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Who owns the customer?”
That question strikes at the heart of most of today's automotive retail relationships. It once was fairly simple the automakers built the car and the dealer sold it. The very nature of the business meant the customer was the dealer's.
Now it's more complicated. New industry players, technological developments and government regulations are blurring the lines and changing the dynamics.
“There are a lot of people in the industry that have a stake in the question,” says John Hawkins, a California dealer and chairman of the American International Automotive Dealers Association (AIADA) Computer Technology Committee.
What makes the question so contentious is dealers are convinced that their survival depends on maintaining and guarding their one-on-one relationship with the customer. But the world is changing. With the advent and subsequent proliferation of leasing companies, third-party web sites and advances in Internet technology, dealers are finding they must work with several different parties who have some contact with the customer.
The Internet also is changing the dynamic by providing the various players with the ability to collect and manipulate vast amounts of data on the consumer. It's not just financial data that is being collected. Family information such as marital status, the number of children and their ages, type of work, likes and dislikes anything that may provide insight into what type of vehicle that customer may need or want or what family members may need or want.
Conventional wisdom says that whoever controls the data controls access to the customer; whoever controls access to the customer wins. A Chrysler dealer says, “The value is in the database.” In today's world, the question of “Who owns the customer?” actually is “Who owns the customer's data?”
Dealers are reluctant to share too much customer information with automakers lest the latter use the data to bypass the dealer body and establish factory-direct sales. Dealers also are concerned the automakers may share that information with other dealers. A Forrester Research study reports that 59% of dealers express some reservation about sharing customer data with manufacturers.
Meanwhile, automakers argue they need data garnered at the dealerships so they know customer preferences, and therefore, what vehicles to build for the marketplace. Having access to the data means automakers can focus more on satisfying and keeping current customers rather than expending energy on the expensive conquest sale.
The leasing companies also are in the business of collecting information so they can better estimate residuals and manage the vehicles coming off lease. The dealer typically doesn't consider the leasing companies as threats.
In fact, many leasing companies begin refinancing and remarketing conversations with lessees about one year before the end of the term. But they are cautious about getting involved with customers at the end of the lease term if the dealer is working with them.
Says Cindy Heximer of Automotive Remarketing Services, “Our clients stipulate the first question we ask the customer is ‘Are you in conversation with the dealer?’ If the answer is ‘yes,’ then we stop our process and allow the customer to work with the dealer.”
Yet other financial companies note that they can beat the dealer to the customer if they contact the customer early enough to discuss refinancing and remarketing the leased vehicle, especially if the residual value is not as much as forecasted, thereby representing a potential loss to the company.
“Contact lessees two weeks before the dealer does so the customer knows that if they have questions, you're the person to ask,” an executive with an end-of-lease marketing company advises independent leasing companies.
Then there's those third-party web sites. It wasn't all that long ago that the buzz was that dealers met their match in the Internet. Of course, except for a few hardy companies, those dot-coms were the ones who succumbed.
The ones still around like Autobytel still are collecting data. Even though, the concept of having any claim to the customer may be a moot point, Autobytel is telling anyone who listens that its customer is the dealer only. Its web site privacy statement says any collection of data is for statistical purposes only. But the data still exists.
Says Jon Lancaster, a dealer from Wisconsin, “The question of owning the customer is a misconception. The most we can hope for is to earn the right to access the customer.”
Forrester Research analyst Baba Shetty adds, “It is fundamentally the wrong question. The consumer owns the information.”
Brian Kelley, Ford Motor Co.'s group vice president of global consumer services and North America, emphasizes, “Nobody owns the customer the customer owns us.” The executive he succeeded, Robert Rewey says neither dealer nor manufacturer can lay full claim to a customer.
“Consumers would find it somewhat ridiculous if they heard that Ford and its dealers were arguing over who they belonged to,” says Mr. Rewey, now retired. “Should we tell the 10,000 people who daily call our consumer assistance center to instead call the dealer then hang up on them?”
