automotive crm for the busy dealer

Automotive CRM for the

Busy Dealer

Automotive CRM for the

Busy DealerBy Todd Lear Smith

© Copyright 2006, 2007 All Rights ReservedLear, LLC

This publication is designed to provide accurate and authoritative information in regard to

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neither the author nor the publishers is engaged in rendering legal, accounting, or other

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1060 Terrace Blvd, Orlando, FL 32803.

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Table of Contents

Introduction ................................................................................................................ 1

What Are You Really Trying To Accomplish By Implementing CRM?............................ 2

Business Requirements Are The Key To Success ...................................................... 4

Use High-Win Projects To Minimize Project Risk And Maximize Project Momentum .............................................................................. 5

The 10 Beliefs & Attitudes That Kill CRM Projects ...................................................... 6

Summary.................................................................................................................. 10

Who’s Project Should It Be? .................................................................................... 11

What’s Next? ............................................................................................................ 11

A Final Thought ........................................................................................................ 12

AUTOMOTIVE CRM FOR THE BUSY DEALER | 1© 2006, 2007 Lear, LLC. All Rights Reserved.

INTRODUCTION

Whether you are just starting to look for a CRM for your dealership or you’re already well into evaluating aCRM provider, the information in this guide will provide some high level insight to help you improve aprocess or get your bearing before you begin down the CRM road.

The number one reason 74.3% of automotive CRM initiatives fail is due to flawed approaches toimplementation of the process.

A journey of a thousand mile begins with one step, but if that first step is taken in the wrong direction allthe other steps you take won’t matter in the least. This guide will give you the framework and point you inthe right direction for installing a successful automotive CRM system in your dealership.

The foundation

Let’s start off with a simple story about building a house.

One day, you decide that you want to put an addition on your house. You have two options on how tobegin:

1) You could try to think of what you where going to need to complete your project: Wood, nails, shingles,concrete and some tools and then just go out in the yard and start building, or

2) You could hire an architect and draw up a plan and use the right equipment, acquire the right amount ofmaterials necessary to insure a quality job and minimum waste.

Which house would you want to live in? Which do you think ends up to be a waste of your time andresources and leaks and then crumbles when the first storm hits?

Do you get the point here? Too often I have seen dealerships plunge head first into starting a CRM initia-tive without taking the necessary steps to ensure its long term success by developing a strategy at everylevel of the dealership. And, if you listen to the marketing message of the CRM vendors, you’d think thatall you need to do is buy the software, plug it in, train a couple of folks and you’re good to go. That’s anaive approach to the CRM implementation process.

The Goal for This Guide

The motivation to write this guide came from the front lines of seeing my dealership as well as hundreds ofothers unwittingly start their CRM journey headed down the wrong path and towards ultimate failure. Iwanted to get dealerships and their teams to take a breath, pause and consider their approach to CRMwith a bit more diligence and understanding.


The primary goals for this guide are:

1. To convince you not to jump into buying and implementingCRM software without using a proven systematicapproach.

2. To give you a high-level orientation on what approach totake in implementing a CRM program. Much of what’s inthis guide is easy to understand and straightforward. Asyou’ve learned, building a house addition once you havethe right information is easy too. But, if you’ve never beenshown or have never successfully done a CRM projectbefore, “you don’t know what you don’t know” and you could make a simple mistake that later wouldbe obvious. The key is to follow a proven approach for each step of the process. This way, you’ll endup with a CRM system that comes in on-budget, on-scope and on-time.

WHAT ARE YOU REALLY TRYING TOACCOMPLISH BY IMPLEMENTING CRM?

It’s amazing the number of dealerships that dive head first into putting a CRM into the dealership. It usual-ly means getting your IT guy, BDC manager or “your Internet salesperson” to start looking for software.Some check with friends in their 20 Group, look for information in trade publications or look for input fromtheir existing DMS vendor or referrals from dealer friends or associations.

