I was in a meeting a couple of weeks ago when the client expressed concern that dealers didn’t really see the connection between delivering higher levels of customer satisfaction and selling more cars. If no relationship exists, what’s the point?
She had a valid point.
To answer this question we took a look to see if higher levels of customer satisfaction resulted in higher closing ratios. This is important because closing ratios are hard behavioral metrics – the customer either bought or they didn’t – and it’s something dealers can understand.
We looked at the closing ratios of 59 dealers of an unnamed high volume manufacturer in 6 of Canada’s major markets. We asked customers of each dealership, (both people who actually purchased their vehicle from that particular dealership as well as people who shopped and rejected that particular dealership), their level of satisfaction with the shopping experience and asked them to evaluate it from Poor to Excellent on a five point scale.
On the chart below you want to be in the upper right quadrant; you don’t want to be in the lower left one.
Click on the chart to enlarge it and you’ll see what I mean.
There is a clear relationship as the points generally go from the lower left (low closing ratio and low satisfaction) to upper right (high closing ratio and high satisfaction). Yes, there are some in the upper left (high closing ratio and lower satisfaction) but from experience these dealers tend to experience lower than average customer loyalty so their less than satisfactory customer treatment comes back to bite them.
Understanding this dynamic is crucial within the network that sells the same brand. A customer may love the car but if they’re not treated well, they tend to go to another dealership selling the same make where they are treated well to do the deal.
There is a relationship – and it’s a strong one. More satisfied customers buy more cars. Period.
Have a good weekend.
Chris
PS A quick search on the Automotive News website will show how important a topic like this is. Same with Customer Think. Check out both for more background.
And thanks to the ‘unnamed’ client for making this information available for the benefit of us all. I owe you a big lunch.
