Over the past several years I have had the opportunity to travel across the United States as well as Canada speaking with independent and BHPH dealerships of all sizes. The most evident observation I have had is that most of these dealerships operate without a CRM system. In the franchise dealer world, CRM (Customer Relationship Management) is a defacto mandatory system that is critical for managing their sales pipeline. Typically, used car dealerships believe that they are too small or CRM is too expensive for their store; ironically, these dealerships need CRM/ILM technology the most. Historically most industry focused CRMs were built for new car stores and larger independents but in recent years, that has dramatically changed with more cost efficient options entering the marketplace.
Typically, when I talk with an independent dealer manager I often ask the following three questions:
- What is your customer acquisition cost across your different marketing channels?
- What lead provider is performing the best and what is its respective close rate?
- What is your cost per sale across the different lead providers you work with?
The majority of the time the manager cannot give a concrete answer to these three questions and that points to a deficiency in their business. Many used car dealerships spend the majority of their marketing budget on internet lead providers like TrueCar, Cars.com, Car Gurus, and Autotrader; however, they don’t invest into tracking their ROI which could save these stores thousands of dollars per month.
With fierce competition from franchise dealer pre-owned departments and automotive e-commerce players like Carvana, used car dealers need to be more data driven in their day-to-day operations than ever before. A decrease in front/back margin means all of the “fat” must be trimmed and making an investment into solutions that assist are essential. If your dealership is making the marketing investment into multiple lead providers there is a real need to track how many deals close rather than how many overall leads you are receiving. Often times, I will hear a dealer say that they get the most leads from ‘X’ lead provider but when further reviewing the data some of those providers are not converting with positive ROI.
Implementing a CRM is sometimes a painful process, especially if technology has not been previously embraced in the dealership. Nonetheless it’s important to understand that being more data driven and putting the proper systems in place will ultimately help your dealership succeed in today’s ultra competitive marketplace. The three most common CRM implementation and usage issues I have observed with independent dealerships adoption of a CRM program:
- Onboard Training – This is one of the most crucial components of CRM adoption. During the onboard call everyone who plans on using the CRM should be present and proactively asked questions upfront. This is where the nuances of the system will be explained and configurations like lead reassignment rules will be setup.
- Hold Your Team Accountable - Often dealerships will get on-boarded to a CRM, excited about the “idea” of a CRM and let the system become optional by the salespeople. Management should also be involved in using the platform for monitoring whether salespeople are completing follow-ups and on task. While a CRM adds tremendous value, it must be adopted with full "buy-in" and consequences for non-usage (if needed).
- Always Greener on the other side – Some independent dealers make a decision on an impulse to terminate a vendor. Its important to realize that each CRM system will have its own "quirks" and constantly changing vendors “to find the right fit” can loose momentum and unnecessarily take management and sales teams' valuable time. Be sure to vet and research your new CRM provider before contracting and once LIVE give at least 90 days to adapt to the new workflow change.
Net-net, data driven independent and BHPH dealerships have the opportunity to take advantage of technology solutions like CRM which will give them a competitive advantage over their peers. Implementing a CRM will take patience and a change in workflow but will ultimately pay dividends once adopted. The garbage in garbage out philosophy holds true in the CRM world and if your store wants to gather proper reporting accountability and "CRM Culture" is key.