Clarity Is Power

However, CRM is not a “figure it out as you go” kind of sport. That kind of uncertainty makes you easyprey in a very competitive business. Those selling CRM systems are more than happy to help you getclear and figure out your Business Systems and Business Requirements. (It’s amusing how their productwill be surprisingly compatible with your needs.)

First, work on being clear on what you’re trying to achieve. Does your dealership have a currentBusiness System? By that I mean a set process in place that you can put on a flow-chart showing thestep–by-step actions to take to close the sale. It might begin with something like: 1) Answer phone callfrom prospect with this script online; and then close with 18) walk customer to their new vehicle and thankthem for the business while handing them their new keys.

You need to define your process and business objectives in writing. Get agreement from all managementinvolved with the process to confirm you haven’t missed anything. It is urgent to get the process in placefirst before shopping for a CRM software system solution. Involve every person who touches the processfor input into deciding the system you will implement.

ACTION POINT!It’s never too lateto put a hold onyour project andmake sure yourapproach is takingyou towards CRMsuccess.


Then come up with an overall dealership CRM strategy forhow to achieve each one of your dealership business objec-tives. You may find that many of your objectives can beaccomplished without the use of sophisticated software. Itruly believe that software is less than 25% of the success ofa CRM initiative at the dealership.

Once you know what your Business Systems are, you can goto work on your business processes. Generally speaking,you want to do as much as possible to improve your busi-ness processes before automating them with software.Putting a CRM product in your store will not fix any problemswith your existing processes.

Take Charge

You need to set the tone for your demos and negotiations with the CRM vendors. That means going intothe market with a very clear understanding of your dealerships needs. The clearer you are on your busi-ness processes and requirements going in to a software evaluation, the more likely you are to choose theright solution. You will need to have your processes completely written out so you can identify opportuni-ties in the CRM that will yield you high rates of return.

When you signal to the sellers of CRM that you are following your buying process and not their salesprocess, you’ll be in a much stronger position when it comes time to get a software demo and negotiateprice. Implementing a new program is tough enough without having to implement a new sales process aswell. Be sure their CRM solution can work with your current sales process.

A Look at Common Dealership Business Systems

Your Dealership Systems can vary greatly, depending on what type of store you have, its size, location,and organizational staffing. Dealership Business Systems can be high level and then under each itemcould be the finer points, or what I call the “micro-process.”

Let’s say there is a goal to increase sales. This is kind of vague and you need to drill down to definethe process and the specific goal. You need to take this goal and look at the possible micro-processesthat could achieve this goal. Here are several potential drill down micro-process segments:

1. Get customer price and payments quotes done faster and more professionally.

2. Compress the sales cycle from 4 hours to 1 hour.

3. Reduce the number of showroom, phone ups that fall through the cracks.

4. Get your marketing message out easier and quicker and to the right people.

5. More and better marketing to generate more and better qualified leads.

6. Capture “Employee interpretation and understanding of existing business processes.”

ACTION POINT!Know what yourProcess improve-ment benefits areand specifically howyou can achievethem before doinganything else. Why are youinstalling CRM inthe first place?


7. Embed processes that currently exist in the minds of senior management and employees into sys-tems that everyone follows.

8. Prepare the dealership for succession by codifying tradition into systems.

9. Improve Customer Service in the service drive.

10. Reduce the number of customer complaints by effectively tracking them and changing policy toprevent it reoccurrence.

11. Maximized your BDC communication with the floor sales team.

12. Reduce the average number of calls it takes to resolve a customer issue.

Quantify The Benefits

Once you’ve identified your critical Dealership Business Systems, it’s time to quantify the benefits whereverpossible. The quantified list of benefits tells you how much overall improvement you can expect to see.With this number, you can calculate a reasonable budget that leaves room for an ROI. Notice that theseSystems are in line to the business objectives of the dealership. Nowhere is there any mention of thingslike “be able to see a contact’s history”—that’s a feature of software. At this stage, you want a list that isfocused on process benefits.

