Recent Press - sales effectiveness

Japanese luxury-brand U.S. dealerships rank best in fielding customer Internet inquiries, according to the latest results of an annual study by consulting firm Pied Piper Management.

Toyota's Lexus and Nissan's Infiniti tie for first place with 62% online-lead effectiveness, followed by Honda's Acura with 59%.
In contrast, two other Japanese nameplates score the worst, Toyota's Scion with 39% effectiveness and Suzuki, dead last with 23%.

Ford and Chrysler brands showed the most improvement from last year. In a 3-way tie for fourth place are Ford, Lincoln and Honda, each with 58% Internet effectiveness.

Pied Piper bases its rankings on a scoring index using “mystery shopping” measurements and sales success.

• Industry-wide improvement from previous year led by Ford and Chrysler
• However, 22% of customer internet inquiries remain unanswered after 24 hours

Monterey, California – March 12, 2012 – Lexus, Infiniti and Acura dealerships ranked highest in the 2012 Pied Piper Prospect Satisfaction Index(R) (PSI(R)) Internet Lead Effectiveness(™) (ILE™) Benchmarking Study, which measured auto dealership responsiveness to customer inquiries received over the internet. Study rankings by brand were determined by the patent-pending Pied Piper PSI process, which ties “mystery shopping” measurement and scoring to actual industry sales success.

Industry-wide performance improved substantially from 2011 to 2012, with two-thirds of the 34 auto brands recording higher scores, but despite the higher scores there remains plenty of room for improvement. In 2011, dealerships on average responded to customer inquiries within 24 hours 64% of the time, improving to 78% of the time on average in 2012. However, the 2012 results suggest that nearly one-in-four of today's customer internet inquiries remain unanswered after 24 hours.

In 2005, more than 275,000 dirt bikes were sold in the U.S., but over the next six years dirt bike retails plummeted 75 percent – more of a drop than any other motorcycle category. Most of those dirt bike customers are still around, but do they still ride? Are they riding, but just not replacing their bikes as often? Is it possible to coax these dirt riders out of “new-bike-purchase-hibernation” to get them interested in buying a new dirt bike again?

Hollister Hills is a 4,000-plus acre off road riding state park in Northern California. According to the park's director, Jeff Gaffney, visitor attendance grew steadily from about 150,000 annually in 2000 to about 200,000 visitors annually in 2006, which also happened to coincide with the peak of U.S. motorcycle sales. We know what happened to motorcycle retails after 2006, but what happened to dirt rider attendance at Hollister Hills between 2006 and today? Did the dirt bikers who stopped buying also stop riding?

Can your dealership sell more motorcycles and accessories simply by improving your showroom lighting? Some dealerships make no change to the standard fluorescent fixtures that came with the building, while others install bright ambient lighting as well as spotlights on motorcycles and on accessory displays. All that specialized lighting costs money to install and the ongoing electric bill may be higher too, so where are the facts proving that specialized lighting is worth the expense?

We dealership folks may be experts when it comes to motor vehicles, but other industries have been paying very close attention to lighting for many years, and we may be able to learn from their experience. Visit any mall and look at the lighting used by jewelry stores, clothing stores and for that matter, nearly any major retailer.

The reason you see such consistency, with plenty of bright but neutral ambient light as well as spotlighting, is that retail stores must achieve retail sales per square foot targets. These retailers learned years ago that the only way to hit their targets was to pay close attention to lighting.

How about some facts? Ten years ago General Nutrition Center (GNC) and its lighting supplier had an argument. GNC and the lighting supplier agreed that the prototype of a new GNC store design looked great, but GNC noticed that they could save a lot of money by cutting the display lighting from the design. The lighting supplier was not happy with that idea, but neither side had facts to back up their conviction, so they agreed to research it...

There are studies that show facilities actually have little to do with whether a customer buys a vehicle from a dealership. One such study is Pied Piper Management LLC's annual Prospect Satisfaction Index, which sends anywhere from 3,500 to 4,000 mystery shoppers into dealerships each year to determine what's most important to customers.

