Recently, a one on one client and friend of mine told me, "I don’t even consider it a car deal, Michael, until the person who bought from me sends me a referral."
Now, how powerful is that?!
It’s been well documented that sales professionals who have the majority of their business come from repeat and referral customers enjoy much higher gross profit averages, as well as, closing ratios two and three times higher than their counterparts on the line. There’s nothing more sad, to me anyway, than the twenty year veteran who still has to call "ups" with the greenpeas. Granted, some of these people still make a very handsome living but, for sure, they’re working WAY too hard for it.
Over the next few months, we’ll cover the essentials of developing and maintaining an effective marketing campaign. We’ll cover how to manage a clientele database, the timing and various methods of marketing, referral programs that work and those that don’t, when NOT to market our products or services, and this month, where it all begins.
I have come to realize that working that repeat and referral gold mine starts right at the delivery. Most consider the delivery part of the sales process but I consider it part of the follow up process. Now, if we are delivering a vehicle it’s probably safe to assume we’ve already built rapport with our customer and have earned their respect. With that in mind, I believe that the last impression we leave with our customer is far more important, and much more profitable, than the first impression. So let’s go get ourselves a shop rag or detail towel (keep it in our desk) and we’ll cover how to make our delivery process something that earns us referrals well into the future.
Although a scheduled delivery will differ from a spot delivery, we should always make sure that the vehicle is ready for them by checking for any equipment that was to be installed, making sure there are two sets of keys, that the tank is full, the unit is immaculate, etc.
We should walk them through the service and parts departments again, reintroducing them to the key players there and reviewing the hours and procedures of our particular store.
We will need to go over all the paperwork, schedules, owner’s manuals, warranty books, etc. that our Finance and Insurance associates don’t cover.
We should re-demo the vehicle. By that I mean to demonstrate ALL of the vehicle’s features to our customer and to make sure they know how to operate all of them. We should set the clock and radio stations with them. We need to be sure to show them all the safety features and where the spare and jack are located. And, when possible, we should drive the car with them again.
We need to make the delivery something special and memorable. We can use flowers, balloons, champagne, theater ropes, gift baskets, etc. to accomplish this.
Now, here’s a surprise, we should NOT ask for referrals or stuff a stack of our business cards in their hand at the time of delivery. I know this probably flies in the face of what you may have been told by other trainers, or even your managers, but we will have plenty of opportunities to ask for referrals later, as you will see. Besides, this is THEIR magic moment, not ours. Think of how it might sound if WE were the customer. The salesperson says, "Here are your keys, your owner’s manual, and your new car. But before you go, here are some of MY business cards…send ME some of your friends…help ME with MY business…blah, blah ,blah." It’s simply not the most effective way to go about getting anyone to like us, no matter what the circumstances.
Finally, remember that detail towel of ours? Here’s what we do with it. When our customers are leaving F&I, we need to make sure they see us wiping down their car as they approach it. After everyone has piled into their new car, with the registration in the window, and as they start to pull away, we scream at them to, "HOLD IT!!." We then dash over to the left rear quarter panel, bend over and give it a quick wipe or two, stand back up, smile, wave and say, "Okay! See ya!." How’s that for a good last impression?
Bottom line: make it memorable, make it special, keep it geared completely towards the customer, and have fun with it.
Next month we’ll get into the timing of our subsequent contacts and methods of long term follow up and marketing.
I hear time and time again that customer loyalty is a thing of the past, that today’s customer will take their business elsewhere for a mere $50, and that long term follow up and going the extra mile for our customers simply doesn’t pay off.
And sometimes, not always, but sometimes, I"ll ask these salespeople how they came to this conclusion. Most struggle to answer that question. If I press them into telling me what long term marketing efforts they are currently using or have used in the past, they almost always respond by detailing some poorly designed follow up system that they half-heartedly administered, and abandoned much too quickly to ever reap any results.
Then, usually, I’ll tell them that because of my job, I get to meet front line car salespeople from all across the country who make six digits a year, year in and year out. Virtually all of them have the majority of their business come from repeat or referral customers, and a few don’t even take fresh ups anymore. Some choose not to work evenings or weekends anymore, and a few even have their own secretary or assistant. There are several people like this in every market we go into.
Now, here’s what blows my mind. When I share with them what these top producing car pro’s have told me they do to build their clientele bases, almost always I see their eyes glass over or hear them explain that they don’t have enough time to do all that or I hear some other lame excuse. I guess they simply don’t believe me, or maybe they just aren’t willing to pay the price for long term success.
In part one, we had already established how a well planned and executed delivery can serve as the foundation of a successful long term marketing program. Here’s a brief overview of the short term and long term elements of most successful marketing plans:
Thank You cards: We’ll need to send these out immediately after the delivery, preferably before we talk with our next customer. We’ll need to make them personal by either hand writing them or by adding a hand written line or two if we use preprinted thank you notes. We’ll also need to include several of our business cards.
