cycle. Okay, that's great. When you first started talking about that, Lynn, you mentioned the business requiring a strategy. What else is in that flow? I'm assuming there's a flow. What comes next?

SPEAKER_02:

There does. So the retention strategy is key. That's probably a missing part in a lot of businesses and a lot of dealerships. And that has to sit separate to your operational strategy and your business strategy, your retention strategy. is what it is it breeds its own culture so from that how you handle retention so the majority of dealerships today will have some sort of retention platform so it will be digital either a digital sales process that leads into digital retention or a manual process that has a platform that handles retention and primarily and does that sorry go ahead

SPEAKER_01:

sorry lynn does that sit within a crm system or is that usually something completely separate to a cr It is

SPEAKER_02:

completely separate.

SPEAKER_01:

So you'll have

SPEAKER_02:

a CRM, you might have a DMS and you might have a separate system in after sales. But the retention system primarily in the UK drives finance retention. Although there are one or two brands that have ingested cash customers into their retention platforms to treat everybody, obviously, with the same process, which is fantastic, which is the way it should be. So from the retention strategy, regardless of whether you're doing it manually, whether you've got a retention platform, or if you're completely digitized as a dealership, you will have processes attached to each of those workflows. The important thing here is that the processes, these retention platforms, even if you're working from a CRM, don't do it for you. They are there to provide you support and assistance and collate information. In the old days, I say the old days, I've been working retention for over 30 years now. There was a manual 13-step retention process before digitization was a thing. Having a retention platform does 11 of those 13 steps. Rather than sitting there with a calculator like I used to do and getting a deal file, get John's deal file out of the cabinet because I sold him a car two years ago. working through a new deal, looking at how much his car is worth, what the price of a new car is, what finance product he's got, and reworking a deal half an hour later to find out, actually, John's not in a position of equity right now, so I'm going to put him back in the filing cabinet. When you switch on a retention platform, it does that calculation, maps you against new vehicles, tells you the payment, tells you how much equity, It does that to millions of finance agreements in an instant. So 11 of those 13 manual steps are taken care of. What the importance here is the engagement process with that customer, positioning the retention process at the point of sale in sales before the customer buys a car. to say, I know you're only looking around today, Dave, but I want you to know how we here at ABC Motors look after our customers when they have purchased. We have a system that looks after your finance agreement or your cash purchase, and it actually highlights to us the optimum time for you to change your car. And we give you calls from time to time just to let you know the situation with your finance agreement or your position of equity and parity. I'll come back to parity in a second. I just wanted to let you know that that's how we look after every customer here at ABC Motors, because you may not find that as you're shopping around today, that every dealer does it the same way.

SPEAKER_01:

That's about taking the stress away from the customer. Look, don't worry about it. We've got this covered for you.

SPEAKER_02:

We're here for today. We're also here for tomorrow. Now, when I talked about parity, what these retention platforms do, as well as all those millions of calculations, is they find the customer in parity. And when we talk about parity, we're talking about the ability that the customer to step from the current vehicle that they're driving into a similar vehicle with little or no money down from them and the same payment on the same finance product if that's how they chose to buy

SPEAKER_03:

right

SPEAKER_02:

so they can have a brand new car but in the customer's world nothing changes they keep maintaining the same it's a new finance agreement of course it is but they keep paying the same payment over the same term for a new car What retention platforms also do, and this is why retention is so huge, and we could be here for a month of Sundays and still never get to the end of this discussion, is because in that system, and even in the CRM system or the DMS system, whichever, or even in the filing cabinet if they're still doing it manually, that is also used pipeline. So we've got customers in there, of course it is, but we also know what they're driving, how many miles they're driving, when they bought the car, the age of the vehicle. Right. So when we're sat around scratching our heads, thinking, oh, we're a bit low on used car stock, better go to an auction or better. And I've seen two posts within the last seven days on LinkedIn advertising for used particular brand cars that are sat there being looked after by your existing customers. All you've got to do is prospect the customers that are driving the cars that you want on your used car forecourt and say, I've got customers interested in buying your type of car, John. Would you be interested in coming down and having an account review to to see if we can get you into a new car.

