Market Focus: Automotive: Driving Relationships

General Motors and Ford faced a challenging year in 2005. Under pressure to lower inventory levels the companies initiated employee pricing campaigns last summer. However, while lowering prices helped to move products, automakers and dealers are still in neutral when it comes to enhancing their postsale customer relationships. "U.S. manufacturers want to embrace CRM going forward. The main issue is that CRM can't be addressed simply by having a CRM program in place. You must have a different attitude that it's not just about the products," says Thilo Koslowski, vice president and lead automotive analyst at Gartner. "Most innovative companies are looking at employing CRM throughout the organization to have a consistent strategy and message. That's important, but companies need to [do it in] different departments." Honda's leasing agents have the authority to apply $1,500 to this effort, making it less painful for customers to return their cars, according to Koslowski. "That's a pragmatic way of empowering people within the organization to make consumer experiences more positive," he says. "If you really embrace CRM on a holistic level, it really becomes like a philosophy for companies." One of the biggest challenges is synchronizing the experience between dealerships and the original equipment manufacturer (OEM), according to Koslowski. Vendors like Siebel Systems are attempting to help OEMs better the customer experience, and others, such as Reynolds and Reynolds, are servicing dealerships. Still, a disconnect exists between manufacturer and dealer. Both dealers and manufacturers need to look past the original purchase and focus more on postsale concerns like reducing detection-to-correction (DTC), or the amount of time it takes from when a manufacturer is first made aware of a quality issue until it detects and corrects that issue, according to AMR Research. It takes manufacturers an average of 120 days to detect and correct problems, with each day costing $1 million when taking into account cost of service, labor, parts, and brand impact, according to Kevin Mixer, former vice president at AMR. As companies scramble to reduce DTC times, they also should be conscious of how doing so can save customer relationships. When a problem arises, organizations should work to communicate with consumers about the issue, Koslowski says. "Consumers value reliability and quality of vehicles, but 75 percent of U.S. owners value dealership and manufacturer relationships during the ownership phase. Companies that look at the presale, sale, and postsale--and understand past issues--will achieve greater success." The auto industry also must remain aware of events like a birth of a child, which may change how a person spends on a vehicle. Regular communication lets organizations collect that relevant data. Koslowski says, "Companies invest a lot of money in collecting and managing data, but do a bad job of executing on it." Car Customer Info Gets Local An Atlanta firm finds that tracking interactions with customers increases the chances of retaining them. A person shopping for an automobile can walk into a random dealership and make a purchase--or do so online. Giving customers personalized service and a consistent experience before, during, and after the sale can make a company more memorable. This is the belief of Jim Ellis Organization, an Atlanta automobile dealership with seven franchises. The company has been in business for three decades, has a solid reputation within the industry and the community, but just wasn't growing, according to Rebecca Gillies-Perez, director of customer retention management at Jim Ellis: "Everything was pointing to the fact that technology was going to help us achieve our strategic growth process." After a year of shopping, Jim Ellis selected Reynolds and Reynolds Contact Management, a Web-based CRM application that captures and tracks a customer's interactions with a particular dealership. "Our intent is not to make everyone use us in the same way, but to automate the things that make that dealership successful, to give [it] an advantage over the competition up the street," says Jill Gehrhardt, CRM solutions executive at Reynolds and Reynolds. The result for Jim Ellis was an 86 percent increase in customer retention. To improve service on the showroom floor, Jim Ellis has added Reynolds and Reynolds Desking Solution, eliminating the need for duplicate data entry, helping salespeople complete deals faster, and letting customers get in their cars in less time, which Gillies-Perez says is a "dream come true." A recent study found that among clients who did not purchase on the first day, 25 percent did so within a year, 5 percent the following year, and 1.5 percent the third year. In 2005 Jim Ellis experienced an 11.4 percent increase in Internet conversion rates--amounting to 292 more units sold than in 2004--making it 12th in the nation for its Internet sales volume, according to the company. --A.D.