Evidence-Based Dealership Management
By Mark Rodgers
March 22, 2010
If you didn't read last month's feature, "Motorcycle Business Myths," hop onto www.mpnmag.com and catch up go ahead, I'll wait. This month's column is part two, and it's time to discuss customer intelligence.
Customer intelligence is information about customers and their purchases that helps us understand and guide consumer behavior, increasing their interaction and loyalty to our dealership. Following are the "Five Ws of Customer Intelligence."
- Demographics: age, gender, residence
- Psychographics: key motivators
- Bike-o-graphics: what they ride, how they ride, where they ride
- How can we stay in touch with them: cell phone number and e-mail address
What products did they buy?
- Motorcycles: make, model, year, color
- Accessories: show, go or touring
- Riding gear: what and what sizes
- Services: rewards program, maintenance program, other
- Events attended: corporate-, dealer-sponsored
When did they buy?
- Time of year: fall, winter, spring, summer
- Seasonal event or holiday: bike blessing, Christmas, etc.
- Weekend versus weekday
- Personal event or holiday: birthday, graduation, tax return
- In store
Why did they buy?
How did they buy?
There are important and obvious (and not-so-obvious)insights that can be made from this customer intelligence.
Obvious examples include:
- Service labor dollars are down, target 4K mileage customers for 5K service.
- Notice luggage rack purchasers who didn't purchase luggage
- Track event participants for next event
Less obvious observations include:
- Realizing customers of a given age display certain buying habits
- Realizing people in a given zip code have certain buying tendencies
- Realizing people of a given age in a particular zip code have certain buying tendencies
"For us, gear sizes are a key component of our customer information," a dealer I recently spoke with said. "We capture size specifics for pants, shirts, jackets and shoes. Then we identify slow and non-moving inventory and e-mail special opportunities to customers whose sizes are in stock. This appeals to them specifically, and, as opposed to sending a mass mailing to all of our customers, it protects us from being seen as a spammer. It also protects us from disappointing customers for whom we don't have a particular size in stock. A side benefit of capturing both gender and size allows us to run reports giving us a percentage breakdown of size and gender, so that we have a scientific approach to ordering product for inventory." Now, that's smart retailing.
Crucial to becoming a peak performing dealership is knowing who your customers are, when, where and what they buy. Understanding why and how they buy just might put you in the stratosphere of high performing dealerships.
For many, the mind reels when debating the endless marketing and business opportunities for the customer intelligence suggested. The challenge, of course, is knowing how to obtain and organize this information? Really progressive retailers use reward programs to capture this information and as profit centers.
Evidence-Based Dealership Management
To improve, you should be using better, deeper logic and employing facts to the extent possible to permit leaders to do their job better. Based on the belief that facing hard facts about what works and what doesn't will help your dealership perform better now and in the future.
Is this really a new idea? Aren't we already practicing evidence-based management? Unfortunately, in most instances, the answer to that question is no. People do what they've always done. When we believe something is true, we look for information to support it. And when you don't believe something, almost no amount of evidence can get you to change your mind. That's what makes the execution of this idea so daunting and not for the weak at heart. In an interview from CIO Insight, Robert Sutton, one of the authors of the book Hard Facts, talks about why managers don't often look for contrary information.
Sutton writes, "There's a whole term for it called 'escalating commitment to a failing course of action.' If you look at the conditions under which it happens, a lot of times managers make a public commitment to a course of action and spend a lot of resources. They mobilize a whole base of support around it, and their medium-term financial well-being is dependent on it.
"At that point it's very hard to pull the plug and to convince others they should do so. The thing to do is to build in organizational checks and balances so you're allowed to question things and allowed to fight such projects."
You can probably name several examples of an "escalating commitment to a failing course of action" within your dealership. So how do we develop our thinking and subsequently make decisions?
Where do we come up with notions like "racing is a great promotional tool," or "commissions are the only way to drive salespeople"?
Sometimes we get an idea from a book or an article that we've read, or we hear someone in our dealer association or our 20-group suggest it. Occasionally we take the advice of a consultant. Sometimes we take actions based largely on fear (we have to discount; if not customers won't buy) or from the actions of our peers (everyone is discounting; we should too). Still, on other occasions we let hope rule the day; we hire a superstar and cross our fingers they will get us out of a jam. Or we develop an opinion based on perceived expertise (we have a couple of car guys in our 20-group, and they say ...).
I'm not saying these are not great places to develop ideas for various performance interventions. I'm simply proposing you don't accept them as gospel until you have tested your execution or interpretation of an idea for a policy or program.
In next month's column, we'll tackle those tests and move one step closer to debunking the motorcycle business myths that are killing dealers across the country.