SPEAKER_01:

That is really about utilising your data. That's about

SPEAKER_02:

having a strategy and having a process. And importantly, having people in your sales department or your retention department or across your business that can identify that and can actually know the processes that they need to deploy to be able to proactively fill the used car forecourt, proactively renew these customers when the time is right, proactively get these customers out of their cars when they want to get out of their cars. It is not all about going to the end of the finance agreement. There's nothing more difficult than if a customer has paid off their finance and you're three months after that, trying to get that customer to change the car when they've got used to having no monthly payment is really, really

SPEAKER_01:

difficult. Yeah, the money's being spent elsewhere. We started with strategy, then we moved to product or systems that help you to track that retention. What comes after that? It

SPEAKER_02:

has to be process because these systems are great. but they still need human beings to apply their professional skills to those systems. So these systems weren't built to replace salespeople. These systems were built so that salespeople could apply their level of knowledge, skills, and thinking to the system and sell more cars more often for more profit. That's what they were designed for. A bit like the PCP. And I'm bound to bang on about that because that's where my life with retention started, the invention of that product. That wasn't about giving a customer a low payment, ever. That wasn't ever about giving a customer a low entry into a finance agreement. That was about shortening the customer's term so that we could renew them every two to three years rather than having to go to the end of a 60-month or a 48-month or a 72-month case, in some cases, agreement. So applying processes and applying the salesperson's thinking to those systems is what makes retention work.

SPEAKER_01:

Who'd have thought it was so complicated?

SPEAKER_02:

Retention is hugely complicated, which is why a lot of dealers struggle. Now, I'm not saying they're not achieving. I'm not saying they're not renewing. I'm not saying that they're rubbish at retention. Some of them have fantastic systems, but it is so complicated that... as we're just learning about how it starts with how you measure retention. And we should be measuring all of those things. And as a dealership, bringing all that data together to find out what our total retention is and being able to work on those elements that need support. So if we're not retaining customers in the dealership or by brand or by finance product, that we have separate processes and separate levels of engagement to deal with those customers. If we talk to customers during their trade cycle or their period of ownership, we'll find out the customer's thinking, because the only thing missing from this retention process is the customer, right? So if we talk to them and find out if they've changed jobs, if they've now got married, if they're going on holiday, whatever it may be, all those lovely, nice to haves in a relationship that you want to learn about and apply them with our thinking to our retention processes and strategy, then we will achieve more. And although complicated processes it is making a difference is simple just one thing at a time because we know in a dealer group and we we analyze a dealer group of 40 dealers in a dealer group if you move move the retention needle one percent that can mean an additional in a dealer group um of 40 up to two million pounds in additional revenue that's huge But there are so many moving pieces, I think dealers don't know where to start. They don't know what they don't know.

SPEAKER_01:

Yeah, and actually the level of complexity to it, you could get bogged down in any single part of that and miss the opportunity to get that 1% effect. Yeah,

SPEAKER_02:

and where it falls down, I'm going to put my neck out here, where it falls down is many, many dealerships do have somebody that looks after retention, either a business manager, a transaction manager or a renewal manager. I have to tell you.

UNKNOWN:

Right.

SPEAKER_02:

Retention is not a one-man job. It's a culture. Everybody in a dealership needs to live and breathe it for it to work properly. You know, dealers are achieving, depends whether you're a motorbike dealer or a car dealer, anything between 14% and 37% is an average between those two entities. It didn't used to be. It used to be 60%, 70%. Why? Because we had less competition. We had more people. We were pre-COVID. And we were focused on retention.

