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Implementation – the key to unlocking the power of a strong retention strategy – Key2Key case study

Pic credit: qimono at Pixabay

Before becoming Global Sales Director for Chrysalis Loyalty, Steve Fitzgerald was a customer of the Key2Key customer retention tool. His experience of implementing Key2Key for a major automotive brand revealed that even the most powerful system cannot be simply ‘plugged in’ and expected to deliver instantly optimal results. Instead there are real life variables which must be accommodated in the implementation phase to make the most of the tool and its underlying data.

He explains: “Key2Key offered – in theory – an almost automated solution to retaining and renewing customers without the need to manually calculate where each one was in the renewal cycle. We quickly found out that there was more to it than simply running the tool, calling the customers and saying ‘you’re in a great position to change with little or no change in your monthly payment’.

“For example, we initially found that we were only able to set one appointment for every 15 people we contacted. And only half of those people were going on to buy a car. We quickly learned that we needed to focus closely on the ‘soft skills’ necessary for handling calls and change the objective of the call itself.

“It was becoming clear that immediately talking numbers on the phone risks immediately descending into a wrangle over the part-exchange valuation. Setting unsustainable expectations in the initial call was also common mistake and we realised that this could stem from ill thought out alignment between incentives and outcomes. If the outbound caller is incentivised only on persuading the customer to attend a meeting and has no stake in the eventual appointment they will tend to exaggerate the customer’s advantages, only to set them up for a disappointment.

“The solution was training our callers to focus only on setting the appointment for a face-to-face discussion, without setting expectations. The ratio of appointments made rose to 70% of customers contacted, with 90% actually attending the showroom. And by leaving the dealer fully in control of the discussion of the details around any possible deal available for the customer we began to achieve a conversion rate of 80% into a new car.

“Working this back to the original number of customers initially called the contact to sale ratio rose to 50%. By focusing on training and fine-tuning the quality of every point of customer contact all the way to the reception of the customer arriving in the showroom, we created a sustainable and replicable approach. These lessons now help us implement the Chrysalis process without the pain of inventing it from scratch. The benefits are enjoyed at every level. The manufacturer sells more cars than it otherwise would – typically three cars in six years to a customer instead of two while also maintaining market share and insulating itself from conquest sales by competitors.

“The dealer increases revenue and profit by selling more cars, with sales staff commensurately rewarded more. The more rapid turnover of agreements means the finance company increases the value its portfolio and retains more customers. And, importantly, the customer who wishes to enjoy the benefit of changing into a new car more regularly is happier and consequently more likely to stick with the brand and dealer over time. Perhaps the most remarkable measure of success, however, was the emergence of in-bound calls from customers who had already been through the new renewal process previously and were now anticipating a repeat of the experience. Those customers were also often prepared to put money into a new deal, such was the goodwill generated by their previously agreeable and satisfying experience of changing their car.”

This case study was first published in Auto Retail Profit

More customer retention best practice advice for automotive brands, funders and retailers is available in the free Chrysalis Loyalty white paper. Download it from  www.chrysalisloyalty.com/white-paper/

 

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Customer renewals driving dealer business growth – a Key2Key case study

Alison Roberts – Renewals Centre Manager, Swansway

Customer renewals are too often overlooked as a central strand in a motor retail business’s growth strategy. There can be many reasons for this. It may be that times are good for the business and a plentiful supply of new customers is keeping sales staff busy. This is when positive external economic forces can distract everyone from the value inherent in renewals. However, even when a business has a defined customer renewals strategy in place, our research suggests that it can under-perform simply through missing the opportunities around the very best moments for customer contact. Rigorous processes can also fail to deliver simply due to the wrong staff being tasked to implement them.

We recently published research revealing that it is not as unusual as it should be for a customer renewal strategy to result in only one sale for every ten or even 20 customers contacted. But when a renewal strategy is implemented well, with the right people delivering it, the results can be spectacular. So it is with Swansway, a dealer group concentrated across the north west and selling 13 brands. At Swansway a combination of the Chrysalis Loyalty Key2Key system for understanding the optimal timing based on the customer’s financial position and the available offers to enable them to change car along with a highly skilled call centre team nurturing the strongest customer relationships delivers best-in-class results with one sale to every 1.4 customers contacted.

Alison Roberts heads a team of five, focused exclusively on Swansway’s customer renewals. And last year they brought in 800 sales for the franchise brands with which they are supplied the Key2Key data and dashboard system. Their success stems from a combination of clearly defined process with ‘soft skills’ so effective that many customers are on first name terms with the team – who are also regularly fielding inbound calls from people anticipating the renewal process.