BUSINESS REQUIREMENTS ARE THE KEY TO SUCCESS

In the last section, I talked about “clarity is power.” Well, the Business Requirements document you put together is the single most important document in your CRM project. It’s also the one dealerships almost never do or are mostreluctant to do properly. The process of cataloguing yourBusiness Requirements requires a significant investment oftime, but it is time that will have a major payback. YourBusiness Requirements are the cornerstone to your entireCRM endeavor and is directly tied to you achieving a decentROI at your dealership.

What Is A Business Requirement?

A Business Requirement is best defined as “what must be in place to make the dealership work well.”One of the biggest sources of confusion around Business Requirements is “what” vs. “how.” BusinessRequirements do not explain how something should be done; a Business Requirements explains whatshould be done. Think of it this way: A “what” does not explain or limit “how” something is accomplished.An example of a “what” is “see a list of non-sold prospects from this month.” This can be accomplished inany number of ways:

ACTION POINT!Invest the time in putting togetheran effective set of BusinessRequirements; it’s worth its weight in gold.


• From the CRM system, print the “Non-Sold Prospects” report.

• Keep an updated list of “Non Sold Prospects” on a dedicated whiteboard in the tower.

• Keep an updated spreadsheet of “Non Sold Prospects” on a paper DeskLog.

An important point about Business Requirements is that they can be satisfied by any number of ways.The “how” will be the job of the Systems Requirement document which you will need to prepare.

USE HIGH-WIN PROJECTS TO MINIMIZEPROJECT RISK AND MAXIMIZE PROJECTMOMENTUM

If you talk to most CRM vendors, they’ll represent your CRMproject as one that will neatly unfold according to a logicalseries of rational steps. As you’ll see, reality is a bit different!

Minimize Risk

Certainly, the more you plan and anticipate potential wrinkles,the more linear and predictable your project will flow. The keyis to set your project up in such a way as to minimize the“unknowns” and, thereby, the risks. The reality is that therewill be disruption. There will be unforeseen circumstancesthat require you to adjust your plans:

• A major glitch or bug in the software is discovered two months after installing it.

• A customization everyone assumed could easily be done has a complication and is now 90 to 120days away from being completed.

• There’s unexpected resistance within the dealership that must be addressed.

Bite Size Chunks

There’s the old joke—“how do you eat an elephant? One bite at a time!”

That joke holds true for tackling the implementation of a CRM program. Too many dealerships try toimplement a CRM as an “all or nothing” proposition. This approach can quickly lead to project overloadand failure:

When dealing with projects that span many months, it’s too easy to let timelines slip and end up with“never ending project” syndrome.

It’s very difficult to develop the depth of detail required to effectively plan and execute. This increased“unknown factor” adds undue risk to the project.

ACTION POINT!Implement yourCRM system oneHigh-Win Project ata time to minimizerisk and maximizemomentum.


By taking an “all or nothing” approach, it precludes being able to learn from each phase to make the nextphase better.

High-Win Projects

The approach I recommend is implementing CRM as a series of High-Win projects. These are projectsthat have low-complexity and high-payoff. This approach gives you momentum that increases the likeli-hood of success for each subsequent project. It’s a good idea to work with your CRM vendor to come upwith an appropriate

• High-Win project to start with, balancing:

• Cost to do the project.

• Amount of time to do the project.

• Complexity of the project.

• Payoff of the project.

THE 10 BELIEFS & ATTITUDES THAT KILL CRMPROJECTS

Over my years of working with dealerships implementing CRM as well as implementing my own system atmy store, I have come across many mistaken and project killing beliefs and attitudes that were held bydealers, managers and salespeople. Back when I was selling CRM systems, I always felt constrainedwhen it came to correcting some of these misconceptions—I didn’t want to do anything to jeopardize asale! However, in my new role as impartial consultant, I can now address them squarely. A phrase I use alot is “you don’t know what you don’t know.” Well, now you do...