SPEAKER_01:

And I guess the rise of the internet or the introduction of the internet also increased the visibility for customers, which increased their options of choice, which will have impacted on a reduction of retention. Maybe not at a brand level, but certainly at a

SPEAKER_02:

local level. If a dealer's gone digitized, digital retention is easier than it was pre-digitization. Because you've got even more information there for you to work with. The only thing you haven't got necessarily for the customer that wants to buy a car online is the customer physically in a dealership. We get bogged down with that by thinking they never want to come to a dealership because they buy a car online. They are still human. They are still pack animals as the rest of us. they will not mind coming to the dealership.

SPEAKER_01:

It's also quite a well-known fact that purchasing a vehicle, generally the second most expensive thing that you ever buy, it is slightly different purchasing online, you know, a widget or a television versus, you know, a£30,000,£40,000,£50,000 plus vehicle. The primary

SPEAKER_02:

difference is not even in the price, it's the fact that if you buy a TV online and you don't like it, you can get a refund. You can't do that

SPEAKER_01:

with a car

SPEAKER_02:

easily. Yeah,

SPEAKER_01:

you're kind of locked into it, aren't you? Okay, so is there anything else that we need to know or would be beneficial to us to know about retention of customers within sales?

SPEAKER_02:

I would probably end the piece on sales retention by saying we started with it's complicated, you need a strategy. But it's actually quite simple. If every person in a showroom did their best... to make sure that their actions made that customer think that they never ever want to go anywhere else ever ever again they would improve retention

SPEAKER_01:

which links perfectly with part of what we talked about in the previous podcast about that introduction of the sales customer to the after sales department so

SPEAKER_02:

sales gurus as you and John are and I have worked in after sales so I'm going to take my hat off to you because it is a challenge it's enjoyable but it's a challenge tell me how retention is viewed in after sales

SPEAKER_00:

First and foremost, I'm loving this. I'm learning so much. And the one thing I'm learning is how many inadequacies there are in after sales in terms of measuring retention, monitoring retention, and impacting retention. It's sort of three different things. I've worked with it in a whole host of different guises. But what I've worked out this morning is they've all been led by the manufacturer and not been led by the business that I've worked with. So they've all been to complement the manufacturer's KPIs and they've never actually been around what is the right thing for my business. It sounds a bit crazy and Lynn's nodding, so she probably gets it. Because I'm looking at it and I've made a short list. I've chased Polk index scores, Catalyst for After Sales scores, which is predictive marketing on what a vehicle will require next. I always thought that was a bit strange, predictive marketing, because if we've seen the vehicle before, we actually know what it needs next. I've chased service plan and full maintenance penetrations So how many service plans I've put in to the opportunity that's been presented to me. I've done that over various brands, actually, between Honda, BMW, Volkswagen, Audi Group. I've looked at email capture rates in two different ways. I've looked at email capture rates as a percentage of how good I am at it. So if I'm 95% completion of email capture rate, or I've looked at it as email bounce backs, which is the opposite, to tell me that I'm 5% and not 95% positive. But I I've never worked at it whereby I've thought, what's the difference to my business? And the one thing that made me really put a light bulb on was Lynn's comments around you've got customer information to hand in sales, which provides you the opportunity to top up your used car stock with the used cars that you want. The used cars that a used car manager or a general sales manager would want is actually the used cars that an after sales manager would want also. So we know the provenance of the vehicles. We know what's been done We know what's been highlighted in Amber EVHC at their last visit, which will probably be read this time round. We've got used car preconditioning work that's usually pretty substantial to us and pretty profitable. And we've got that cycle to retain segment two and three penetration vehicles because they're coming back to us, which means that we are prepping them, we are sending them out. Hopefully we're sending them out with some sort of service maintenance package so they're going to come back to us within a couple of years. It's just unbelievable, but it goes to show that sales in terms of retention has evolved massively but after sales has not because genuinely as an after sales manager I'm not too proud to tell you but I always looked at what was coming at me not what I lost

SPEAKER_02:

and you're not alone and that's the way the industry works at the end of the day right and you were incredibly good at what you did which is why you obviously rose to the heady heights that you did john to be able to buy a salon anyway that's a great question for you if i may be so bold from a sales perspective a car needs a service which means more to you the one that come it comes in is brought in by a customer and goes home with the customer or the customer that's intervened by the sales department gets them to renew and then gives you the car to service so it can go on the used car forecall?

