Keeping your customers happy

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How do you drive success at your dealership?

Pulse of the Customer imageThe auto industry has a long-standing policy of incentivising dealers and staff based on customer satisfaction scores in surveys.  While there is no doubt that the customer experience at the dealership has improved in many areas, the driving force has not always been the measurement of satisfaction.

Like any other retail business, most dealerships have recognized through pure experience and better business practices that customer retention is the end goal, and that satisfying the customer is just one step towards that goal.

Amplifying customer opinion

In a recent paper from the Boston Consulting Group, the company identifies five key elements where traditional marketing is being transformed as a result of the influence of new groups of customers (especially millennials).

These are: reach, relevance, reputation, relationship and referral. It’s the last one, referral, where I believe we need to pay attention.  Consumers have embraced mobile technology and social media at a mind-blowing pace over the past few years.

In a world of almost instantaneous, spontaneous and unfiltered opinion, social media platforms can very quickly amplify a message — good or bad — about a brand or business.

Look beyond satisfaction

What is the outcome we want — is it customer satisfaction or customer retention?  What is the best predictor of retention?  And what is most likely going to drive the business forward?

In the past few years more OEMs are starting to shift the focus from measuring satisfaction to measuring “advocacy” — the percentage of customers showing willingness to recommend the dealership. This is a good thing.

The best measure by far to gauge the effectiveness of customer handling is to look at actual retention in both sales and service. While we’re getting better at that, it’s still a more difficult and time-consuming task to do it properly and on an ongoing basis.

Customer surveys that include satisfaction and recommendation measures at least provide an opportunity to watch the key metrics that lead to customer retention.

But what should you watch most closely?  The measure of satisfaction is very different from the measure of advocacy.

Both measures are important, but I believe that watching your “advocacy” or recommendation score more closely is key.  It’s a more comprehensive reflection not only about how a customer felt about their last interaction with your business but also about how they feel about your business in general.

No short cuts

When advocacy measures became the rage some years ago, the “net promoter score” was touted as “the one number you need to grow.” The net promoter score is essentially the percentage of people giving a high rating to their likelihood to recommend (promoters) less those at the lower end of the scale (the detractors).

One of the problems was that many companies adopted the approach that a recommendation question was therefore the only question you need to ask.  That fit well with the feeling that customer surveys were too long and burdensome — and in many cases they were.

The problem is that with a very short survey you don’t know what’s driving your score and what to do to improve it.

Having different versions of surveys with the questions and the length of the survey determined by the customer’s responses are an excellent solution.

Where to hang your hat?

I believe that advocacy or recommendation is indeed the number that you need to watch.

But it’s not the only number. Satisfaction is still a critical component.

Unfortunately, we’ve seen significant “score compression” in customer surveys over the past few years. That’s the tendency for satisfaction and, to a lesser extent, recommendation scores to crowd to the top, making it very difficult to truly see how well you’re doing.

Coaching customers plays a major role here. That won’t go away until the incentives based solely on customer satisfaction go away.

I would pay even more attention to customer retention.  Actual customer retention is the hard measure of how your customers feel about you. They’re voting with their own money and saying they trust you.

Recommendation is a softer, but very important message, and it will become even more important over the coming years.  Hopefully, it won’t be as susceptible to score compression if incentives are placed on actual retention as opposed to satisfaction or recommendation.

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Canadian auto dealer