Consumer
confidence-shaking public sector cuts are looming and the scrappage
scheme is thought to have pulled forward a lot of the latent demand
in the market, meaning that volumes may be under more pressure than
expected this winter.
In fact, many are beginning to
wonder if the uplift in new business predicted to come before
January’s VAT increase will materialise at all, causing dealers and
finance providers to turn to their existing contact books to try to
find business.
Go deeper with GlobalData
Rather than throw energy into
prospecting for new customers, however, industry consultants are
advising dealers to concentrate on their existing customer bases,
in order to generate leads from long-standing personal
relationships.
“Most people who know about
marketing say that it costs between six and seven times as much to
acquire a new customer than it does to maintain an old one,” said
Peter de Rousset-Hall, chairman of Woburn Consulting.
“The dealers should know more about
their existing customers than anyone else.”
De Rousset-Hall claims to have been
asking dealers to make the most of their previous customers for the
last 20 years, to little avail. The former managing director of
Ford Credit and chairman of the Finance and Leasing Association
(FLA) claims the return on investment can be huge.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataPhil Williams, sales director at
consultant Direct Affinity Solutions (DAS), agreed.
He said: “Statistics prove we can
make contact with 70% of a dealer’s existing customers. Three% will
be in the market to change right now, which the dealerships can
then turn into additional sales and profit.”
DAS has worked with several large
dealership networks and independents that were looking to build
sales success, and found that they were cold calling outside of
their contact books to generate leads.
“It soon became apparent that this
was not a cost-effective use of their time,” said Williams.
‘Customer loyalty a rarity’
“Customer loyalty is now a rarity
across many industries as the focus shifts towards not only the
customer service provided but also the best deal and value for
money to the individual.
“As a result of this, dealers need
to make more effort to understand the wants and needs of their
customers.”
De Rousset-Hall believes reluctance
in prospecting among former customers may reflect an underlying
problem with dealers’ attitude to the methods through which they
make sales.
He said: “A lot of sales people are
more hunters than farmers and often don’t like rejection. It is in
the nature of the psychology of salespeople.
“A dealer or salesperson would much
rather hunt down a customer when they emerge in their territory in
the showroom than call them at home in order to try and get them to
come in and do a deal.”
De Rousset-Hall went as far as to
say dealers should be thinking about repeat sales when they make
their initial sale to a customer (a sentiment echoed by Peter
Cooke, p13).
“When you sell the car, the point
of sale should also be the point of resale,” he added.
“You structure the deal you do with
the customer the first time in a way that maximises your chances of
doing a further deal for them, preferably in about two years’
time.”
This includes not taking huge
deposits from customers.
“The chances of them being able to
replace that car in a couple of years’ time without a huge increase
in payment are extremely limited,” de Rousset-Hall added.
“At a time of economic stringency, sometimes dealers go for what
is thought to be a short-term benefit but then two years later you
are twiddling your thumbs wondering where all your customers
are.”
See also: Public
sector hire spending shocks Sir Philip Green