SPEAKER_00:

That's a great question. It's rhetorical. I'm looking at the retail. I'm looking at the retail where I should be looking at the bigger picture. Yeah, I agree.

SPEAKER_02:

Either way you get the service, the technician gets the work right. Everybody's happy, including the customer.

SPEAKER_03:

yeah

SPEAKER_02:

and sales being the biggest customer of after sales but it's always from a sales perspective there's always been that friction there where we've tried to do that in retention with after sales departments so it's just interesting to hear your perspective actually

SPEAKER_00:

the the thing is when i'll be honest and i had this mentality for a long time whether i was running one or two or three multiple centers as an after sales manager Yes, I was very much focused on what my budget split was. I was very fortunate that I would build my own budgets and nine times out of 10, they would get past the FD. Of course they would. I would get my own way eventually. But yeah, I was never that concentrated on my split. I always thought that if I budgeted correctly, my split would normally take care of itself. But over the line in service was over the line for me. You know, if I'm profitable, I'm profitable. If my retail come in at 95%, but my sales and internal money come in at 105%, and I blitzed through the number, no one was going to take my lunch money from me.

SPEAKER_02:

In terms of retention, and this might blow your mind, John, actually, and you do, in sales retention, in the last 12 months or so, we've started to get into propensity modelling. How likely, and measuring the customer on how likely they are to buy another car from us based on our interactions with them, based on their previous behaviour of changing their vehicles. Is anything like that heading into after sales? The likelihood of a customer coming back for a third service once they've had a first and second?

SPEAKER_01:

So there have been surveys conducted in the past that will indicate the likelihood of customers repurchasing the same vehicle based on their after sales behavior. experience whether that's a repeat repair what's the impact of a repeat repair you know on the likelihood of purchasing the same vehicle or the same manufacturer's vehicle but also on the likelihood that they'll come back and buy from the same dealership as well there was some jd power statistics that were really quite powerful and the one that always stands out for me and this is a few years old so it's likely to have changed a bit since then but i'll bet it's still the wrong way up a repeat repair meant that a customer was four times less likely to purchase the same manufacturer's vehicle and like i say that's all that those old stats but i'll bet you it's not that different now so the impact on that repeat repair feeds back into that brand loyalty piece or brand

SPEAKER_02:

absolutely and that repeat repair piece fits lovely into the analogy of the hairdresser because if i come out of a hairdresser and it happened to my daughter recently where there was a piece one side cut shorter than the other and she had to go back to get it corrected the last time she had a haircut she did not go back to that hairdresser so it's the mindset you're right it's the mindset you know if sometimes it's not about getting it right first time because some of these things are very complicated right you know there might be something that needs tweaking or something that needs polishing or oiling or whatever after you've had a maintenance or repair visit it's how you handle that when the customer brings it back up Customers think the dealership built the car. So if anything goes wrong, it's your fault. How you handle that has got to be key to that customer's loyalty. Because loyalty is about the emotional side of retention. And if that customer has a bond with you and is willing to listen to you and is willing to tell you what is wrong and how you can fix it, then we should listen and we should fix it.

SPEAKER_01:

It's interesting because whenever I'm talking about customer service or delivering customer service training, I'll always say things go wrong. It's not the fact that it's gone wrong that will make the customer never come back. It's how it's dealt with. And you can experience that at all sorts of levels, whether that be in a pub or a restaurant or wherever, there are problems. My steak's undercooked or whatever it might be. It's how that's dealt with that makes the difference. When your steak comes back out and it's cooked right, do the peas look like they've died a second death and your chips are soggy because it's been sat on the side? Or have they renewed all of the bits around the steak? It's that scenario, how the problem is dealt with. You don't want somebody

SPEAKER_02:

to question you... flagging that up, right? You don't want them to say to you, what do you mean? Well, it's cooked medium rare. Well, no, it's not. You just want them to say, I'm really sorry about that, Mr. Bounds. Let me get you another steak.