24 hour phone call: This call is primarily to answer any questions our customer may have, note any problems, and thank them again for their business. We do NOT ask for referrals. This call is for them.
72 hour phone call: This call can also be used to answer any new questions that may have arisen, note any problems, and thank our customer yet again for their business. Here, however, is where we make the transition into our marketing efforts. We’ll ask if they received our card yet or at least to expect it. We’ll point out that we’ve included a few of our business cards, explain our referral program (if we use one), and ask that they think about sending us referrals. ("Mr. Customer, I know in the next week or so you’ll be showing your new car to your family, friends, neighbors, and coworkers. When any one of them mention that they too might be in the market for their next vehicle, new or previously owned, any make or model, would you please do me a favor and give them one of my cards? I promise I’ll show them the same respect and work just as hard for them as I did for you.")
1 week phone call: This is primarily a marketing call asking for referrals and an opportunity to thank them again. ("Mr. Customer, have you given out any of my cards yet?" or "Mr. Customer, should I send you some more of my business cards? You’re out of them by now, aren’t you?")
1 month phone call: This is primarily a marketing call asking for referrals.
Quarterly newsletters: We can use quarterly newsletters to keep our name in front of our clientele base. Sometimes we can include new model info or service coupons and specials but we do need to be careful about making our newsletter "just more junk mail". The best results come from those that include such things as recipes, puzzles, motivational stories, humor, "how to" tips, family updates, etc.. We do need to detail our referral program (if we use one) or mention how much we depend on repeat and referral clients.
Note cards or post cards: We can use these in conjunction with our quarterly newsletters to make sure our name gets in front of our clientele base every forty five days or so. We can use almost any excuse for sending these like Fourth of July, Ground Hog’s Day, St. Patrick’s Day, etc. Just a quick note and a brief P.S. mentioning our referral program or asking them for referrals.
Anniversary letters: We can use this along with quarterly newsletters and post cards to round out our "every forty five days or so" marketing program. Again, just a brief PS is all that’s needed to remind them of our referral program or to ask for referrals.
E-mail or faxes: If we come across an article or story that will be of particular interest to a customer or group of customers of ours, we can zip them one of these. Just affix a simple F.Y.I. note and send it along!
Daily service check: This is where we check to see if any of our customers have brought their car in for service. We can use this as a way to drop them a brief note just to say "Hello!" and to mention that next time they should drop us a quick e-mail or voice-mail to let us know their car will be in for service. That way we can check on its progress and make sure that it’s washed and gassed before they come to pick it back up. (Most stores already wash serviced vehicles and filling it up with gas doesn’t need to cost us any money. We simply get permission from the service manager or dispatcher to add a line item and pass on the gas charge to our customer. By stapling the gas receipt to the R.O. our customer will see that we didn’t mark up the gas and filling it up was simply for their convenience.)
Birthday, Christmas, Chanukah, Ramadan, Kwanzaa, etc. Cards: When we send these out, we need to make sure we send each client the appropriate one. If we’re unsure, a simple Season’s Greetings will work. We need to make sure we send them out in plenty of time to arrive a bit early. Affix a stamp, don’t meter these and make sure we DO NOT mention referrals or even include a business card. These are NOT overt marketing opportunities!
In the next installment in this series of articles on marketing essentials, we’ll cover the various methods we can use to maintain and manage our client database. We’ll also review what kinds of referral programs are currently being used across the country and which ones get the best results.
Remember, we don’t get wealthy in the car business by simply selling each client a car. We get wealthy in the car business by creating a relationship with each client that allows us to make a reasonable profit, five or six times, over the next twenty years.
We’ve bought into the philosophy that we don’t get wealthy in the car business by simply selling each client a car. We believe that we get wealthy in the car business by creating a relationship with each client that allows us to make a reasonable profit, five or six times, over the next twenty years.
Okay, so now we’ve transformed the delivery from a function of the sales process into the foundation of a long term marketing program. We’ve committed ourselves to using the phone only for our 24 hour, 72 hour, 7 day, and 30 day contacts relying on thank you cards, newsletters, post cards, anniversary letters, service walks, and occasional faxes or e-mails for our long term marketing efforts. We even send out birthday cards and holiday greetings for good measure.
But how do we keep it all straight? How do we keep every one of our customers in the loop? And how do we keep our sanity? By choosing to get organized and staying that way!
One method of managing our customer base is the use of an index card and file box system. Most good systems have two cards per customer; one for an alphabetized index (for quick access to individual customer information) and one for a chronological index (to organize and schedule our marketing or follow up efforts). It should include alphabet tabs and month tabs for sorting. Each card should have the following information: name, home & work addresses, home/work/cell/fax phone numbers, e-mail address, vehicle information, purchase or lease terms, date of purchase, family members’ names, hobbies or interests, number & type of vehicles in household, source or name of person who referred them to us, names of prospects they have referred to us, and plenty of room for contact notes.