1. This is an IT project plan and simple.

Go back to the section on what you’re really trying to do. Notone of your answers were about technology. Every answer wasabout improving your business operations. Technology is onlypart of your CRM project because it’s only going to help youachieve your dealership goals. And, because technology is onlypart of the project, it needs to be put into its proper place: facili-tating the achievement of business systems. As you travel on your CRM journey, you’ll encounter a lot ofproject “noise” at the dealership such as:

• Disagreements over priorities.

• Internal resistance at all levels of your dealership.

• Budget trade-off decisions based on the CRM’s features.

These types of issues can only be dealt with at the dealer and GM level of the dealership.

ACTION POINT!This is a DealershipBusiness Project.


2. All CRM software is pretty much the same.

This is absolutely NOT the case. There is an unbelievable variety in CRM software, including:

• Database platforms. Some are built on rock-solid enterprise level databases while others are builton very old, proprietary and flaky databases that could cause you to lose customer records.

• Product Specific focus (showroom control, desking, service scheduling, follow up automation,Internet (ILM), BDC etc.).

• Architecture Design (web-based, server based, etc.).

• Capability. For example, you could look at two differentsoftware solutions that both claim to be “fully integrat-ed” with your DMS, but actually have two very differentlevels of integration.

Newer Isn’t Always Better

This is very important: It may be natural for you, or morespecifically your IT person, to pick the latest and greatesttechnology. However, the latest and greatest may not bemature, stable technology. Have you ever heard of the bleeding edge? Don’t get caught up in the hype offuture technology. The latest and greatest may not have the complete feature set you need. As I saidbefore, cutting edge is good, bleeding edge is bad.

3. We just need a vanilla, “out of the box” system.

The phrase “out of the box” is strictly born of the marketingdepartment. It was invented to “convince” dealerships thatthey wouldn’t have to pay for any consulting to make the pro-gram work at the dealership.

It’s not true. Remember: this is a dealership business project;you’re trying to achieve business systems. That means howyou implement your CRM system is going to be dictated bydealership business systems. Simply installing software that“works” out of the box not only does little to nothing to achieve your business systems, it can actually harmyour business if you use it under the false assumption that it’s going to achieve your business systems.

4. The software is going to work.

Ever hear of bugs? Ever hear of marketing hype? Ever hearthat salespeople just lie or really don’t know the product wellenough to inform you? When talking about whether or notsoftware works, the question really is—“does the softwarework according to you, the dealer’s expectations?” CRMvendors have become very good at marketing. They spend agreat deal of time and money to position their products in the

ACTION POINT!The primary consideration whenselecting software ishow well it satisfiesyour DealershipRequirements.

ACTION POINT!CRM Software has to be made toachieve your business systems.

ACTION POINT!Don’t expect softwareto work. Unless yousee it for yourself, be skeptical of marketing claims.


best light possible. They know what the buying motivations of their target market are and how to play tothem. This makes it nearly impossible to validate a software’s claims and more importantly whether or nota particular software is the right choice for achieving your business systems.

5. We’ll just install it and use it.

This is not like installing a word processor or even an accounting system. CRM systems are notoriouslycomplex when it comes to installing and configuring. Think of it—a CRM vendor is going to create onesoftware application that is going to work for hundreds if not thousands of dealerships, each with theirown way of doing things. Much of how one piece of software can serve so many masters is in the abilityto configure and customize it.

Know When To Bring In The Experts

If I gave you a block of marble and the right tools for sculpting and asked you to make me a sculpture ofan eagle you (most likely) wouldn’t know where to start. But, if I gave that same block of marble andthose same tools to a master artisan, he’d make a brilliant sculpture. It’s much the same with CRM sys-tems. Someone who has the experience of having installed and configured dozens of systems is going tobe able to put it in not only faster but better.

6. We’ll change our processes to fit into the system.

Now why would you want to do that? When I ask the ques-tion, the answer is usually something along the lines of“they’re in the business of showroom control and with all oftheir customers must know what they’re doing.” What theanswer usually means is that the dealership either isn’t confi-dent in their current sales processes or knows their salesprocesses are in desperate need of changing. The answer isnot to simply do it the way the software does.