SPEAKER_01:

It's empathy, isn't it? It's instant empathy that, okay, I'm seeing this different to you, but actually I'm just going to deal with it from your perspective as opposed to

SPEAKER_00:

my perspective. I think we need to remember, though, that for the customer that will give us the feedback, I mean, I've been fortunate whereby I had a lot of customer issues in the past that became our biggest advocates on how we've dealt with it because it's the character of who you're dealing with that will turn the tables. And I always used to think that, you know, once I hit the manager's desk, it was a bit too late to then go toe-to-toe with the customer. It was very much, you're right, let's talk about it, let's fix it, let's show you who we are next year at next service. And it's everything that goes along with it, not necessarily about just giving something away for free either actually. It's about enhancing the experience and making a commitment but I always used to worry about the customers that didn't complain. I always used to worry about the customer that didn't take the customer satisfaction survey to give us a one star out of five and pour their emotions onto the satisfaction survey because then I could do something with it. I always used to worry about the customer that voted with their feet and there'd be a lot of them and that's the one that's your worry I think.

SPEAKER_02:

And therein lies an opportunity because we know that's the same in sales and service because in service if somebody doesn't fill in that questionnaire i would want a strategy or a process in place where my team would call that customer and say john lynn from abc motors we recently sent a survey i noticed you hadn't returned it did you get the link okay can i send it to you again please because it actually means the world to us

SPEAKER_00:

yeah absolutely

SPEAKER_02:

but we don't do that in after sales why We haven't got time.

SPEAKER_00:

Yeah. I agree. As I said earlier on, we're very much focused with what's in front of us as opposed to what's left out the back door.

SPEAKER_02:

And that's not anybody's fault. I'm not having a dig there, by the way. That's the elephant's knee theory, right? It's just the way it is.

SPEAKER_01:

So this is absolute class, class conversation. We knew that this was going to be good, which is one of the reasons why we wanted to talk to Lynn on this podcast. We've ventured into the after sales arena and loyalty retention, however we want to define it. What, from your perspective, Lynn, is what else is missing within after sales retention of customers what would you here's your open forum what would you be telling after sales that they need to do more of less of

SPEAKER_02:

firstly in after sales if we're looking at after sales as a department We need to define what retention is at dealer level. What is retention to you?

SPEAKER_03:

And

SPEAKER_02:

I know we're chasing J.D. Power surveys. We're chasing Polk statistics. We're doing whatever we need to to measure up. But what are we doing for ourselves? What do we want it to be? I mean, ideally, what we want it to be is that every customer that buys a car from our dealership, new or used, or a motorcycle, new or used, comes back to our service facility to allow us the privilege of looking after their vehicle for as long as they want to own it. What we put in place around that is more of a sales strategy. I'm not talking about upselling. A sales strategy of regular contact, not just once a year when they need a service. Things happen in between time. Huge missed opportunity. Amber work. I still haven't had that phone call, by the way. Last August, I was told that my brakes would need fixing or sorry, replacing before my next service, which is August, obviously this year. And I had a phone call to say, just wanted to remind you that you had some amber work flagged up to you last August. Do you want to pop your car in so we could give it a quick look over to make sure? that you're still on the right side of safe.

SPEAKER_01:

There's a bright red flag to all after sales managers listening to this. You know, you need to ask yourselves, have you got customers out there that are in Lynn's position? It doesn't

SPEAKER_02:

have to be a service advisor that makes that call. It doesn't have to be a salesperson that makes that call. In fact, anybody could make that call. That customer has bought a car from the dealership, has been into the service department, so they know people on both sides of the business. Anybody can make that call. Just to say, you know, if I'm a salesperson and I've got call book with yourself dave just as an annual account review for your finance agreement whatever it may be i should know if you had amber work flagged up at your last service because actually that gives me an additional opportunity to have you come into the dealership now it might be whilst we're just checking your breaks over dave we could do the account review at the same time

