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21 Retail™
Ideal Customer Experience
Exceptional Retail Profits
A white paperby
Malcolm Earp
Research | Strategy | Implementation
m2tac limited Malcolm Earp – Managing Director112, Bloomfield Road, Bath, BA2 2AR, Somerset, UK + 44 7851 66 76 16 - Mobile
Company Registration No. 05977391 + 44 1225 317004 - [email protected]
Confidential for not for publication © m2tac 2009
21 RETAIL™ WHITE PAPER OVERVIEW
Background
Despite heavy investment in facilities, people and capital, automotive retailing fails todeliver the level return that other business sectors enjoy.
The best performing retailers average 2.5% Return on Sales1
Typical retailers from other sectors averaged between 4.2% and 8%2
Although it could be argued that this is because the nature of the automotivebusiness is different with high cost products, heavy investment and manufacturerpressure but this misses some fundamental issues.
Generally Customer Retention is low,
On average < 50% of new car buyers return and buy from the same retailer3
Vehicle Retention (paid servicing) is lower
New cars < 40% returning to the same retailer for service3
Used cars <20% returning to the same dealer for service3
Conversion of new prospects into customers is low.
On average < 20% of prospects are converted into customers3
Argument
The traditional process of separate customer relationships for sales and after-salesbreaks ‘points of contact’
In a typical vehicle retailer no one is specifically responsible & remunerated forretaining customers and low Vehicle Retention levels depress profits.
Most Salespeople tend to be either,
o Good at prospecting/closing new business and weak at paperwork &follow-up
Or,
o Weak at prospecting/closing new business and good at paperwork &follow-up.
A ‘trusted’ Service Advisor with an ongoing relationship is usually best placedto motivate a repeat vehicle purchase but is not mandated to do this.
The sophisticated technology needed to maintain close individual relationshipswith customers has only just become available.
1 AM 100 2009.2 Competition Commission Report 2006; Dixons, Currys, Argos, Jessops and John Lewis3 m2tac Ltd dealer studies in US and Europe
21 RETAIL™ WHITE PAPER OVERVIEW
m2tac limited Malcolm Earp – Managing Director112, Bloomfield Road, Bath, BA2 2AR, Somerset, UK + 44 (0) 7851 66 76 16 - Mobile
Company Registration No. 05977391 + 44 (0) 1225 317004 - [email protected]
Confidential for not for publication © m2tac 2009
Proposition - 21 Retail
Optimising Retailer Profits from Outstanding Customer Relationships and Retention
A new structure for a retail environment built on three simple principles,1. Don’t expect ‘Cats’ to bark or ‘Dogs’ to meow.
2. Don’t break relationships; build them.
3. Don’t let yesterdays technologies and structures dictate today’s environment.
Revised Customer Management Structure
For the best quality customer interaction we need a reorganised structure:
A dedicated team responsible and remunerated for Acquiring and converting newcustomers for the Retail Centre with a focussed brand and corporate experience
A dedicated team responsible and remunerated for Retaining customers for theirpurchasing life with a single seamless sales and service relationship
Results
Results from ‘Pilots’ conducted in the USA during the last half of 2006:
Dramatic increase in initial Sales conversion rates – Both New & Used.
Increase in customer and vehicle service retention, especially amongst Usedbuyers.
Good indication of future increased repeat purchase rates for both New & Usedbuyers, although pilots not running long enough for complete cycle.
No increase in headcount and almost all existing staff retained
No increase in overall salary bill, increased staff satisfaction, less confrontation
21 RETAIL™ WHITE PAPER OVERVIEW
m2tac limited Malcolm Earp – Managing Director112, Bloomfield Road, Bath, BA2 2AR, Somerset, UK + 44 (0) 7851 66 76 16 - Mobile
Company Registration No. 05977391 + 44 (0) 1225 317004 - [email protected]
Confidential for not for publication © m2tac 2009
Challenges
One ‘Pilot’ ran out of w/shop capacity due to increased service retention and had tointroduce a shift system. This resulted in a 32% increase in service ‘Sold’ hourswithout increase in facility.
Push-back resistance to change.
Conclusion
21 Retail has enhanced the performance across the businesses increasing the acquisition
of new customers, retaining more in both sales and service, greatly increasing their
experience and satisfaction, leading to considerably expanded profits using existing staff
and facilities.
For a more detailed over-view please contact the author.
