Manufacturers are from Mars, dealers are from Venus.
Sometimes it seems that these two sides of the automotive industry, like the two sexes, are ruled by different planets.
As independent business people, dealers typically have priorities that are rooted in the short-term: making sales and moving selected inventory.
Manufacturers are interested in moving product, too. But their focus tends to be on longer-term issues, such as market share and brand image. And that doesn’t always mesh perfectly with the entrepreneurial mind-set of the dealers.
Lately, though, the two sides seem to have reached consensus on at least one key issue: the primacy of customer retention.
Automotive manufacturers, of course, have always sought to cultivate customer loyalty, as have dealers. But a number of factors – the growing role of technology in the car-buying process, a more informed consumer and a fiercely competitive market – have dictated that manufacturers and dealers begin working more closely together to establish better relationships with customers.
‘What manufacturers are realizing is that the relationship with the customer has to be strong right through the period of ownership,’ says industry analyst Richard Cooper of Toronto-based J.D. Power and Associates. ‘And the dealer is very much a part of that, through the service and maintenance process.’
As this realization takes hold, many manufacturers have begun collaborating much more closely with dealers in a number of areas, from customer service to advertising and promotions.
Service
So how do the two sides go about mounting a concerted effort to improve customer satisfaction?
Very carefully, says Jim Miller, senior vice-president, corporate affairs with Honda Canada.
Dealers and manufacturers, Miller concedes, may not always share the same set of objectives. Still, in recent years, the relationship has reached a new level of maturity.
‘We both realize now that customer retention is critical to future business,’ he says. ‘Maintaining customers is much more cost-effective than trying to conquer new ones.’
As part of their heightened focus on customer retention, some manufacturers are looking at ways to improve the physical environment in which their vehicles are sold. General Motors of Canada, with its Image 2000 plan, and Saturn, with its Retail Environment Design program (red), have been the leaders in creating a uniform look for their dealerships.
Honda, too, is making strides on this front.
In Edmonton, Millwoods Honda is in the process of designing a prototype dealership facility, based on a guide provided to them by Honda. Glenn Connelly, general manager of Millwoods, says it will boast features such as a lounge area, where customers can sip a coffee and peruse product literature in a relaxed atmosphere, without unwelcome intrusions from salespeople.
What all this demonstrates is that the industry has begun paying much closer attention to how vehicles are sold.
Research conducted by J.D. Power suggests that, of all the aspects of the car ownership experience, it’s the act of purchasing that consumers enjoy least. With overall product quality becoming more consistent across the industry, contact at the dealership level is likely to play a bigger role in customer purchase decisions – hence the need for manufacturers and dealers to collaborate on improvements in this area.
‘There’s not much difference between one [manufacturer and] another in terms of features and reliability,’ says Cooper. ‘So as the playing field levels off, it all comes down to how the deal is structured, and how it is handled.’
In Burnaby, b.c., one Toyota dealer is now working on a pilot project intended to reinvent the way dealerships sell and service vehicles. At Regency Toyota, traditional sales staff have given way to ‘personal account managers’ who work with customers through all the stages of ownership – designing payment plans, selling extended warranties, appraising used vehicles and even scheduling service appointments.
One advantage of this is that it affords customers a single point of contact with the dealership, says Mehboob Alladina, general manager of the Regency Auto Group, which operates nine dealer franchises in b.c., for manufacturers including gm, Chrysler, Honda, Mazda, Infiniti, Lexus and Toyota.
In the past 15 years, Alladina says, the relationship between manufacturers and dealers has changed enormously.
‘We are now partners,’ he says. ‘That’s the approach manufacturers now take toward their dealers.’
Toronto-based Mercedes-Benz Canada is another auto maker now working with dealers to raise the bar on service. Three months ago, the company introduced its Mobile Service program, in which a branded M-class sport utility vehicle will travel from the dealership to a Mercedes owner’s home or workplace, to service that customer’s vehicle.
Currently, the service is offered only through manufacturer-operated dealerships in Vancouver and Toronto. But Jo Anne Caza, manager of marketing and communications for Mercedes-Benz, says that independent dealers have also expressed interest in implementing the program.
While manufacturer and dealers agree upon the need to up the customer service ante, there are still some points of contention between them that need to be resolved – most notably in the area of warranties.
Frank Romeo, general manager of Pine View Pontiac Buick GMC in Vaughn, Ont., says the two sides still disagree at times about how warranty claims are processed.
‘Manufacturers have policies and procedures,’ he says. ‘And in the real world some of them work fine, others don’t. There’s a lot of frustration on the part of dealers, in that manufacturers aren’t supporting us enough in the area of customer satisfaction.’
