The Evolution of CRM

Customer relationship management (CRM) systems in 2012 offer auto dealers more technology than it took to land man on the moon 43 years ago. Since that time, e-evolution has completely transformed the way cars are sold, rocketing dealerships into cyberspace. A sales manager can today hold in the palm of his hand a link to the world more powerful than the machine Neil Armstrong stepped from to take his “giant leap for mankind.”

Continued leaps in the science of electronics are made, leaving dealers and programmers of CRM software running to catch up. “It’s evolving very, very quickly,” Ed Braunbeck, mobile product manager for Dominion Dealer Solutions (DDS), said of technology. “It’s scary.”

In the last couple of years alone, producers of CRM systems have been forced to revamp their products to include emerging tools like social networking and mobility. “There’s definitely been an acceleration in (CRM) technology over the last 24 months,” said Tom Harsha of Hunt Valley, Md.-based iMagicLab.
 
(R)evolutionary Changes
The concept of managing customer relationships has been around for years, though on a relatively stagnant evolutionary scale until the end of the 20th century when electronic systems were developed to enhance businesses-to-consumer rapport. This software was aimed at reducing costs and increasing profitability through maximizing interactions with consumers. Prior to that time, you could call the approach to cultivating those relationships “CRM Unplugged.” In fact, a Rolodex was about as high-tech as CRMs reached before silicon chips made leather-bound ledgers and typewriters obsolete.

During the first half of the 20th century, with demand overmatching supply, the extent of American business marketing was, effectively, “Here it is. Come and get it.” Customer satisfaction was not a primary concern with such mass marketing, as famously exampled by Ford Motor Co. offering its Model T from 1914 to 1925 in any color … so long as it was black. But as supply caught up with demand in the middle of the 1900s, the changing market pushed business to adopt data collection and analysis of customer demographics. The result, target marketing, allowed suppliers to appeal to specific segments of consumers.

In the 1980s, technology-driven relationship marketing began making strides toward today’s CRM products through electronic database management, though it was little more than a digital index of data used to profile current customers. This was mostly a one-way interaction, however, allowing the sales department quick access to vague consumer information. Keith McKinzie, dealer principal at Sonju Superstore on the western shores of Lake Superior in Two Harbors, Minn., said in those days, CRM systems offered little more than a log of current customers and a reminder of when to send out cards on birthdays, anniversaries and Christmas.

A decade later, CRM was officially born as an early version of the relationship-building tool it is today. Businesses not only acquired static information on prospects, but added tracking of consumer spending and other habits as a means to nurture trusting business-to-consumer interactions. These were the days when reward programs—frequent flyer miles, credit card points, etc.—emerged, recognizing consumer loyalty. Retailers could, for the first time, interact with consumers through CRM e-mail functions.

Finally, at the dawn of the new millennium, as the Internet became a household fixture, CRM emerged as an even more powerful marketing tool, utilizing the Web and other advancing electronic technology to manage not only current, but also prospective, consumer data. It was around this time that industry-specific software for auto dealerships emerged.
 
“Things started to take off with CRM around [the] turn of the century,” said Christian Thornton, senior executive vice president of business development at AULtec. “It’s amazing to see how far we’ve come.”

DDS’s Braunbeck said the automotive industry was a different world when he entered the realm in 1999. “A lot of dealers didn’t even have websites.”
 
In 1997, reported the U.S. Small Business Administration in January 2002, only 47.1 percent of dealers had websites. That number grew to 83 percent in 2000. Today, 99 percent of auto retailers have an online showroom, according to Paul C. Taylor, Ph.D., chief economist with the National Automobile Dealer Association (NADA).
 
Thornton said Facebook, started in 2004, helped launch the Internet from Web 1.0—which allowed for endless amounts of static content but little to no interaction with users—to Web 2.0, the social, interactive Internet we know today. This second generation of the Internet is what helped open previously shut cyber-doors to dealerships. Dealers came to see, Thornton suggested, that not fully utilizing the Internet could only hurt their business.

CRMs Grow Up
Since the early 2000s, iMagicLab’s Harsha said, vendors have spent their energy “chasing the Holy Grail of all-in-one CRM technology.” But after years of trial-and-error, CRMs are beginning to mature, offering cutting-edge technology on a more streamlined, user-friendly platform than ever before and integrating functionality for all departments of auto dealerships. “Over the last two years, we have seen CRMs come into their own, helping dealerships sell cars,” he said.