After each contact, we need to update the chronological card and file it in the month of the next scheduled contact. Some sales people keep a card in front of the box for each unsold customer until they are ready to file as sold customers or are no longer in the market. This method of using index cards and a file box is expandable but over time can become very cumbersome, some growing to three and four boxes. Also, it is virtually impossible (certainly impractical) to duplicate. So, fire, theft, or loss can prove devastating.
Another method of managing our customer information is to use a prefabricated binder system designed specifically for the automobile business. There are several variations of these on the market today. Some are better than others, of course, and only a few allow for both alphabetical and chronological sorting of our clientele base. Fewer still include room for all the customer information I’ve listed above. This method is certainly more portable and less physically cumbersome than using index cards, but virtually none are expandable. They rely on us purchasing a new binder every year or so and don’t take into account long term (10 or 20 years) customer retention. This method too is virtually impossible to duplicate. So, fire, theft, or loss are still issues. Still, some sales people swear by them.
My preferred method, and the method used by the vast majority of the "top guns" I’ve interviewed, is a digital database. Having our customer database on computer allows us the most flexibility, and the most functionality of all three methods we’ve discussed here. It’s also easily duplicated (just save the database to disc and store the backup disc somewhere safe), so fear of loss is eliminated.
There are several good database programs out on the market today but, by far, the majority of our clients who choose to manage their customer base by computer use the program ACT. A distant second would be the program Goldmine. There are many others, of course, some even designed specifically for the car biz, but most tend to be either too inflexible or ridiculously expensive. ACT and Goldmine both allow us the flexibility to customize it to our specific needs, so all the customer information we can include on index cards can be included here too. Also, virtually all programs will allow us to sort by any field, thus enabling us to send out any note, article, or story to a specific customer or group of customers that may have an interest in it. Most good programs will also allow us to set a follow up schedule for each client and then it will remind us of each marketing step currently due. Some will even print up a daily work schedule for us each morning!
The bottom line is to make a decision. Choose a customer information management system, get it current with our existing clientele base, and then be disciplined enough to use it and update it every day. It is initially a bit more work than just waiting for the next walk-in prospect but, in the long run, it’s a heck of a lot easier, and much more effective and profitable than relying on fresh ups to make a living. Beside, getting organized and staying that way is simply a sound way to run a business.
We did know we are running our own businesses now, didn’t we?
Is your referral program working? Should you even have one? And if so, what should it look like?
In part four of our series on developing a repeat and referral business, we’ll examine these questions, and discuss what other successful salespeople across the country, those who derive the majority of their income from repeat or referral clients, are currently doing. In every market we’re currently in, there are a few sales professionals who fit this bill. And some don’t even take new customers (fresh ups) anymore.
To find out if our referral program is working, all we have to do is figure out how many referrals we sold in the last 90 days and what percentage of those required us to invest in referral incentives. If the answer is two or three sold referrals a month and zero referral fees paid out, then the answer is fairly obvious. The validity of this test depends on how long we’ve been in the business, of course. But if we’ve been selling for five years or more, and these were our results, then it ain’t working (or we aren’t)!
So should we even have a referral program? Not if it’s the mindless $50 bird-dog fee administered in a haphazard fashion. I’d bet my next paycheck, if that’s our idea of a referral program, it’s not working very well for us right now. About half (and it IS roughly half) of the successful sales pros we’ve interviewed do NOT use any kind of formal or published referral program. They rely simply on their reputations for delivering excellent service to drive business their way. Some will pay for the occasional dinner for two, or concert tickets, etc. to those clients who either purchase several cars from them or have sent several referrals in the past. But for the most part, this half of the marketing world we visited with believe being skilled, concerned, and committed to delivering outstanding customer service is enough.
The other half employ various incentives to drive referral business to them. None, none that we’ve interviewed anyway, have had any success using the traditional (read "tired") $50 bird-dog fee mentioned earlier.
Some will spring for a nice dinner for two for every referral sent to them. They usually set up an account with one or two of the nicest restaurants in town. Then they’ll simply ask the referring client to mention their name when making reservations, so the restaurant will know to bill the salesperson’s account. (One salesperson told us they had a customer use their name for more than one dinner, so now he calls the restaurant beforehand to "approve" each referral dinner.) Some have fancy certificates printed up that the restaurant approves ahead of time and agrees to honor. Some sales people include alcohol, some don’t. Some sales people include the gratuity, and some don’t. Some use a set dollar amount, like on the certificates, but most don’t.
A few sales people like to send referring clients tickets to a concert, or a play, or a sporting event. Quite a few of these maintain season tickets for this purpose (reminding us that they are tax deductions after all). Some will send them car accessories, or wine baskets, or other gifts like that.
