E.N.G’s 3rd Annual Executive Summit “Next Generation Automotive CRM”: Identifying, Attracting and Retaining Customers through Search Strategies, Online Marketing and Targeted Campaigns
Recently I was fortunate enough to attend the European Networking Group’s 3rd Annual Executive Summit “Next Generation Automotive CRM,” August 15th & 16, at the Marriott Manhattan Beach, Manhattan Beach, California. The program focused on Internet-related customer relationship management in the automotive sector, with seminars that included expertise and “best practices” from both the manufacturer, media/consulting and retail dealer perspective. Not long ago customer relationship management itself was a new topic for automotive retailers, so to have a conference on Internet-enabled CRM shows you how far dealers have come. Five years ago the manufacturers looked at the Internet as strange new world, and dealers were outright hostile to those “twenty something” led companies who were going to replace the franchise dealer. And for good reason – remember the lunacy of “CarsDirect”, with a business model to buy vehicles from franchise dealers, replace the new car dealer in the consumer service model and sell direct to the public and somehow make money, hence the name “CarsDirect”…I couldn’t listen to it with a straight face back then even after it raised $195M on the concept, one of the largest amounts raised for a the start-up company back in 1999 if I’m not mistaken. That business model crashed and burned before the Penske folks quietly brought it back to reality as a dealer lead generation tool.
This “Next Generation Automotive CRM” conference certainly updated me on the tremendous evolution and advancement in using online and emerging media tools to refine and enhance customer relationship management. In what seemed a very short time, we as an industry have gone from skepticism of the Web to the “state of the art” in using online leverage to build relationships, solicit new business and cost effectively manage growth and build brand identity.
An Interesting Keynote (from an Interesting Company) and then Vehicle Manufacturers’ Developments
The jury is still out on Malcolm Bricklin’s latest venture, Visionary Vehicles, which plans to import a US version of the Chinese Chery cars. Bricklin was a founder of Subaru, and has since had a string of less successful automotive ventures, including the ill-fated Yugo. But the keynote address by Paul Lambert, President of the new company and a veteran marketing executive, was very interesting.
Most of the rest of the day focused on how automotive manufacturers are using new media as a method to communicate to, and build, customer and prospect interest and loyalty, and the ability to measure the results of their new media programs. Christine MacKenzie, Executive Director, Multi Brand Marketing & Agency Relations, Daimler Chrysler, gave a presentation entitled “Emerging Media…The Leading Edge” with examples of what Daimler Chrysler is doing in that regard (I like those bobble head Jeep commercials she ran, that now seem to be everywhere on television). Patrick McFarland, Head of Customer Knowledge Services from Ford Motor Company, had an informative presentation on “Customer Lifetime Value – Predicting and Applications to Automotive Marketing”…this, although not mentioned directly, has aggressively filtered down to the dealer level, with even the major dealer computer vendors building in an easy way for service writers in the dealer service shop to calculate, with a keystroke, the gross revenue each customer has generated for the dealership over a multi-year period. This last point I picked up not from a presenter, but from some dealer people I had lunch with that afternoon; seems a simple obvious thing to want to do, but it was impossible back when I was a dealer.
There was a presentation on maximizing the profitability of customer interaction – “A Strategic Framework for Driving and Leveraging a Profitable and Effective Customer Experience” by Michael Fitzpatrick, Chief Marketing Officer of Harte-Hanks. This was followed by the first panel discussion of the day, moderated by my old friend Cliff Banks, Director, Editorial Development, Ward’s Dealer Business (a dealer trade magazine I’ve been reading now for at least 16 or so years), entitled, “Moving Your Business Online – is Search Engine Marketing the Answer to Declining Sales.” This presentation was the first to directly apply the applications of search engines and new media to automotive retailers, and, as such was of the most interest to me. The panel included representatives of some of the “best and the brightest” marketing, communications and customer retention dealer group managers, with Richard Fisler, Corporate Marketing Director for the C.A.R. (Conant Auto Retail) Group, Erin Touponse, Director Development & Communications, Harte Auto Group, and Cassie Broemmer, Director of Customer Retention and Marketing, Van Tuyl/Automotive Investment Group.
One of the things that is clear to me, at least, from listening to his panel, is the fact that the most advanced and effective dealers using the Web are creating their own leads through things such as search engine marketing, and the role of the “third party” customer lead generators (the Autobytels and the like) is being greatly reduced, if not marginalized completely. The handwriting is certainly on the wall when the general metrics are revealed, that, indeed, when closing ratios are considered, the least expensive Web based leads for a dealer are those that are self-generated (through things such key word purchases), the next least expensive are those generated from the various manufacturers (such as through FordDirect), and, by far, the most expensive leads are those generated by the many “third party” vendors – who in many cases generate their dealer leads through the same key word purchase/search engine technologies that are available to dealers directly (that is, those that know how to use them correctly), and their only addition is a cost mark-up.
That Afternoon, I Couldn’t Resist Listening to How Ferrari Targets their Prospects…(my Road Rally invitations must have been lost in the mail)
The afternoon had a couple of break out sessions and I had a choice on which to attend. One choice was listening to David Kain of Kain Automotive, who I heard gave an excellent presentation on utilizing search engine marketing (and I know this to be true, having heard David speak before at a JD Power Roundtable as well as some other venues – David is one of the best known speakers on this topic). The second, and I have to admit, the one I succumbed to my temptation to hear, was given by Paul Montopoli, Director CRM & Marketing Planning from Ferrari North America. Just to hear how the Ferrari folks treat and nurture past and potential owners was a trip…when you sell a few hundred cars a year at ultra high prices, to people, who, I learned, more likely than not have a whole fleet of super luxury expensive vehicles (and private jets and yachts as well) you have to be very generous for your “lifestyle” exclusive cocktail events and “road rallies”…but unfortunately for guys like me they are also very selective…
The first day closed out with a presentation by Dan Keller, General Director, Marketing GM/CRM, General Motors, on how he uses technology to coordinate and leverage all of the various company contact points for a typical GM/GMAC customer – with a company as large as General Motors (all the vehicle brands, GMAC, GMAC Mortgage, GMAC Insurance, OnStar, etc.), the coordination alone is an serious task.