In fact, think of CRM as being a bucket of Legos™. Whatyou really want are Lego instructions so you can build effec-tive dealership processes. If this describes you, then youshouldn’t even be looking at CRM software until you get a handle on your dealership business processes.If you can’t accomplish that in-house, then use an outside expert.

7. It’s the CRM Process Consultant’s job to figure out what we need and make it work.

You can certainly hire a CRM Process Consultant to document your business processes and softwarerequirements, but be prepared to spend upwards of $20,000 for it and this kind of analysis. YourBusiness Requirements document is absolutely critical to the success of your project. It’s a multi-pagedocument that describes, in detail, what your CRM system needs to be able to do, from a business per-spective. I strongly recommend that dealerships undertake putting together their own Business

ACTION POINT!Don’t look to softwareto fix broken businessprocesses. Get yourbusiness processesunder control beforelooking at software.


Requirements and to do so before looking at any software.This isn’t just to save money, but also because you knowyour Business Requirements far better than any outside party.Ultimately, you are responsible for making sure you have acomplete set of Business Requirements and that you usethose Business Requirements throughout your CRM projectto make sure your CRM Partner is delivering the right thing.

8. We can train our staff ourselves.

Usually dealerships that want to take on responsibility fordoing the training are doing so as a way to keep costs down.And it’s a perfectly valid cost-reducing step to take. However, almost without exception, I’ve seen in-house training efforts tank. And it’s almost always because following the decision to do the training in-house; there was no orchestrated effort to do it properly.

Keys To Successful In-House Training

• If you are going to take on training yourself, then make sure:

• A person with an aptitude for training and technology is put in charge of the training early on.

• A training plan is developed for managers, sale people, BDC reps, administrative support staff, etc.

• A training facility (even a converted conference room) is set-up for hands-on training.

• Your designated Trainer receives adequate training on the CRM system and can field a wide varietyof questions without having to go to the CRM vendor.

Benefits Of A Good Trainer

I would not make the blanket recommendation that you should do training yourself. I have seen someexcellent Trainers who can not only train your users, but also win over anyone who’s resisting the new sys-tem. A talented Trainer can be a critical agent in your organizational change plans. They can serve as animpartial set of eyes and ears that users will open up to more readily. They can then feed this informationback to management who can take appropriate action.

When You Should Do Training Yourself

However, many CRM vendors are strong technically, but areoften weak on training. If this is the case, then you’re almostalways better off doing the training yourself provided you takeit seriously.

9. My staff has had training so they’re trained.

People should be considered trained only once they can demonstrate a level of skill and proficiency. Formany, this may be after an initial training session. However, some will require more training and support to

ACTION POINT!You absolutely must have a good set of BusinessRequirements beforeshopping for software.It’s time consuming,but well worth it.

ACTION POINT!Doing the trainingyourself is fine, butdon’t cut corners onthe quality of training.


get to a level of proficiency. If you have users who, after initialtraining, aren’t demonstrating a minimum level of proficiency,there are several things that can be done:

• Separate one-on-one training for individuals with spe-cific questions, concerns or difficulties.

• A follow-up group session for users who are havingmore general difficulties.

• “Real world” support where you help users “at theirdesk” while they figure out how to use the system.

Warning Sign

If you notice several people having difficulties getting up to speed with the new CRM system that may bean indication that your CRM system may be poorly designed. No matter how much training you throw atpeople, if the system is a bad one, they will not be able to effectively use it. Your training plan shouldanticipate the need for additional training. Don’t let this be an unanticipated surprise. It’s critical that usersfeel there is support for them learning the new system.

10. My staff will use the system if I tell them to use it.

One of the biggest contributors to CRM failure is rejection bymanagers and salespeople. Rejection can take many forms:from “bad-mouthing” the system to outright refusal to use it.Simply assuming your staff will use it is a mistake. In thecase of “user adoption” the best defense is a good offense.You need to be proactive about your change management plan:

• Involve all staff users in the design of your dealershipsystem.

