3 Critical Ways You’re Losing Referrals

Customer loyalty isn’t dead. People are just changing the way they communicate and it’s affecting the premise of one of the automotive industry’s most crucial forms of business development: the referral.

Transparency is at an all time high. We have access to more information at a given point in time than the kings of previous centuries. What’s more is that the pace is accelerating; with information becoming more readily available every year. From our computer monitors at home to at our fingertips on our phones. We have tangible sources for determining what businesses are legitimate (see Better Business Bureau), social media outlets like Facebook and Twitter for checking out what vehicles our inner circle of friends are approving, and tools such as CarFax and AutoCheck for checking out the history of pre-owned vehicles. Put simply, the “word of mouth” system of yesterday has become antiquated. We’re living in the “Word of Technology” age now.

Most auto dealerships have stuck to systems that worked fine during the “word of mouth” age but aren’t up to par with the current state of technologies. Everyone knows a foundation of repeat and referral business is important for establishing a career in sales. But with the outdated honor system of “send us a referral customer and if they ask for the salesperson you dealt with and tell him or her who sent them, we’ll send you a hundred bucks” has three major flaws.

For starters, if I just purchased a vehicle from Bob and had a terrific experience, I’ll go home and when my Aunt Cheryl finds out I got a brand new truck and mentions that she’d love to trade her Buick Enclave in for a new Ford, I’ll immediately instruct her to go to Bob. I’ll want her to be able to have the same great automotive ownership experience I did. However, one of three things can happen:

1. After being instructed to go to Ford Motors A, she winds up at the wrong dealership next door and the poor woman buys from someone else entirely.

2. She goes to the right dealership but forgets to ask for Bob and ends up buying from the wrong salesperson.

3. She goes to Ford Motors A, asks for Bob, but forgets to mention that I sent her.

In either circumstance, my aunt purchases a vehicle and I don’t receive the immediate gratification of the $100 referral fee that I deserve. Am I likely to be as enthusiastic about sending Ford Motors A another referral? Probably not.

In the new “Word of Technology” age, we will overcome this problem or we will fall behind as an industry. The salesperson will become extinct.


29 thoughts on “3 Critical Ways You’re Losing Referrals

  1. A good read, thanks.

    But I have a couple of points to make.

    1) I disagree that the salesman is dead. In fact it is the complete opposite. She has a greater role to play than ever before however there is no such thing as a sales department anymore because everyone in the organisation is now in sales. At every touchpoint, both off and online, the brand is being established (or not) by people interacting with other people. And isn’t just related to suspects, prospects and existing customers. It is also related to suppliers, competitors and other consumers.

    2) The auto industry really needs to up its game in how it engages suspects, prospects and customers. Actually, this applies to most industries. Far too much money is wasted on ‘me too’ aquisition tactics whilst on the whole, very little is invested into retention strategies.

    • Great first point, and actually, I essentially state that the salesman will become extinct if we don’t up our game. I’m speaking of the direct face-to-consumer salesperson of course. By no means did I mean the salesperson is currently dead, just that because of technology and current changes in information transparency, the outdated strategies of acquiring and retaining customers no longer work.

      The auto industry is a big offender. I’m an auto guy myself, so I’m on the forefront seeing what’s happening.

      In order for direct salespeople to be able to thrive in the world of Web 2.0, retention strategies must be restructured. To use technology as a tool in this process instead of clinging to methods of attaining customers that lead to a few deals being made but not enough loyal repeat customers being created.

      The referral system of olden days is being overshadowed by factors brought into play by advancements in technology. It was never really a system anyway so much as a word of mouth gig.

      In the auto industry, among many others, referrals are absolutely essential for business development and especially for the establishment of a salesperson’s career.

      It appears we are in agreement on one big thing: the auto industry and every industry affected by advances in technology must truly up their game.

      Love the feedback and input, thanks!

  2. Garrett, the scenario you spec out here sounds like a process issue on the dealer side, no? You’ve done your part in referring and expressing your positive feelings about the experience. What did “Bob, the sales guy” do to ensure his great work with you was forwarded on? What type of CRM is utilized at dealers? How can the dealer make sure that Aunt Cheryl gets to the right “Bob”, or even better, the right dealership? And yes, it would be great if you got that $100 referral bonus….good stuff. And thank you for visiting my blog, as well.

