An easy way to make more profit in 2012 is to upsell, right? There’s no doubt upselling has its benefits. It’s a relatively easy process to initiate for starters, and, if a dealer’s staff are good sales people, it can be a pain-free process for both the customer and the dealer’s bank balance.
But get it wrong and that customer will walk out of a dealer’s double glass doors, never to return again. It’s a risky scenario to be in – and with the uncertainties surrounding 2012, it’s a scenario a dealer would be wise to avoid.
But what’s the solution to upselling? ‘It’s reselling,’ said Fourmative’s director Gary Hodgkiss at Car Dealer’s Profit Clinic. With a presentation entitled ‘Upsell or Resell – Your choice’, Hodgkiss told the audience what dealers needed to do to make customers come back in the future – and the answer was the correct handling of the colour amber.
‘If we take a look at dictionary definitions of the words ‘‘upsell” and ‘‘resale”, we find two different meanings,’ said Hodgkiss. ‘The definition for ‘‘upsell” is: ‘‘Seller induces the customer to purchase more expensive items, upgrades or other add-ons in an attempt to make more profitable sales. The organisation must ensure that the relationship with the customer is not disrupted’. and the definition of ‘‘resell” is: ‘‘to sell again”.
‘If we look at why customers buy items, we can see there are two types of purchasing habits. the first is pleasure – items such as clothes and televisions – which are items which customers consume and want to buy. however, the other type is pain purchases – such as bills – and these costs are met because the customer has to do it. In other words, there are purchases that give pleasure and relieve pain.’
Aftersales and car servicing fall in the latter category. customers rarely want to get their car serviced or replace expensive parts – but when the need arises, it’s unavoidable. ‘Underpinning both categories of buying is trust, and the challenge for dealers is to sell correctly to customers.’
Using a CAP survey from 2010, Hodgkiss showed the most likely reason for a customer to choose a franchised dealer was trust. But, the number one reason for a customer not to choose a franchised dealer was that their prices were too expensive.
‘These days, 45.7 per cent of all service work is carried out by fast-fits and independents – up from 42.1 per cent in 2010. Ten years ago it was 30.2 per cent.’ Customers seem to trust franchised dealers for carrying out important service work, but it’s the cost that’s putting them off.
‘Advising the customer on when they need to return is a great way of ensuring customer retention’
As an example of how to keep customers for life, Hodgkiss turned to the American businessman Carl Sewell and his book ‘Customers For Life’ and whose car dealerships became known for trust among customers.A famous example of Sewell’s attitude to customer trust was a sheet of paper given to Cadillac customers who had their car serviced. The sheet had three questions: ‘Are the charges (less than), (the same as), (more than) the final estimate?’, ‘Was your automobile ready when promised? Yes/ No’ and ‘Is this the second time for the same repair? No/Yes’.
‘But, trust itself will not deliver retention. Dealers need a value proposition too,’ said Hodgkiss. ‘Sandwiching trust – right first time, on time, and with a price equal to or less than expected – and retention, there needs to be a value proposition.’
Hodgkiss’s step one concerned measuring retention. ‘There are retention opportunities in new cars, used cars, services, MOTs and amber work. Dealers’ targets should be 100 per cent.’
Step two was measuring the process. It’s here where the customer experience revolves, ‘so dealers should make sure they measure it and not their customers, and dealers should be asking does this add something to the customer experience?’
Focusing on the customer was Hodgkiss’s step three. ‘Dealers should be finding out why customers are not completely satisfied as opposed to just concentrating on the customers that are completely satisfied.
‘Advising the customer on when they need to return is a great way of ensuring customer retention,’ said Hodgkiss. Managing the customer was Hodgkiss’s step four, and effective management can ensure that the customer comes back in the future. ‘Commit them now to future work. Customers are more likely to commit to someone they trust and have carried out a good service, and customers trust the advice of the service advisor.’
But it’s not just the customer that dealers need to be concentrating upon. Dealers’ own workforces are areas that need to be looked at as well. ‘Incentivise staff to deliver quality service, and teach them the importance of customer retention.’