This is the fourth follow-up in a series of five from a recent blog titled These Are the 5 Automotive Tips You’ll Love in the New Year.
Think about all the time, effort, expense, and credit-building activity you put into attracting new clients (conquest business) when there is a much easier and less expensive way to do it? Today’s article is all about the easier less expensive way.
The average dealership spends tens of thousands of dollars in marketing, sales efforts and advertising every month to get their phone to ring… increase traffic to their website and fill their showroom with quality leads in order to sell more vehicles.
What would happen if you could get other people, companies and organizations to drive conquest traffic for you? What if they did it faster, more efficiently and for a fraction of the cost you’d spend doing it yourself?
Most dealers have invested a small fortune in improving their sales processes all designed to create a more enjoyable customer experience. Why not leverage that investment and benefit from it long after your client buys? If you’ve demonstrated that you care about your clients, made buying and servicing their vehicle with you faster, easier and more enjoyable, they will eagerly refer a constant flow of quality leads to you. But… you have to show your clients what to do. They rarely will do it on their own.
My goal with this article is to show you how to create and implement a low-cost, formal client referral system that will bring you an immediate increase in clients and income. Asking for referrals and receiving them is legal in all states… however… There are states that have either laws or regulations that prohibit or regulate fees paid for referrals in some manner.
You’d be shocked if you knew what percentage of your new clients actually come from direct or indirect referrals right now. What would happen if you set up your store with a formal and aggressive referral system? Once it’s set up it can run on auto-pilot.
This is something every dealer should do. You invest too much in your dealership and clients. You’ve invested far too much in providing a better customer experience to allow all of the friends, coworkers, family members and colleagues of your current clients to be denied access to you.
Here’s What Your Marketing Agency Will Never Tell You
Dealers spend all of their time, effort and money on conventional, externally focused advertising, marketing or selling programs when a fraction of that time and money would get them many times the results if they developed a formalized internal referral system.
Here’s the mental approach I take with my own stores…
I have an obligation to extend the same superior level of service, hassle-free shopping, and incredible deals I provide to each and every one of my clients, to everyone they hold dear.
What’s my rationale for saying this? It all stems from a fundamental belief I have about the auto industry.
Most dealers think of the generic aspects of what they do… they sell cars, trucks vans, parts and services. The Internet and 3rd party sites are painting you into a commodity corner – Refuse to allow yourself to become a commodity. Instead, focus on your contribution to your client’s car-buying journey and the ultimate impact that results in a transaction.
Focus on the fact that because a person or family bought one of your vehicles, now they are much happier driving around in a much better vehicle. The driver of that car has probably been able to reduce their monthly gas expense, has a warranty that will save them on future repairs… the new vehicle could be a much better fit for their current lifestyle… all thanks to you. What used to be a tension-filled car buying process was simple, fast and easy all because of your dealership.
Focus on the benefits that doing business with your dealership made possible. Never focus just on the generic commodity value of what your vehicles do or your service department does.
The moment you alter the way you see yourself and your store’s contribution, everything changes for the better. This could not be more applicable for referrals.
Change the Way You View Your Clients
You’ll look at each and every client as a valued friend. A lifetime friend, because that is precisely what your clients are to you: true friends.
Think about it… They’ve trusted you with the second-largest purchase decision they’ll probably ever make. This decision can impact their financial security, well-being, comfort, happiness and/or prosperity. They trust you and continue to depend on you for service.
Once you accept that idea… how could you allow anyone who is important to one of your valued, true friends to make a bad purchase decision if you could possibly keep it from happening?
None of us would want our mom, dad or best friend to buy something we knew wasn’t a good deal… or choose something we knew wasn’t best for them… at least not without suggesting a better option.
Do the same for your valued clients. If you know that people important to your clients are making decisions on their own about buying or servicing their car, and potentially they aren’t getting the very best outcome they could, you must help.
Every client you deal with is a potential source of dozens of referrals and new leads for you over his or her lifetime. But… you have to stimulate those referrals.
This is something I do for my own stores with great success. Referrals cost me less per car sold than any other lead we get.
Formalized Your Referral System
You currently get a decent amount of referrals now, but you probably don’t know how many. These are the ones you’re getting by accident, you’ll get these regardless of the process. You want a system in place that allows you to multiply that number. A formal ongoing client referral system will bring you an immediate increase in clients and sales.