SPEAKER_00:

yeah in fact actually when i was having a conversation not too long ago uh with a very good friend very good colleagues front house manager that i i I worked with for a long time. We used to talk about the investment in the vehicle EVHC. And Dave and I have a real affinity for this. And it's, if Lynn's car requires brake pads and discs at year two, and you've got a four year agreement with the business, it means you're only investing in your brakes once in that car's life cycle because the likelihood is you're going to change it at three years or you're going to change it at four years. When you change it, your new car comes with new brakes and then you've got another two years down the line providing your driving style and your mileage profile has never changed. So you're only investing in that repair once in that vehicle's life because the second time around it's probably the sales department that's going to invest in that because the after sales department is going to do the used car prep on your vehicle So, yeah, listen, I'm 100% with you on this. It's a no-brainer. Unless you're in a position where you have to convert something in amber, you'll never ever look at it. If you've got bookings with five or six weeks lead time coming in at you, busy periods, three or four weeks sometimes in your quieter periods, you're never going to look at that. You're just going to hope it's going to take care of itself and the customer's going to rebook in and actually do the amber for you. Because there is some of that. There is some of that. Genuinely, as some of that, customers will just come back and say, can I get my car checked out? But you're right. I mean, how often do we do? I mean, I used to, in GLR, I used to run a holiday health check, which was come in and get your vehicle checked halfway through the point of the year. And I would do a winter health check. So let's make sure the car's safe for the winter periods. And it was a great piece of work. It's 20 minutes. It's a washing hoover, which you're having to invest in, which is fine. But it just, one, it maintains the customer relationship with your retailer, which which is great. They're probably coming in halfway through the point of the year where they were going to come in for service anyway. And two, it's the right thing to do. It's due to care. It's due diligence. It's just the right thing to do.

SPEAKER_02:

You've missed out one of the checks though, John. You missed out the pothole check.

SPEAKER_00:

Ah, yes, of course. My apologies. The old pothole check. The pothole check.

SPEAKER_01:

I think it's interesting though, and what you just said there, John, the interactions in between servicing tends to be those seasonal checks, as you say, the holiday check, the winter check. But I would suggest that the mindset within the after-sales department isn't about focused on the customer loyalty or retention Yeah. Yeah. take that business from that customer without them feeling like they're having that money taken from them for that piece of business. But the other piece that I wanted to just note, and it was something that Lynn said that I think is really, really important because, again, it links with the mindset. You said, and it's obviously very natural to yourself, Lynn, but I don't think this is broadly seen within after sales, it's a privilege to work on that customer's vehicle.

SPEAKER_02:

Absolutely. I

SPEAKER_01:

don't think that mindset exists within after sales. And again, that's not a criticism. I'm after sales through and through and, you know, we'll never be any different. But I don't think we think about it like that. If anything, it's a damned inconvenience that this customer dares bring their vehicle into the business on the busiest day of the week. And it's like, whoa, hold on a minute. We should see it as a privilege to be working on

SPEAKER_02:

this customer vehicle. in the hope and should be an expectation that that vehicle one day will be sat on your own used car forecourt

SPEAKER_03:

yeah

SPEAKER_02:

absolutely you don't want that car when it's sold as a used car to come back two days after it's been sold because the customer's got an issue with

SPEAKER_01:

it or even the just the reconditioning costs when it comes in as a used vehicle before you can retail it out as a used vehicle having astronomical retail costs share share some of that cost with the customer that owned the vehicle to start with

SPEAKER_02:

because recon costs don't get me started How come they only occur on the cars that we sell on the used car forecourt? Can some of that not be taken care of while the customer's still owning it before it comes back and is

SPEAKER_01:

renewed? Yeah, absolutely. Share that cost with the customer that owns the vehicle. Do we want our customers

SPEAKER_02:

driving a car that actually is going to need reconditioning before we can resell it again?

