| Customer feedback systems: Focus on commercialism! |
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Statistical Analyst Ville Helasoja, Grey-Hen Activity alone doesn’t guarantee profit The customer feedback systems in used car sales should reliably measure the commercialism of the salespeople. This brings more profit and makes training more efficient. 
Most of the customer feedback systems in used car sales measure the activity of the salespeople. The evaluation of commercialism is easily ignored, and this can lead to the wrong type of actions.
A well performed customer feedback survey will show the management the possible problems with sales and provide the salespeople with clear means to improve their work. These surveys, however, are often ordered from external providers who offer ready-made customer feedback systems with no special expertise in the automotive business. The client seldom has a change to evaluate the quality of the studies, and misleading results can create unfounded notions that distort decision making. Three dimensions The success of selling can be viewed with the help of three main dimensions: activity, apdaptiveness, and commercialism. Here, activity means the ability of the salesperson to create and maintain customer contacts. Adaptiveness refers to the ability of the salesperson to adapt behaviour according to the situation. The central issue here is how much of the sales process can be left hanging just on the skills and judgement of the salesperson. As extreme examples you can think of a telemarketer reading through a ready sales pitch compared with an expert seller who adapts the offers according to the customers needs. In used car business, this management problem becomes concrete in the division of tasks between a salesperson and a supervisor. Studies show that many customers feel a lack of confidence, if they think that the salesperson serving them isn’t in charge of the offered price. The third concept, commercialism, is understood as the ability of the salesperson to make profitable sales within the goals set by the management. Measuring activity doesn’t reveal the truth Most of the customer feedback systems measure the activity of the salespeople. However, evaluating the adaptiveness can be difficult and often is neglected in routine general questionnaires. Simple question lists mainly produce graphs of the textbook behaviour of the salespeople, for example, how quick and friendly was the service. Measuring of commercialism is even more neglected as customer specific questionnaire material cannot be combined with the exact price and target data of the vehicle and offer in question. If the exact target level is not known, there is really no opportunity to evaluate how well it’s fulfilled on a single customer meeting level. Exactly this has been the problem in used car business management, for the price of the trade-in car is always different. This way, the salespeople themselves get a lot of decision-making power. If the incentive systems are tied to insufficiently measured customer feedback, at worst it can result in guiding the salespeople towards unprofitable behaviour that brings positive feedback. The variants of customer satisfaction and profitability The accompanying image clarifies a situation where some of the salespeople gain good feedback, but make mainly unprofitable offers and sales. This example material includes trade-in purchase situations from a dealership in 2008. The dealership in question uses an appraisal and reporting system that determines an exact target price for each individual car. The prices also note overcompensation. 
Combining the customer satisfaction with commercial success offers an interesting matrix. Sales in type 1 are the goal.
The vertical axis shows the total grade given to a salesperson by the customer. The horizontal axis shows how beneficial that sale has been from the point of view of the dealership. The salesperson should be able to make a deal according to the target levels. So all offers should be on the left side of the graph. As expected, a pleasant salesperson that makes a good offer for the client is most likely to make a sale. The essential thing is however, how the sales are distributed to the four main types. In the first type (upper left corner) the salesperson has been able to justify an offer that is profitable for the business, but still keep the customer happy. The profits from happy customers can easily be multiplied, as they recommend the dealership to their friends and also visit again. These benefits of a long-term customer relationship are also achieved with offers in the second main type (upper right corner), but with a price. The dealership suffers a loss at least temporarily. The offers in the third type (lower left corner) are profitable, and in theory, a dealership can manage, if sales are made with unhappy customers as well. In the long-run however, problems can arise as the bad reputation spreads and customers choose to go elsewhere. The most alarming situation for the dealership is naturally the fourth group (lower right corner), where the salespeople offer too much for a vehicle, but still don’t manage to make the customer happy. Feedback system alerts So the most important thing is to notice in time, whether an individual salesperson makes offers that are outside the group 1 (upper left corner) and do something about it. A good customer feedback system can produce clear action proposals to solve these problems. Thus the salesperson specific data is combined to a larger complex that recognises the most essential factors that effect sales at the dealership and at the most important competitors. These factors include among others selection, delivery times, and financing terms. The actions of the salesperson can be divided into kindness, expertise, and clarity among others. It’s essential that the meaning of these factors to the sale varies according to the customer. Men and women often value different things, and the grounds for a sale can be partly different in the countryside than in the city. Clear benefits from commercialism measurement Once the above mentioned customer based factors have been recognised, it's possible to note just the selected qualities in the performance of the salespeople and monitor their development. The success of this development can be clearly measured by the offers in group 1. Measuring commercialism with customer feedback is thus a key to notable benefits. The staff training becomes more accurate. Avoiding excessive training saves time, money, and everyone’s nerves. Changes to the right direction can be reached by monthly customer feedback report meetings between the salesperson and supervisor. These meetings don’t need to take long, because the agenda can be planned according to the report results.  This article was published in Suomen Autolehti magazine. |
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