Being a Former Car Dealer who Leveraged “Old World Off-Line” Customer Leads, Ralph Paglia’s Case Study on Day II was Far and Away my Favorite Part of the Whole Conference…
Day two started out with a presentation by Aaron Smith, Interactive/CRM Marketing Manager for Hummer, on “Empowering the Customer” and matching dealer inventory customer demands. Then my old friend Ralph Paglia, CRM/eBusiness Director, Courtesy Chevrolet shared with the group the strategy and technique that produced his phenomenal success at Courtesy Chevrolet in Phoenix, AZ, and made Courtesy the leading Internet retailer of new and certified used Chevrolet vehicles in America, in a presentation entitled “Integrating the Internet Department into our Retail Strategy.”
Frankly, Ralph’s presentation, and the whole CRM/eBusiness organization and their results to date are so impressive that I immediately looked to do a podcast for the blog with Ralph, to give a more direct experience for those blog readers interested. Even with something like 38 people in his department, organized into three fully staffed business development centers, an eBusiness finance team, and four distinct Internet sales teams operating out of four separate buildings, Ralph is still rapidly growing his Internet operation, through a state of the art interactive marketing strategy (creative key word purchases, site creation etc.) strategically coordinated with traditional off-line media marketing.
Of course, part of Ralph’s advantage is that he has always been in the forefront of automotive retail Internet and interactive marketing, as a consultant or practitioner, since the science (or art depending on how you look at it) began, now probably close to ten years now. And clearly, part of his success has to be his unique insight and energy. But I have to tell you, seeing Ralph’s phenomenally successful results on leveraging new technology (not to mention the fun he has with it on leading the pack in the online dealership environment with a single point store), more than anything else out there, makes me wish I was back in the retail car dealership environment. Way back when, before there was an Internet, I had some decent results in leveraging “old world” direct marketing (direct mail, telemarketing, etc.) - as the Internet geometrically expands this reach, as no better an example than Ralph has proven, it makes me wonder how I would fared in the online environment today as a car retailer. The Internet truly is a great “equalizer” in a lot of ways for car dealers, and, I think, in many respects one is limited only by one’s imagination, creativity and drive in leveraging its use for results, rather than in the old world limitation parameters of physical location, number of franchises and locations, etc.
A Research Analyst, a Few More Manufacturers, and Close Out with a Car Dealer
Later in the day, Ron Rogowski from Forrester Research, made a presentation entitled “Building Your Automotive Brand Online” mostly aimed towards manufacturers, while Valerie Fuller from FordDirect (the manufacturer/dealer cooperative site from Ford created to drive Internet traffic to Ford dealers) addressed the group with “Supporting Dealer Operations Through Customer Intelligence.” Also, Mike Musich from Toyota Motor Sales USA had a presentation on “Working Together for the Ultimate Customer Experience – How Toyota and the Dealer Organization Can Drive Higher Customer Satisfaction Toward Improved Customer/Owner Loyalty.
The last presentation of the day, however, was of greater interest to me than the manufacturer centered presentations, as it was conducted by a car dealer principal addressing a issue that, although focused on Internet-based sales, certainly addressed a problem that pre-dates the Internet inside car dealerships, namely, how to recruit, train and retain good sales representatives. The case study presented by Mike Johnson, the owner of Antelope Valley Ford/Shuttle Lincoln Mercury entitled, “Training Staff for Professional Online Service” began with the fundamentals of how to hire and train “green peas” (car lingo for people hired with no experience in car sales) – in this he had an advantage, as an ex-schoolteacher he developed a training/tracking program from the start. He also outlined the “bad habits” all dealers went through before terms like “CRM” were important, such as relying on “ups” (again car lingo for someone who walks through the showroom door inquiring about a car), and promoting the practice of doing everything possible (advertising & promotion, manipulating phone inquiries, etc.), to drive the prospect physically into the facility before any serious interaction took place.
Johnson then outlined how Internet sales, and indeed, the development of CRM in general, required a very different culture for success – one of his presentation bullet points, “determine when, not if a separate sales staff for Internet customers is needed,” kind of says it all. In an era where the average dealer spent $565 per retailed vehicle in advertising (NADA data for 2004), Mike Johnson’s emphasis on hiring, training and accurately measuring the performance of sales personnel, particularly in the emerging Interactive media area, not only makes sense, but probably will dictate which dealers survive and prosper in the years to come.
Although this was the third in the series, I had never been to one of these manufacturer/dealer E.N.G. Next Generation Automotive CRM conferences before, and was very impressed with the information presented and the quality of the presenters and audience. At the end of the day (literally), I’m more convinced than ever that the automotive retailer world is rapidly dividing up into those that “get it” and those that don’t (or refuse to…sometimes clinging to old past practices as doggedly as the venture capital folks a few years ago were blindly convinced that Internet-based “bubble era” companies were going to replace the automotive retailer). It’s clear to me, at least, that with new technologies, automotive retailing is evolving and changing more rapidly today in prospect lead generation and customer relationship management than at any time in its 100+ year history – the message is “keep up with the latest developments, or lose the race to the competition…”
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