Times are tough in the car business these days. Some dealers that we've talked to are down 50% or more in sales over last year. And the temptation to cut customer services always raises its ugly head at times like these.

Case Study

A dealer group I know was one of the more innovative at providing customer focused services including things like:

- Showroom amenities like kids play areas, business centers and video libraries.
- Maintenance in your driveway
- Basic car washes for life
- Popcorn, soda and donuts for showroom guests

The original owner wouldn't have dreamed of cutting any of these benefits, but the new regime viewed these items as expenses rather than investments in future business. So one by one they began to disappear.

First it was the car washes, then the donuts and popcorn and finally the soda (that costs a whopping .05 a glass) went the way of the Do-Do bird. As you can imagine, customers were furious and dealership moral hit the skids.

What is interesting to me is that the same organization who reduced their costs per vehicle by about $25.00 by cutting present customer benefits, was still investing $300.00 per vehicle in newspaper ads in an attempt to bring in new customers. And based on sales statistics, those ads never produced the same ROI as the repeat and referral business generated by the dealerships good will. In fact, things rapidly got even worse.

Time to dig deeper

Rather than cut customer benefits, we recommend you look for ways to improve relationships with existing customers. Find out what they want and provide it. Then ask your satisfied customers to provide referrals.

Yes, it takes more work for salespeople than just standing out front waiting and hoping that the latest incentive will drive a customer to your door. But the payoff will help you get through the lean times better than cost cutting strategies that tend to drive a wedge between you and your customer base.

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