    • Great questions, Rick! It’s absolutely a process issue on the dealer side, caused by using dated systems of handling previous customers and referrals they send.

      Referrals are such a huge part of creating a career in automotive sales. CRM like Promax, Dealer Lead Track, and Dominion CRM are common solutions used at a lot of dealerships I’ve seen. Hell, I’ve seen dealerships that don’t even use a CRM software and just rely on their salespeople to keep track through the old index card filing method.

      Identifying methods that work efficiently and utilize the technology of today that ensure Aunt Cheryl and customers like her get to the right Bob and the right dealership is the big effort underlying sales markets everywhere in 2013. Perhaps better CRM will lead the way in connecting customers with dealers and eliminating errors from the process. Only time will tell.

      • Funny, my wife and I purchased a 2012 Enclave in February. Friend of ours is a car sales guy. We started the process six months before purchase with a conversation with him at the pool and it continued on to the final signing. A process for sure, but engagement started the whole thing.

        Wow, old-school index cards, huh? Wonder if they are successful in staying with a process they “know”?

      • Awesome! Enclaves are spectacular vehicles, bet you both are enjoying yours!

        I’ve definitely had sales processes last over a few months like that before too. Keeping track of every deal interaction on the back of the index card, even starting new index cards. It’s the good ol’ system that worked for people throughout the 70’s and into the early 90’s, and a lot of the people in car sales are good ol’ boys and girls who are stuck in their ways.

        That being said, these days it seems like even a lot of the good ol’ boys of a few years ago are catching up to speed. CRM software allows you to do everything you could with index cards & then some – and it be more efficient and easier to track. Making the sales process easier for everyone.

        A lot of it comes down to breaking tradition and looking around, realizing what advancements in technology have been made, and connecting the dots with how those technological advancements could be utilized to enhance workflow.

      • Garrett, I’m happy you stumbled upon my blog and I’m happy to have found yours. I like your thought process. Your comments apply to any business out there, I think it comes down to how a particular industry discovers, adopts, adapts and implements new “things”. Efficiency and enhanced work flow is great, but nothing beats that personal touch and engagement.

  3. Any time you propose a problem – always provide a potential solution for your readers. Maybe Bob should have given you a few business cards for instance. That is still word of mouth, but having that card ensures:
    1. She goes to the correct dealer
    2. Asks for the correct salesman
    3. Physically holding the business card, she is probably looking at the sweet note you would have written to your auntie and will be thinking of you and therefore mention you.

    The salesman is not dead. People are social and naturally like other people. So often, we buy not because we’re in love with a mystery product but because we like the personality selling it to us.

    • First off Joanna, I want to absolutely thank you for taking the time to read this post and provide such thorough feedback as a response, I love it!

      Secondly, this blog post is the start of a long conversation, and by no means the be-all end-all, nor was it intended to be. It’s poses the question, “Going further into the future, how do we solve this problem?” Subsequent blog posts and the entire point of GRAYLU is the answer. Because truly, there is no one catch-all way to solve it. It;’s a multi-faceted issue that calls for more than one blog post to solve. Essentially, it’s a matter of underlying principles.

      Also, from the beginning I state, “Customer loyalty isn’t dead,” so I most certainly agree with you that the salesman is not dead! If I believed that, I wouldn’t be the salesman I am today. I build clientele relationships on a daily basis, and if I believed the salesperson’s position was a dying one, I wouldn’t be as committed to doing what I do.

      Yes, all salespeople in all industries must adapt to the changing methods of communication or they will be weeded out. The great news is, this doesn’t have to happen. But it will take conscious effort to change and adapt.

      Traditional business cards are a great method of communication, based on older media (print, radio, etc.) and help to an extent. Still, it’s limited by a lot of factors. Relying on customers to not lose them is one, but the biggest is relying on customers to use a form of communication that is becoming antiquated.

      Electronic business cards, social media utilization, mobile apps and other emerging technologies must be taken advantage of. We’ve got to provide consumers with ways to spread our business using their preferred methods of communication. The big problem is, in many industries, we do this very poorly. The business card, mailers and other forms of print media are great – but only to the extent that people will use them.

      Thanks for your input, Joanna! Glad you stopped by!