The customer owns the data? Sounds warm and fuzzy. But is it true? Possibly. It reflects a growing awareness that consumers are getting frustrated with companies either selling data on them or using it to blast them with junk mail (regular or email) and telemarketing phone calls.
Ford is heading toward permission-based marketing, says Mr. Kelley. Using the customer data to communicate with the customer involves three levels. For example, Mr. Kelley says, “Customers typically give us permission to have information so if there is information on the vehicle or recall information we need to get to them, we have the ability, the right and the data to get that information to them.”
A second consideration is actual marketing. Says Mr. Kelley, “Most consumers are willing at some point to receive marketing as long as it's not burdensome.”
The customer, however, is still very uncertain about the third area that involves the sharing of data across the Ford Motor Co. brands says Mr. Kelley. “We would never share the information with anyone outside the company, but we could within the company if the customer lets us.”
Government regulations also are responding to consumer complaints. Legislation already is on the books that could determine how and what information gets shared.
The Gramm-Leach-Bliley Act, which went into effect on July 1, dictates that consumers must be given the opportunity to opt out of having their information shared or sold to outside companies. (See story, page 44)
Right now, no one really know the full extent of the law because the Federal Trade Commission (FTC), the agency charged with interpreting and enforcing the law, has yet to publish how the law is to be complied with. However, the leasing companies already have stopped sending lease maturity reports to dealers. For dealers who work closely with independent leasing companies this could lower the level of service provided to customers.
Because the various parties, mainly the dealer and the automaker, collect customer data and as a result have access to the customer, the question is who will have the responsibility of accessing the customer?
A growing consensus between dealers and automakers is that it will have to be a partnership, with a sharing of data, to provide the customer with the best experience and the best service.
Mr. Shetty wonders, “Is there a possibility to collaboratively manage the customer relationship?”
Mr. Hawkins, using a health care industry analogy, says, “The dealer is the primary care giver in the industry. The other guys are specialists they don't want to be the dealer because they don't like the hours or the responsibility of always having to deal with the customer. Now, being the primary care giver, I know I'll probably have to give data to the factory.”
He agrees the factory, unlike the dealer, has the resources and money to crunch all that data. That can be a valuable tool for the dealer to use in customer relationship management.
The partnership already is beginning. Toyota is conducting a pilot program with five Toyota dealers and six Lexus dealers that tests how information can be shared.
“Toyota views itself as having a supporting role in a marketplace where relationship building begins with the dealer,” says Michael Rouse, a Toyota customer information manager.
Dealers will send data to Toyota, who then will analyze it, manipulate it and send it back to the dealer in a better format. The dealers' primary concern is that Toyota will share a dealer's own customer information with other dealers. Dealers need not worry, says Mr. Rouse, “We guarantee that no other dealer will see the information.”
General Motors also is working to gather all of its customer information into one database, according to Chuck Kirk, general manager, Enterprise Customer Management.
One of the benefits is being able to manage the customer across the brands. Mr. Kirk explains, “If a former Saturn customer decides to buy a Cadillac, we can inform the Cadillac dealer that the customer is a repeat customer.”
Of course, it will take strong partnerships to make the concept work, Mr. Kirk acknowledges. Dealers must be willing to share more information with the automaker and depend on it to analyze and provide data back in a way that will help the dealer provide stronger customer service.
The manufacturers must prove they can protect the information and that there are no intentions to use it to create a relationship with the customer that leaves the dealer out.
The last few years have been educational. The dot-coms did not put the dealer out of business, and the automakers' forays into the retail industry failed “for the upteenth time,” Mr. Hawkins observes.
The dealer is the main contact point for the consumer and it looks like it will remain that way for a long time.
But maybe the limited partnership can work. As Mr. Hawkins says, “This partnership is a lot like a marriage. We're finally going to make it work!”