• Build a system that work well whether you have a CRMor not.

• Identify possible problem employees and put a game plan together on how to deal with them.

• Provide users with lots of training on a bug free system.

Are you prepared to handle situations such as a top-producing salesperson refusing to use the system?Be sure you prepare for situations that can be reasonably predicted. Dealing with any situations that comeup quickly is the key.

SUMMARY

Go into your CRM project understanding that you “don’t know what you don’t know”. By getting up tospeed on the “nature of the beast” you will be well positioned for making realistic plans that are based onrealistic expectations.

ACTION POINT!Users are trained only when they candemonstrate profi-ciency. Be preparedto help users becomeproficient beyond initial training.

ACTION POINT!Give thought early onto how to proactivelydeal with any potentialresistance to yournew CRM system.


WHO’S PROJECT SHOULD IT BE?

By now, I hope you have a clear appreciation for this being a Business Project whose systems are, in part,achieved with technology. Business process first, technology second.

Dealership Business Sponsor

Therefore, I strongly recommend that the Dealer Principle have involvement and act as the BusinessSponsor. This role is critical to the overall success of your CRM project. Leadership and continued projectsupport are the primary function of the Business Sponsor.

Dealership Project Manager

However, I am sure that last thing you want to do is baby-sit a CRM project, so the day-to-day manage-ment should be delegated to a Project Manager.

Role Of IT

Clearly, technology is a major input to the success of a CRM project and the IT department will have a sig-nificant role to play. However, their role should not overpower business decisions, including choice of soft-ware. When evaluating software, the role of IT is to be part of the evaluation, offering an opinion (albeit avery key opinion), not the final decision. If you don’t have an IT department no problem. Assign two ofyour more technology savvy people to look into CRM programs and write an evaluation on each one forreview. If you don’t have savvy people look for an outside company to do it for you.

Rest Of Team

It’s important that key stakeholders and representatives fromkey user groups such as Sales, Service, BDC, and Internet bepart of the project team. Their input will be vital in coming upwith Business Requirements and helping decide which soft-ware is best suited to your dealership.

WHAT’S NEXT?

Hopefully by now you know not to rush out and start lookingfor software. Here’s a simple quiz that highlights the conditions that should be present before you beginyour evaluation of software solutions

ACTION POINT!Keep this project inthe hands of businessleadership. IT is animportant and valuedinput into the businessmaking decisions but not the decidingfactor.


Take This Simple Test To See If You’re Ready To Evaluate Software

Here is a quick and effective way to determine whether or not you’re ready to begin evaluating software.For each question, give a score between 1 and 5, with 1 being the lowest and 5 being the highest.

SCORE QUESTIONS

We’ve done as much as we reasonably can to improve our business processes; we need software to do the rest.

We have a clear understanding of our Business Systems and specifically what needs to be done to achieve each one.

The Business Sponsor is the Dealer or GM who is willing to put there respective time and reputation into the project.

Generally speaking, the employees see a clear need for a new CRM system.

We have a project team that includes key stakeholders and representatives from key parts of the dealership

The project is being organized and lead as a business project (not a technology project)

We have a realistic budget in place that provides room for a reasonable ROI.

TOTAL

Scoring

If any one question scores a 3 or less, take action to raise the score to a 5. If your total score is 28 or better, then you’re good to go.

A FINAL THOUGHT

Another question related to the failure rate is—“so, if there’s a 74.3% failure rate for dealership CRM projects,why are more stores than ever jumping into doing these projects?” The answer is simple: because therewards are so great that it’s worth the gamble. With customer demands growing at an enormous rate it isimperative that dealership’s adopt a way to personalize a relationship with each customer. I hope that bynow, you understand that CRM, when approached right, doesn’t have to be risky.

1060 Terrace Blvd, Orlando, FL 32803.

(888)-564-LEAR • Fax:(888)-220-0377

E-mail [email protected]

www.learllc.com