Joe Garcia, general manager of Birchwood Infiniti Nissan in Winnipeg, Man., agrees. When it comes to keeping customers happy, he says, the dealers are usually the ones that end up on the hook.
‘Sometimes [manufacturers] try to get out of paying for something on a technicality, even though it was a legitimate expense or repair,’ he says. ‘So we have to bite the bullet.’
Advertising
Customer retention, of course, is a moot point if you can’t lure people into the showroom. That’s where advertising comes in. And here too, auto makers and dealers are finding that it pays to co-operate more.
In an effort to cut through all the noise in this crowded market, many manufacturers have taken steps to make their brand messaging at the national and the local dealer levels more seamless.
‘We make sure that all our advertising is consistent with what our brand is,’ says Stew Low, spokesperson for GM Canada. ‘And we also educate the dealer body, to help them to understand that they need to deliver a consistent brand message.’
Dealers, for their part, credit the formation of advertising associations with finally giving them some input into national brand campaigns.
The General Motors Dealer Marketing Association, for example, is a committee of dealers that works with the manufacturer to help map out strategies.
‘Previously, manufacturers would never have listened to a dealer’s ideas,’ says John McDonald, sales manager of Jim Wilson Chevrolet Oldsmobile in Orillia, Ont.
Nissan Canada is another manufacturer that has recognized the need to integrate dealers more fully into national campaigns.
‘We’ve tried to achieve a consistency between national, regional and local efforts in terms of the message, the look of the ad, and communications on certain brand information like warranties or customer satisfaction,’ says Ian Forsyth, Nissan’s director of marketing. ‘And we’ve used our 1-800 number extensively [in both national and regional advertising] to give customers the feeling that it’s all coming from one location.’
While manufacturers on the whole are doing a better job of taking the local dealer body into account when developing campaigns, Richard Cooper of J.D. Power says the real breakthrough will come when auto makers provide links to dealers through their corporate Web sites.
The impetus to do so is increasing rapidly, he adds. According to J.D. Power’s figures, the number of car buyers who used the Internet as an aid to making a vehicle purchase doubled in 1997, from 4% to 8% – and Cooper expects that percentage to grow just as dramatically in 1998.
Promotions and Events
Increasingly, ‘relationship building’ is seeping into the vocabularies of auto manufacturers. And one effective means of relationship building, many have found, is working with dealers on events at the local level, often in conjunction with a new product introduction.
Saturn, for one, has established itself as a leader in this area, with its successful Saturn Drive-in Reunions, which bring together Saturn owners in various parts of the country. In September, the gm subsidiary and its dealers also collaborated on the second annual ‘Saturn Playground’ event, in which Saturn staffers and customers in various locales across Canada came together to build community playgrounds for youngsters.
Ford Motor Company of Canada, for its part, has operated a program called ‘Pit Pass’ for nearly five years. The program was initially conceived as a training program for sales and service staff at the dealer level, affording them the opportunity to test-drive new vehicles with professional drivers, and brush up on their product knowledge.
The program, however, has since expanded to include a sizable customer outreach component as well, whereby both existing and prospective customers are invited to try out new vehicles – often before they’re even available for sale.
Pit Pass runs for seven days in major centres, and for shorter periods in smaller markets. In Toronto, Montreal and Vancouver, the event includes a day specifically geared toward female drivers. Vancouver also has a day for Chinese-Canadian customers.
Nissan Canada hosts a similar event for its Nissan Pathfinder customers. And BMW Canada does likewise, offering customers the chance to perform test-drive comparisons of bmw vehicles against competing models. While invitees are culled primarily from bmw’s customer database, dealers are also sent extra tickets, so that they can bring top prospects to the event.
Glen Rumpel, president of Stampede Lexus Toyota in Calgary, says he used to organize a ‘day at the race track’ event for his Lexus customers. Although the program earned plaudits from attendees, it eventually became far too expensive for a single dealer to sustain.
Happily, he says, Lexus has shown some willingness to help out local dealers by lending support for promotions and events. That can prove especially important in the luxury-vehicle segment, where providing added perks often has a major impact on the relationship with customers.
Recently, for example, Lexus sponsored Eric Clapton’s North American tour. When the graying rocker performed in Calgary, the manufacturer co-funded a night out at the concert for customers of Stampede Lexus. In all, some 240 Calgary Lexus owners attended the show, where they were treated to a special pre-concert reception.
‘These types of events offer a different car experience for our customers,’ says Rumpel. ‘The key phrase that you hear today is ‘relationship marketing’ – and that’s exactly what we’re doing.’