VinSolutions of Overland Park, Kan., is the preferred CRM solution for McKinzie and Sonju Superstore. “To me, it’s an amazing tool,” said McKinzie, who has used VinSolutions at the 88-year-old dealership for several years. “CRM is all about customer retention management. I believe VinSolutions does that best. I was able to cancel six or seven different vendors to go with them. They combined all those functions in one.”

Today, dealers are turning to CRM systems for controlling customer data and associated contact reminders, building and maintenance of their Internet site, detailed analysis of website traffic, scouring social media like Facebook for conversations about the dealership, and mobility through CRM apps. Dealers also welcome any other tools that help cultivate interaction between the business and consumer, Sonju’s dealer principal said.

One such tool, VinLens, combines live traffic reports from a dealer’s website with a CRM. This tool has shown McKinzie that Sonju’s website is averaging almost 30 views an hour, and if one of those visitors is already in the dealer’s CRM database, he is able to see who’s paying an e-visit to his dealership. This provides an opportunity for follow-ups for the all-important retention of customers.

Shane Born, chief operating officer of ProMax Unlimited in Davenport, Iowa, said his company’s CRM now gives dealers more tools than ever to disseminate information to the consumer. That may include information about a particular vehicle, such as financing options, videos, pictures and even a customized e-brochure that allows managers to send a potential customer a concise, attractive presentation of requested information. “It can pretty much answer any question a customer has on a car,” said Born.

But despite revolutionary enhancements to the capabilities of CRMs, vendors and dealers agree that a CRM is still only as good as the people operating the system.

Customized Ride
If you ask some dealers, integration and customization are among the top improvements to CRM systems of late. Like McKinzie, Tamara Darvish, vice president of DARCARS Automotive Group with more than 20 stores located around the nation’s capital, said her CRM of choice allowed the group to drop multiple vendors providing numerous functions in favor of one system that covers all their needs.  “It’s all integrated,” she said of ELEAD One CRM from her Silver Spring, Md. office. “One company, one price, one training. It brings all worlds together in one.”

ELEAD One allows her to design her own management system and specialized programs for specific tasks or individual lots in the group. “It’s extremely customizable,” said Darvish. “One size doesn’t necessarily fit all [when it comes to CRMs].” She also enjoys the automation of tasks ELEAD CRM can perform. “In the past, a CRM was just a reminder of tasks,” she said. “Now, if the tasks are not performed, it goes ahead and does it.”

The ultimate in customization is building your own CRM. Today, technology has become so affordable and accessible that some auto dealers are taking it upon themselves to design their own system to better meet their unique business-to-customer relationship needs. Clifford VanMeter said Express Auto’s specific niche in the industry as a buy here pay here group made it difficult to find the right program for their narrow focus of work. So, they simply decided to build their own CRM.

“I've hired a programmer and the (general manager) and I are working closely with him to develop a solution that is specific to our workflow,” the marketing manager said from the Kalamazoo, Mich. store. “The problem with even the best off-the-shelf solutions is that they are designed to appeal to the broadest possible selection of dealerships.”

The Social Web
The last presidential campaign proved the success of incorporating mobility and social networking in reaching out to individuals—politics’ own version of CRM, or constituent relationship management. If Facebook, YouTube, Twitter and mobile apps could influence Americans at the polls, it could surely do the same when it comes to their purchases, particularly with what’s parked in the garage.

The incorporation of social networking tools in automotive CRMs is one of the latest trends. And with two-thirds of Americans utilizing online social media—according to findings in “Pew Research Center’s Internet and American Life Project,” released in April 2012—that demographic can hardly be ignored. Yet there are mixed feelings in the automotive industry about how effective social networking with those 130 million consumers can be on influencing sales.

Studies seem to offer varied signals on the effectiveness of social networking’s impact on auto sales. In May, Dataium, an independent collector of online behavior for auto shoppers, reported that while 94 percent of Facebook referrals visited an auto dealer’s website for the first time, only 36 percent of those visits resulted in the viewing of an automobile. The Dataium numbers, based on 100 million active auto shoppers, did not reflect how many of those visits translated to actual sales. In the meantime, a joint Dealer.com, DriverSide and GfK Automotive Market Research study— “The Rise of Loyalty, Advocacy and Influence: Social Media and the New Automotive Purchase Cycle”—suggests that in 2010, 2.4 million car sales were influenced by social networking. That’s 400,000 more cars than were purchased in America from the top seller of automobiles in 2011, Ford. The January 2012 report, though, surveyed only 2,000 buyers or prospective auto buyers.

