Bridging the data divide

Introduced in 2003, Honda's so-ugly-it's-almost-cute Element was intended to attract young, hip consumers. In its first full year of production, the Element found more than 67,400 buyers, exceeding expectations. But alas, the SUV has gone over like a lead surfboard with the coveted Gen Y crowd; R.L. Polk & Co. shows that buyers are more likely to have attended Woodstock than the X Games.

That Honda Motor Co. could whiff so badly in such an important market segment proves that automotive industry CRM has miles to go.

One reason is that automakers don't own their most important customer-contact points -- new-car dealerships. Indeed, the relationship between automakers and dealerships is frequently adversarial. This unusual sales channel has strongly influenced the design of CRM software for the industry.

"In your business rules and data structure, you need to pay a great deal of attention to hierarchies and visibility rules," says Patrik Riese, director of CRM at Saab Cars. That's because while dealerships are happy to accept leads and prospect information that parent company Saab (a division of General Motors) takes in through its Web site and other media, they are notoriously reluctant to share any information they glean themselves.

Tight-Lipped

"When I worked (in CRM at) Nissan, anytime we talked with a dealer about CRM, they would simply shut down if there was to be a sharing of information with the manufacturer," says Douglas Turk, who is now an analyst at consultancy Inforte and co-author of the book CRM Unplugged (Wiley, 2004).

Riese says this odd one-way information flow is now designed into the Siebel Systems CRM automotive software that Saab uses. However, in 2000, when the carmaker first used the Siebel application, he says, "we were one of the first automotive customers and had to do a lot of customization."

Like Siebel, SAP offers CRM tools tailored for the industry. The automotive version of MySAP CRM lets manufacturers track both customers and vehicles throughout their life cycles. It includes tools for online configuration and pricing, automatic warranty processing, and vehicle financing.

Another fact of automotive industry life that CRM vendors must pay attention to is ease of use. The turnover rate among dealership salespeople can be as high as 150 percent annually, so systems must be easy to learn. Moreover, many dealers are technology-averse mom-and-pop stores in which even the Rolodex is deemed newfangled.

"Only 10 percent, maybe 20 percent of all dealerships 'get' technology," says Shaun Knissin, director of Internet sales at Byers Automotive.

A Template for Every Task

The easily strained relationship between manufacturers and dealerships has given rise to another niche -- CRM specifically tailored for dealers. The leader here is The Reynolds and Reynolds Co.. According to Turk, where general enterprise CRM tends to be focused on "the funnel" -- the process by which a contact becomes a prospect and possibly a customer -- software from Reynolds and Reynolds is more likely to stress postsales information intended to attract lucrative service business. For example, Reynolds and Reynolds' library of follow-up letters includes a mind-boggling 3,322 templates.

The vendor also offers a feature that allows dealers to quickly calculate a half-dozen or more payment options. Traditionally, sales reps have time to run only one or two possible payment plans for prospects, fearing that customers may grow antsy if they take any more time. Byers Automotive is a Reynolds and Reynolds customer, and Knissin says the payment-options feature improved the dealership's percentage of closed sales.

There are other CRM benefits awaiting manufacturers and dealers alike, experts say. "The big concern in the industry is to get away from incentives," says Turk. Studies show that consumers have grown so accustomed to rebates, financing deals and other incentives that they won't shop for most brands unless such ticklers are offered. "That tends to mean they're not sure who their real consumers are," Turk adds. "Now they need to grasp their competitive differentiation."

On the dealership side, Knissin says the big benefit lies simply in treating consumers the way they're treated by other retailers. "When you come in, I know what you've bought from us, when you need service, when you might be considering your next purchase -- it's basic stuff, but so many dealers don't know this."

Automotive

CRM Maturity Level: Medium

Maturity rating by Barton Goldenberg, ISM, Bethesda, Md.

ROI Grade: C

Grade based on positive ROI in case studies analyzed by Nucleus Research, Wellesley, Mass.

Special Characteristics: Carmakers have focused on key profit centers such as service and warranties, but they haven't spent a lot of time targeting consumer awareness. Automotive industry CRM software places more emphasis on postsale follow-up, which improves repeat business and service visits. Visibility and data-protection features allow dealerships to shield prospect and customer information.

Key Vendors: PeopleSoft, Reynolds and Reynolds, SAP, Siebel

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