The importance of building an effective strategy
Using customer insights to build business strategies can provide unmatched growth potential to businesses and shouldn’t be overlooked. As dealers think about the best ways to collect and analyze relevant customer information, the shift to digital technologies has at the same time provided additional opportunities and made strategy development more difficult.
The speed of events and conversations in the marketplace are rapidly increasing, and digital technologies require dealers to act immediately in response to customer demands. With the rise of social media platforms such as Facebook and Twitter, comments and critiques filter down extremely quickly, so dealers must move just as quickly to stay ahead of any possible problems or concerns.
Digital tools also offer a huge opportunity for strategy development. An abundance of useful data and insights are now possible, but unless the data is analyzed correctly the results won’t be truly useful in the long run. A modest degree of knowledge is useful in these instances such as knowing how to correctly use and extract data from Google Analytics.
Critical measures to consider
Financial and nonfinancial measures can be combined to create really powerful data. Financial measures such as point-of-sale data are often the easiest and most straightforward data to capture, but these measures can be even more effective when used in combination with other insights. When combined with nonfinancial measures, such as share-of-wallet – a measure that is often lower than expected—dealers can end up with a more realistic view of their customers’ buying habits and preferences.
In one project, for example, an independent dealer collected point-of-sale data from customers and combined this data with survey info from the same group of customers. A study of the combined data gave the dealer deep insights that guided future actions.
An additional metric Essendant tracks is the “net promoter score,” which is a measure of how likely customers are to recommend a particular dealer or service. This statistic identifies customers as promoters, detractors, or passive customers and helps dealers plan how to approach these customers so they are best positioned to increase both revenue and customer satisfaction.
Interpreting insights to reach customers
Perhaps more important than collecting relevant data is understanding how to interpret that data once it becomes available. Dealers must be able to take data and feedback, glean insights and act upon those insights to build the most effective strategies.
Analytics and research should be used to drive strategies on an ongoing basis. When surveys are conducted only once every three or four years, the data can’t account for variables that change over time and lost revenue can result. When data is collected and analyzed on an ongoing basis, it can be extremely influential in maximizing business results. Best practice, which every dealer should consider, is to incorporate survey data into yearly business plans.
Industry experience sometimes gets in the way of objectively analyzing data, because seasoned managers can possess biases that might influence how they interpret data. The challenge is to not let experience overrule data; dealers must remain open to the insights that research provides to improve their services and increase their bottom line.
A similar challenge that should be addressed is to avoid misrepresenting data, as dealers might be tempted to rework it to give a more positive outlook to their performance. The data should stand on its own, and at the same time dealers must resist the urge to reframe data to please other involved parties or avoid causing controversy.
While challenges inevitably arise with the collection and analysis of survey data, the potential revenue boost and increase in customer satisfaction by far outweighs any downside. Dealers should identify the most important measures to collect, gather this data and then carefully analyze it to determine what adjustments should be made to their business plans.