Will that new car be arriving in a month? Eighteen weeks? Or maybe never?
In the era of inventory shortages caused by COVID-19 and microchips, many newcar buyers are playing the waiting game, a game they don’t like.
That stress can lead to friction, but simple communication to manage expectations can keep customers in the loop — and content — and can also shore up retention and loyalty, according to dealers and consultants.
Carlton Honda in the central Saskatchewan town of Prince Albert is well acquainted with these issues, which are affecting retailers from coast to coast. As of late February, the small dealership, which typically sells about 240 new vehicles a year, had 22 buyers on a waiting list, and the only new Hondas in stock were two HR-V crossovers.
According to General Manager Steve Jeffers, sales staff contact customers awaiting vehicles whenever there is an update.
“We just phone them and let them know if the car is moving ahead or not,” said Jeffers. “If it was expected for March 1 and it’s not coming until April, we let them know.”
And it works.
“Ninety-nine per cent” of customers are understanding, he said, and there are no hard feelings if a buyer finds a vehicle elsewhere.
Maintaining customer contact throughout the ownership cycle has become critical as dealerships shift the emphasis from customer acquisition to retention, said Jeffrey Williams, president of Absolute Results, a consulting firm based in Surrey, British Columbia. In a Jan. 14 Automotive News Canada podcast, Williams said retention has fallen to about 30 per cent in the past decade.
CUSTOMERS NEED TO KNOW
“Communication is the most important thing,” said Jim McManes, dealer principal of Calgary-based McManes Automotive Group, which owns eight dealerships representing eight brands in Alberta, British Columbia and Manitoba. More calls or messages to customers keep them up to date on the status of vehicle orders, he said.
While Steve Chipman, CEO of Winnipeg-based Birchwood Automotive Group, said customer follow-up remains “ingrained in the sales process,” what has changed in the past two years is the frequency of communication.
Since the pandemic struck two years ago, Chipman said, staff at the group’s 22 dealerships in Manitoba and Saskatchewan have given new-car buyers weekly updates via text, email or phone as the vehicle moves through the build cycle. As many as 1,500 orders are outstanding across the dealership group, he said.
“Where the challenge [in maintaining a positive customer relationship] is, is if a factory order gets cancelled,” said Chipman. “It’s almost like it’s not an order; it’s a Christmas wish. You don’t have the car until it’s under the tree."
Increased communication with customers also means increased internal communication. Every Friday morning via video, Chipman updates his 1,100 employees on inventory and other issues. He also makes periodic appearances — about once a month — on a Winnipeg talk radio station, keeping the public updated on industry trends. As with many dealerships, Birchwood’s call centre also regularly contacts customers to remind them of service intervals.
The pandemic “changed everything for the majority of dealers,” said Dominic Sigouin, owner of Noahvik Consultants near Montreal. Over the past 20 years, dealers have developed sophisticated online strategies, shifting the emphasis from customer retention to finding new customers through such social channels as Google, LinkedIn, YouTube and TikTok.
But with cars and parts in short supply, “that bubble just popped,” he said.
‘GOODWILL CALLS’
That is why dealerships need to reemphasize retention, he said, returning to pre-Internet days when dealerships sponsored events such as Santa Claus parades to build links to the community. Sales staff also need to make “goodwill calls” to keep relationships with existing customers alive.
“Right now, [many sales staff] don’t have a real relationship with buyers,” Sigouin said.
“They just send an automated message once a year — Happy Birthday, blah, blah, blah.”
Instead, sales staff need to develop an authentic relationship with customers that keeps them up to date on how that customer’s needs have changed.
“If you have a real relationship, you’ll know the customer is no longer happy with their vehicle — maybe they need more space for their kids — and you will respond proactively.”
Customer contact could be as frequent as monthly through events such as hosting a guest chef and inviting VIP customers to attend.
The frequency of one-on-one contact also could be increased by reshaping the sales staff’s duties into those of a customer service concierge, Sigouin said. One person becomes the sole point of contact with the customer, making the reminder calls and acting as a service adviser.
“I will be your service adviser; I will be your salesman,” Sigouin said. “Then you are really maintaining a relationship.”