And yes, the facility ranks low on importance. In fact, it's the dealership's people that are the most important. Says Fran O'Hagan, Pied Piper's founder, "The sales team is what makes much more of a difference than the facility. That's not to say the facility doesn't make a difference, just that if you and I owned a dealership and had to pick between a great sales team and a great facility; we would pick the great sales team every time."

(For the record, the Pied Piper study is the most comprehensive and provides the most accurate picture of what's going on in the dealership that I've seen. O'Hagan has been in the business for a long time -- much of it as an OEM guy.)

So what role does a facility play in either the vehicle purchase or service for a customer? According to Pied Piper, there are five key points:

Back in 1985, I scraped together every last cent to buy a Kawasaki Ninja 600R from a dealer in Pennsylvania, Bill Peacock. I still remember Bill's business card to this day because below his name he had chosen for a title, “Owner, Janitor.” His point was that his dealership was a small, friendly, hands-on family business.

One of the sales process steps our company measures today is whether a sales customer is introduced to dealership management before leaving the store. For the motorcycle industry, this step is uncommon; happening less than 10 percent of the time when motorcycle sales customers visit dealerships nationwide.

Wandering around this year's Long Beach motorcycle show, I was struck by how dramatically the U.S. motorcycle market has changed — and is still changing. Remember when the four Japanese brands and Harley-Davidson seemed responsible for 95 percent of what was happening, and niche brands like BMW, Ducati, Victory and Triumph were really just curiosities? Today the four Japanese brands and Harley-Davidson are still heavy-hitters, but the brands that used to be curiosities have come on strong with no end in sight for their growth.

Maybe it goes back to that word, “brand.” I've personally been a very good retail motorcycle customer over the years, and I can remember buying sport bikes because of their horsepower, their weight and their handling prowess. I didn't buy those bikes because of the manufacturer who happened to sell them. The danger of course — for that manufacturer or the dealer — is that being the best commodity is a title that is fleeting. If the purchase is strictly based upon the physical product, what happens when the next “best” product is sold by someone else?

Earlier this year, New Jersey Gov. Chris Christie signed a bill into law allowing Sunday motorcycle sales. While pushing for the change in law, New Jersey motorcycle dealerships observed that many of their customers had been crossing over the state line into Delaware to shop on Sundays. How many motorcycle dealerships nationwide are open on Sundays? For that matter, how many have extended hours on Saturdays, instead of closing early to allow dealership employees to head-off early to enjoy the weekend?

Too many hard-working motorcycle dealerships today are holding on for survival, trying to grind out a living relying on the same number of customer “ups” in a week that they used to see on any given day. First of all, yes, you are in good company; there are plenty of other dealerships in exactly the same predicament; and yes, most would agree that you and your team didn't cause the downturn. On the other hand, you and your team are the ones who can change behaviors to drive success at your dealership right now.

Let's focus on sustainable ways to drive more floor traffic. Note that I said, “sustainable,” since a one-time, budget-busting advertising blitz is probably not the long-term answer. Here are three free or inexpensive solutions that are sustainable:

Mystery shoppers gauge things that are important to making a sale, but not necessarily of interest to customers at the particular time.

“A customer in a dealership is thinking about price and trade value, not whether the salesperson addressed specific features, asked for the sale or followed the sales steps,” said Fran O'Hagan, President & CEO of Pied Piper Management Company LLC. “Those are not what the customer focuses on, but they are what sells cars.”

Consumers who later fill out customer satisfaction surveys give feedback on their dealership experience. But there is a difference between asking buyers how they feel after the sale “and sending people into a dealership to find out what is happening during the sale,“ O'Hagan says.

Customers often aren't keyed into how to run a business, he says. “It's like Henry Ford said: “If I had asked my customers what they had wanted, they'd have said a faster horse.”