Referrals usually give you better grosses, higher closing percentages and tend to be more loyal than other conquest leads you could go after. And… referrals are easier to get. Referrals produce more referrals.
Every time clients deal with you in person, by phone, email, through your sales staff, your BDC, or your service department, tactically ask them for referrals. But first, you must set the stage.
Tell your clients how much you enjoy doing business with them, and you would like to do more business with other people just like them. Tell them you’d like to extend them the opportunity of referring their valued and trusted friends and family to you. Then help your client see a clear picture of who in their lives could benefit the most, from your dealership’s vehicles, customer experience and services. Paint a good picture and make it real for them – they have to visualize it. Then extend a totally risk-free, obligation-free sales offer (if allowed by your state laws and regulations). If your state does not allow a bird dog or fee for a referral then follow all of this advice without the financial offer. A different alternative could be a donation to their favorite charity.
Next… tell your client all that you will do for their referral (with no obligation on the referral’s part). Your goal is to demonstrate how willing you are to help their friend. You can willingly offer to advise them, drive vehicles to them for demos, etc. Offer to be someone that is just looking to help consult their referral or let them demo your vehicles without expectation of purchase. This way your client sees you as a valuable expert with whom they trust to help their friends or colleagues.
If your store does this systematically every day, to every client you talk to, sell to, email to – you can’t help but get dozens or even hundreds of new leads. I have seen this first hand with my own stores and other dealerships when people follow an aggressive referral process.
These Are Inexpensive Leads
There is much less marketing risk. They have the highest potential payoff of any lead source to gain new clients. But maybe even more important… a systematic referral process can help you retain a higher percentage of customers. When clients recommend you to a friend or family member, they have committed themselves also. The client becomes even more committed to you.
Remember, you have to set the stage. Explain that even if the referral does not buy, you will provide a valuable service for them by letting them know what they should look for, what they should avoid, what they should expect, what they might overlook, and anything else which could negatively or positively affect the referral.
A Few Quick Tips:
- Have your client call or directly contact the referral.
- Stay in frequent contact with your clients who have provided referrals in the past. Always give your client status updates and let them know what happened with their referrals.
- Ask for referrals when clients are most receptive.
- The more you ask the more you’ll get.
- Thank your clients for referrals.
Help your clients visualize where these referrals can come from. Ask them, “Who do you know who _______________?” Fill in the blank for your clients on various scenarios – you have to lead them through it.
“Who do you know who … _______________?”
- … has a friend or family member looking for a car?
- … is looking to sell their vehicle?
- … may live near you and is considering a newer vehicle?
- …. saw your new car and is now looking for a new one themselves?
Lifestyle changes are good scenarios to bring up because many people buy a newer vehicle when they experience a major lifestyle change. Such as… buying a new house, having a baby, getting married, etc.
- … may have just moved and is looking for a new vehicle.?
- … is considering a new vehicle because they are expecting a baby?
The lesson here is that when people are asked for referrals, they don’t always know who you want. You have to make it easy for them. You must give them a list of qualified prospects and if they know somebody on the list, they are much more likely to give you high quality referrals. Or, explain the type of referral you want.
My dealerships are fortunate because of the work I do with J&L Marketing. J&L exposes me to hundreds of different dealership approaches and best practices. We have one client who claims almost 50% of his sales is referral generated. He speaks for all kinds of groups and associations within his local community. He has found one of his best referral systems is for him to keep himself constantly in the mind and awareness of his potential new clients.
His strategy is very simple. He believes in serving people – he continuously gives his time. He understands that if he sincerely cares about the interests, needs and well-being of his past clients at a higher level than everyone else, he’s going to have top of mind awareness. So when they’re socializing, playing golf, having dinner with friends… whenever someone mentions they are looking for a new car – his clients are automatically predisposed to refer people to him.
The effort it takes to set up a formal referral system is worth more than the small amount of time you invest. Remember, referrals will be one of your best and most loyal categories of clients.
Referrals are your first line of “attack” for sales growth. They are easier leads to generate and they are a more enjoyable group of people to talk to, work with and sell. Setting up a formalized referral system is also the easiest sales building lever you’ll ever construct for your dealership.