Darvish does not rely on social networking to drive visitors to the company’s website. But the user of ELEAD CRM said the social media aspect of the product is a great source for corporate branding. It also provides a means to invite people to events the auto group may be sponsoring or partnered with. “I don’t really believe social media sells cars,” said Darvish, who countered that the e-tool remains useful in cultivating relationships.

Regardless of such opinions on social networking, many auto dealers have apparently seen some value in online social media, swarming to establish themselves on such sites in the last four years. According to CNW Research in its December 2011 newsletter, only 11.3 percent of new car dealers and 6.3 percent of used car lots had a Facebook presence in 2008. In just three years, however, those numbers had swollen to 41.6 and 26.8 percent, respectively. Use of Twitter echoed that trend.

Alex Snyder, director of product research at Dealer.com, an automotive marketing company in Burlington, Vt., said his firm’s initial foray into offering a CRM product incorporates some aspects of social media to monitor what’s being said about a dealership. But while Facebook pages my help with branding, he, too, doesn’t believe it is the most effective means to drive sales. “A customer incubator, that’s what we call it,” he said of the social networking aspects of the 13-year-old company’s first CRM, which was released last month.

Some dealerships, however, take social networking more seriously than others, employing  workers simply to monitor and respond on Facebook, Twitter, YouTube, etc., to tap into the 130-million-plus adults socializing online.

“Most dealers who use social media are not on it with a CRM,” Born said. “They have a specific person to monitor and take care of social media. They are going to use a tool outside of CRM.” He said ProMax has kicked around the idea of incorporating social networking into their CRM, but feels it is not necessary at this time. “There will come a time when that is needed,” he said, “but we haven’t seen that yet.”

AULtec’s Thornton said their CRM, AEROS, does include social networking capabilities to help dealers find out what’s being said by their customers and by others speaking about the store. For instance, it will allow a lot’s social conversation scout to see the last 10 tweets a customer has posted on Twitter.

Going Mobile
Though the jury is still out on social media, vendors and dealers seem to agree on the power of mobility. Pew Research shows nearly as many American adults own smart phones as utilize social media: 53 and 66 percent, respectively. Most dealers are already tapping into that market of 100 million on-the-go consumers through mobile-ready websites. But mobile app technology is so new to the auto industry that some vendors have yet to even offer dealers mobile functions linked to their CRM. In fact, the first mobile CRM app for dealers was not introduced until September 2010 by iMagicLab.

For those dealers who are utilizing mobile apps offered through a CRM product, it might be the most significant enhancement to the systems, period.

Darvish, regularly on the go in her role as an auto dealer advocate and NADA board member, finds her mobile CRM app from ELEAD One invaluable. She is not only able to keep up with what is going on at the auto group when she is on the road, with the CRM app, she can interact with any of the 20-plus DARCARS stores on her handheld device while traveling between sites.

“For a manager, that’s where it really begins to shine,” Dealer.com’s Snyder said of CRMs. “(Mobility) gives the manager instant access to the data they need. It allows them to be untethered from their desk.” Snyder sees mobile apps as the top enhancement for CRMs, outranking social media functions or any other improvements in recent years. “It’s fantastic,” he proclaimed. “Mobile is certainly a more important part of the game than social at this time.”

Thornton agreed. “We think, too, that mobile will change the future of CRM,” said the AULtec spokesman, whose company offers dealer mobility as well as a dealership-branded app for consumers that allows them to interact with the store from anywhere. Dominion Dealer Solutions also offers both a dealer app and store-branded mobile solution for customers, the Be Back app.

But mobile apps and social networking are certainly not where CRM evolution will end.  Expect a move to more mobility, personalization tailored to the needs of everyone from the general manager to the service department rep, and perhaps even speech interfaces. With more technology packed in your handheld device than was found on the capsule that took man to the moon, if you want it, chances are you will eventually get it.

Vol. 9, Issue 9