  4. Garrett!
    How would you tell if a salesman is being honest when it comes to selling any products & knowing they work for more than just a day, or a month & making sure that it will be taken care of after buying it? I know dealerships love to make money, but when a salesman jerks a chain to get a sale & only for that reason, how does that make a customer of his feel?

    • Hey there Rodney, first off, truly appreciate you stopping by to connect with me here and thanks for commenting! As for your question, I understand the desire to find a salesperson you can trust and who is honest. Just like anywhere else in life, you’ll find people who manipulate and people who are genuine. People who spread misinformation and those who are committed to transparency and building trust. It’s unfortunate that automotive sales got the bad reputation for shady salespeople in the 70’s through the 90’s, and even today. The great news is, because of the saturation of information, it’s become harder for people who are at their core dishonest to be so and last for long. Outside of a whole slew of laws within the past few decades that have changed the way dealerships can conduct business, with the transparency that technology provides us, those who are dishonest have to face the revealing light of truth more than ever now.

      Body language is still king when it comes to detecting lies and manipulation. Even with a ton of resources at your fingertips to prevent deception regarding value, financing options, warranties, extra add-ons, payment arrangements and what not, you still want to be on the look out for yourself. As a salesperson, I expect that. I want customers to pay attention to me. It actually makes my job easier because it allows my genuine interest and dedication to solving problems to overcome any preconceptions about the “slimy used car salesman.” And if a salesperson’s body language is ever at odds with what they’re trying to sell you, don’t buy. Don’t buy it for a second. Call them out on it. Research what claims they make if you don’t feel that gut level trust that they should be instilling in you. It’s the job of the salesperson to convey trust and honesty. It’s the customer’s job to educate himself and make the most informed decision possible.

      Dealerships like any business have to make money, but at this point, the majority of dealerships know that jerking a customer’s chain too much can cause a serious problem in the long run: brand destruction. Dealers are more visible now than ever before in history. No customer deserves to be misled, and every customer deserves a salesperson who can help the customer make the best automotive (or whatever product) decision. Every customer deserves a salespeople who is committed to solving their problems, armed with an arsenal of experience and tools that the customer doesn’t have, so that both parties can prosper together.

      • I like this very much! I was going to a part of when my mom had got a vehicle & it had a problem & something it had was never taken care of & don’t know why my mom let it go. I think she got tired of the salesperson she had to go through then which at the time was a Ford dealership in Northglenn, Colorado. I’m not sure what happened but she had it for a while & we took care of it for her at the time. That’s why I was talking about sales-people in dealerships who were misleading my mom. I only heard it after the fact of her getting that vehicle.
        Thanks again!

  5. This is why I have developed a “Hard Referral” group to teach people how to actually give a solid referral and follow-up to make sure all parties are connected. How many times have you heard, ” I told so and so to call you” and you never hear from them. Be more intentional about the outcome. Give what you really would like to receive. Love this post.

    • Excellent! The Hard Referral Group sounds like a fantastic idea, that’s great that you’re actively engaging people and helping both parties establish a better connection. I’ve heard “I told so-and-so to call you” so many times it’s unreal. Sometimes they call, sometimes they don’t. A better line of connection, a more solidified one, can ensure that we get the pleasure of doing business with the people that the trusted people in our lives have already had awesome experiences with. That’s huge.

      Thanks for taking time out of your day and commenting, glad you enjoyed the post!

  6. Great insight and where were you last June when I purchased a luxury car but didn’t get treated like a human, much less a preferred customer? I felt more like a potential point or two towards a sales goal. .

    • Glad you enjoyed it, Patricia! That’s unacceptable that you were made to feel like a number, especially at a luxury automotive dealership. I apologize on behalf of an industry that is too often littered with people who are in it for the wrong reasons and don’t grasp the key concepts of opening relationships and not just “closing deals”.

      On a side note, I was at my dealership, Ford Groves, last June and am still there. Beautiful southeast Missouri in Cape Girardeau, MO. So if you ever are in need of an automotive solution again or know anyone who is, I would absolutely make it worth the trip haha!

      Thanks for your comments, Patricia!

  7. Great article! Agree that the role of sales is changing. Consumers are much more informed than every before. Thanks for posting!

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