Others still have success using cash but it has to be a cash amount of significance. A good rule of thumb as far as how much to allocate, whether for a dinner, concert tickets, cash incentives etc. is to take our average commission, divide it in half, and then add to it whatever the dealership has already set up for referral fees. So, as an example, if our average commission is $500, and the store will allocate $100 for referral fees, the amount we can offer as a referral incentive is $350. Now we can advertise our referral program like this;
"For every customer you refer to me that, 1) sets an appointment with me, 2) tells me you sent them, and 3) eventually buys from me…I’ll make your next monthly car payment! (up to $350, I’m industrious not wealthy!)" or like this;
"Would you like to hear of a way that you can drive this Sentra for free? Well, let me tell you about Michael Money! For every customer you refer to me that, 1) sets an appointment with me, 2) tells me you sent…"
One sales person came up with this idea. He calls it "Larry’s Lottery" and here’s how it works. For every car he sells he puts $25 dollars in an escrow account. He even has an accountant client of his "audit" it. At the end of November, the accountant pulls three names from the "hat" to divide up the lottery pot. First place gets 60% of the lottery pot, second place gets 30%, and third place gets 10%. For every referral someone sends to him, they get one ticket in the lottery. For every referral that buys, they get two more tickets in the lottery. So even if they don’t end up buying from him, the referring customer gets a chance at winning some money. If they DO buy from him, the referring customer gets three chances at winning! Then to advertise it, he takes what he sold last year from December to November and projects out the total pot. Something like this;
"Remember "Larry’s Lottery" referral program! For every car I sell, I’ll put $25 dollars in an escrow account. For every referral you send me, you’ll get one ticket in the lottery. For every referral you send me that buys, you’ll get two more, or three total tickets in the lottery. The accounting firm of Jones & Jones will pull the names on December 1st. Last year’s lottery totaled $4,500 (180 vehicles sold @ $25 each). First place, which went to Mr. Client, was $2,700! Second place, which went to Ms. Customer, was $1,350! Third place, which went to Rick Refersalot, was $450. So don’t miss out! I love referrals and you will too!"
You think that might catch someone’s attention? I’m sure that all of us can come up with other ideas just as clever and just as effective. If not, we can use these ideas that have already been proven to be effective. One sales person told us that he alternates between incentives each quarter and uses his newsletter to publicize what he’s doing next.
But we must make a decision! Are we going to use an incentive for referrals or not. (Remember, roughly half of those we talked with choose not to use incentives). If we choose to employ a referral incentive, then we need to publicize it, and use it whenever or where ever we can to drive business our way.
I’ve been asked many times, "Besides the additional expense of slipping them into an envelope, what’s the best way to get our newsletters read". That’s a great question! First, our newsletters must always be worthy of being read, of course, then another way to make sure they get read is through the use of proper introductions. A proper introduction, when placed on the blank panel opposite the address panel of a tri-folded newsletter, can not only insure our newsletters get read but can also save us the cost of using envelopes.
As far as defining moments go, what’s the difference between meeting someone new, interesting, and exciting and getting someone to read our work? The answer is…not a thing!
A good personal introduction will establish interest, expectations, and a direction that the initial conversation can go. Likewise, a good written introduction will establish the direction an article or newsletter is going to take, will create expectations that can be met, and will also serve as a mental Pit Bull that grabs our reader’s attention and won’t let go. Here are some ideas:
Open with a question:
Can you guess what the most common complaint about sales people is, from both customers and sales managers alike?
Open with a quote:
"This just may be the single most important moment of your entire life." That’s exactly what the red- haired, green-eyed beauty said to me just before she introduced herself.
Open with an announcement:
Two of the most important elements in selling anything are the ability to build trust and confidence. The evidence manual is designed to help us do both.
Open with a personal experience:
While waiting to pick up a friend at the airport in Portland, Oregon, I had one of those life changing experiences that you only hear other people talk about. You know, the kind that sneaks up on you unexpectedly? Well, this one occurred a mere two feet away from me!
Open with a bold or challenging statement:
Contrary to what you may have been told, knowledge is NOT power! It’s not what we know, but what we DO with what we know that makes the biggest difference.
Open with how we felt:
My mouth was dry. My hands were sweaty. My breathing grew quick and shallow. My world went silent as the time drew near.
Open with a riddle:
As far as defining moments go, what’s the difference between meeting someone new, interesting, and exciting and getting someone to read our work? Even if we’re the most exciting person on Earth, no one will ever know unless we get properly introduced. The same holds true for our work. Even if it’s the greatest piece ever written, without a proper introduction, no one will ever know.
(Oh yeah, it’s also a good idea to make reference to our introduction in our conclusion!)
Written by Michael D. Hargrove is President of Bottom Line Underwriters Inc.