The future belongs to those dealerships that know & understand that in order to retain their customers, they must learn how to retain their employees. Although one of the most expensive, your employees can become one of your most valuable assets. By building your organization around your employees you will have a greater chance of building your customer base and resulting profit stream. Because no matter how innovative your processes and technologies are, without the commitment and skill of your employees, the innovations you have put in place are less likely to be effective and sustainable over the long run. Efficiency and standardized processes are driven not only by technology but also by those individuals who deliver your entire value proposition to your customers on a daily basis – your employees. They are the human equation that truly drives your organization’s results.
How important is the role your employees play in retaining customers?
Why Companies Lose Customers*
- Death : 1%
- Transfer: 3%
- Friendship: 4%
- Competitive Reasons: 9%
- Product Dissatisfaction: 14%
- Dissatisfaction with contact with the company’s employees: 69%
*From James Vander Putten, V.P., American Express Travel Related Services Company
Based upon these statistics, it becomes clear that your dealership’s success is directly tied to the success of your employees. By attracting the right individuals, developing their skill sets and behaviors, teaching them to self-manage and by providing personalized rewards, you insure that the necessary building blocks for employee retention are in place.
All those ingredients center around a team-aligned culture made up of integrated directed daily work efforts of each employee. However, it is important to note that the “right” culture must precede all other meaningful changes. This culture will provide the cement to the foundation on which all your customer relationships are built. As this culture is developed and/or improved through a concentrated effort to improve employee satisfaction (Esi) – good things happen. Your employees will exhibit a greater “internal” commitment to the company, rather than simply tacit or surface commitment. This “internal” commitment will come in the form of a heightened awareness for the needs of their customer, and will truly move the organization toward a customer-centric approach. You are modeling to them what you expect them to model to your customers. In a Harvard Business Review, a study was sited that for every 5% increase in employee satisfaction, there’s a resultant 2% increase in customer satisfaction, returning up to a 1.8% increase in net profit.
Foundational to any initiative to change your culture is the premise that, you must change the culture “with” your people, not “to” them. Be a coach and lead them through the change. Allowing them to participate in the process design, implementation and resulting cultural creation provides your employees the opportunity to own the success of the new culture, thereby facilitating buy-in to the overall change effort.
Bill Marsh Automotive Group, in Traverse City, Mich., is a good example. The Executive Leadership Team began to initiate the changes that would shape its corporate culture, beginning with the development of core values that filtered throughout the organization. In-dealership consulting services were brought in to strategically plan, facilitate and monitor the formal change management processes.
Bill Marsh credits the new environment with a dramatic improvement in both employee and customer retention. “Our values are reflected in everything we do — how we treat one another, as well as how we treat our customers. I’m a great believer in the development of our people – and in giving them the tools and training they need to be self-managers, leaders or developmental coaches. We want to know what our employees and customers think about the dealership and actively solicit their ideas. We reward our associates for longevity and ingenuity – they know their value and are “fully employed” in our customer relationship management transformation.”
An important part of the development of employees is training so they can develop their skill sets and operate the new processes and systems set in place. Dealers ask, “why should we give employees expensive training, when turnover in the automotive retail business is so high?” But the real question is, what is worse than training your people and they leave? The profound answer is: not training them and they stay.
If employee retention is truly the gateway to customer retention, then by allowing employees to get the initial and on-going training and support they need to develop, they are much more likely to have a long-term career with you. If we can attract and retain our employees for the long term by shifting their customer focus from transactional to a relationship based approach, we’ll inevitably increase the probability that our customers will be more likely to have a longer-term relationship with us as well.
A study conducted by The Gallup organization involving more than 1,000,000 interviews over the past 25 years ranked the top “core elements” to keeping good employees. The number one factor was, “Do I know what’s expected of me?” Within the top five factors were elements such as, “In the last 7 days, have I received recognition or praise for good work?” and “Does my supervisor or someone at work care about me as a person?” How simple…and literally without cost. Notably missing in the top 12 “core elements” – there was not one mention of compensation – rather, the top 12 focused on personal growth, communication and recognition.
The right kind of training teaches people the concept of self-management, proven to be the definitive link between customer satisfaction and profitability. A very satisfied customer is up to six times more willing to buy from you than a customer who is merely satisfied and an added bonus is their willingness to pay higher margins to receive the appropriate amount of service. By empowering your people to do what it takes to make a customer happy, you drive more value to the customer and your organization, with greater returns to your bottom line.
Success isn’t easy, as you probably know. However, keep in mind what will guarantee your future: your employees. By providing a culture of empowerment and excellence, you will pave the way toward increased employee satisfaction and retention. Remember, training and developing your people is an investment in your most valuable asset – and the real payoff happens every day and every time a customer works with someone who is proud to be a part of your company.