SPEAKER_01:

Okay, so brilliant conversation. Really enjoying this. But I do have one question. More question for you, Lynn, that might just help people to build some of that strategy that you said is usually the bit that's missing. What would a customer retention utopia look like? What does perfect look like? Does it exist? Have you ever seen it?

SPEAKER_02:

What does that look like? On the lower end of the scale, utopia looks like moving the needle 1%. On the upper end of the scale, it's delivering on the customer's perception. The fact that sales, used car sales, and after sales, they've all got sales in the title, work harmoniously on the retention strategy for every single customer. That, for the dealer, will cut down on resource, cut down on cost, improve efficiencies across the board, bar none. And in terms of customer satisfaction, well, wherever you want to take it.

SPEAKER_01:

And that's without spending any money. It's

SPEAKER_02:

free. They've got what they need to achieve great things already. They just need to know how.

SPEAKER_01:

Fantastic. Well, I guess on that bombshell, if you want to know more about customer retention, then Lynn's Business Think Academy is a great place to start. You can get a download from her on what you should and shouldn't do with retention. And I'm absolutely confident that Lynn will be able to get you some of those 1% incremental gains within your business. So massive thank you, love these conversations no longer do we have two old blokes just chatting about after sales we've now got two old blokes and a glamorous lady chatting about automotive absolutely fills fills my heart it really does i'm going to invite lynn back for another recording for another podcast because i think it's quality it genuinely is quality and this is bringing a broader perspective to what an after sales business does within that broader dealership but actually some of the gains at a higher level within the dealership where you start looking at it from a whole as opposed to a part what i really want to do is i want to get into a to and fro debate about the challenges that after sales have with sales all of those irritations those niggles and we touched upon some during the last podcast but i think there's some mileage in us having that uh having that discussion and and i'm pretty sure that lynn will be able to come back at us and go yeah but why don't after sales do this and this is what irritates sales I think that could make for a great podcast what do you guys think well I

SPEAKER_02:

think firstly I'm humbled thank you for inviting me to start with and thank you for inviting me back be careful what you wish for I would love to be part of another podcast or more podcasts and I look forward to the opportunity of having that bun fight between sales and after sales but I'll say a couple of things one think we should sell tickets for that podcast because that is going to be

SPEAKER_01:

subscribed subscription only

SPEAKER_02:

really interested to know what your listeners or should i say our listeners perspective on the sales after sales button fight so i if they sent in their challenges or their perceptions and have us fight it out anonymously on their behalf i think that would be fabulous

SPEAKER_01:

well i think we'll record it and put it on john's only fans site so that we can monetize that particular one subscription only now to be fair it'll be class that's definitely going to be free give us your thoughts what are your frustrations whether you sit in sales or whether you sit in after sales or parts or body shop doesn't matter not not not bothered tell us what are your frustrations or admin or admin absolutely don't forget the people that glue the whole thing together you know what is it you get frustrated about with those other departments let us fight it out for you I don't fear John and I's chances against Lynn even though it's two on one I'm not sure we're going to come out on top with that but look absolutely brilliant I look forward to those comments coming in and let's let's have that let's have that fight John you can finally go toe to toe with somebody good luck

SPEAKER_00:

can I just say when this has been a privilege as much as a pleasure it really really is good fun and really thought provoking for me as well so listen thank you so very very much and I'll look forward to round one in a few weeks time

SPEAKER_02:

excellent thank you John it's been an absolute privilege for me too I can honestly tell you there's not two guys I would much rather spend two hours with than you two

SPEAKER_01:

thanks so much great stuff it's a privilege for all of us there you go that's the gooey stuff done let's get on to the fighting thanks for spending your time listening to our podcast we genuinely do love recording it I hope that comes through in the passion and also the humour as well hopefully you enjoy some of that but thanks for listening stay in touch and let us know what you want us to talk about music music Thanks for listening to the 1% Partnership Podcast. We hope you enjoyed listening to it as much as we enjoyed making it. Keep your ears peeled because there's more episodes coming along very soon.