A sign of Swansway’s understanding of the value of such skills is that Alison had no prior background in car sales when she began building the team. Today, with the advice and help of Chrysalis Loyalty, the team is delivering best-of-breed results. Although Key2Key provides unrivalled insight into the options for renewal at very specific moments in a customer’s contract, the strength of the Swansway strategy stems from a holistic approach to the long-term customer relationship.

She explains: “Three years ago we began making calls at two, eight and 14 months, just to keep in touch and understand what their needs are.  Even if we can see they are not in a great position now we can get a clearer understanding of where they will be in the future. They are never surprised to receive the calls because we give the customer a booklet when they first buy their car, explaining how we will maintain contact with them and why. It’s very softly softly, with no hard sell and the customers appreciate it. They may have had problems with something like pairing phones with their car and we help them with things like that. Only about a third of the calls we make are with the intention of setting a renewal appointment.

Alison Roberts (2nd from left), with members of the Swansway renewals team.

“Key2Key shows us exactly where they are in terms of their opportunity to change and in the cases of brands where we do not have the Key2Key data it is a much less qualified call – more a stab in the dark. Having insight into the customer’s exact position also gives us as callers more confidence and so those calls are more professional. It means there is no risk of wasting their time and that means our own time is spent more efficiently too.

“One brand just took Key2Key and we have literally been able to move on from using a spreadsheet and a phone to manage those customer contacts to a clear window on where they are in their contract and their opportunities to renew.

“We also use Key2Key as a communication tool between sites, sharing notes about the customers, vehicles they are potentially interested in, or if they have a life change that necessitates changing their car. Everybody who has access to Key2Key understands that customer.

“Many customers now know us by name and the conversations are very pleasant and friendly because they trust us to have their interests at heart. Even people who are a little wary about why we are calling them at first are happy with the contact when they understand what is happening. We have even started to receive inbound calls, now that customers know us, asking when they can have a chat about their renewal.”

This case study was first published in Auto Retail Profit.

More advice from Chrysalis Loyalty on how to implement a transformational customer renewal strategy is available in the recently published white paper ‘How to create loyal customers and drive real growth in sales and profitability: A Chrysalis Loyalty guide to best practice for automotive brands, funders and retailers’. The white paper can be downloaded, free, from www.chrysalisloyalty.com/white-paper/

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Confusion over GDPR is still rife in motor retail direct marketing

NEW REGULATIONS governing the use of customer data for marketing are still widely misunderstood across the automotive retail and finance sector, even since GDPR came into force.

Photo by davidpwhelan on morguefile

That’s the view of customer retention specialists Chrysalis Loyalty, who say confusion is still evident from their conversations about customer renewal and retention marketing across the industry.

The main area of uncertainty, says Chrysalis Loyalty Product and Marketing Director Mark Fretwell, is around reconciling direct marketing activity with the principle enshrined in GDPR of ‘legitimate interest’.

Chrysalis is encountering a widespread misconception that ‘legitimate interest’ is a one-sided principle relating to the data subject’s interests, when in fact GDPR guidelines specifically provide for the supplier’s right to conduct  direct marketing activity in given circumstances.

It means that many motor retailers are now seeking clarity after receiving often conflicting interpretations from lawyers and other partners.  In some cases there is a possibility that the confusion may result in less rather than more transparency in the communications between dealers and customers – and in some cases, communication activities have been suspended unnecessarily.

Chrysalis believes that a crucial message has been lost in the legal interpretations of many businesses; that in almost all scenarios where a finance agreement already exists there is a legal basis for maintaining ongoing customer contact – often even in the case of ‘lapsed customers’.

Mark Fretwell said: “There remains a lot of confusion over GDPR and especially over the meaning of ‘legitimate interest’ as a basis for contacting customers. It appears that many businesses have been reacting to GDPR as if the new rules infer that direct marketing does not fall under the banner of ‘legitimate interest’ when in fact it is clearly provided for in the regulations.

“It is perhaps no surprise that confusion has led to an over-cautious approach in some quarters because of conflicting legal opinion over what constitutes an ongoing right to remain in contact with a customer.

Chrysalis welcomes the new regulations and believes that eventually the confusion will clear leading to greater understanding and professionalism in this industry. The company points to the message from the UK Information Commissioner, Elizabeth Denham, who recently said: “We are going to be focused on businesses that deliberately, persistently or negligently misuse data. Some people are so concerned about being caught out by the new rules that they appear to be assuming marketing directly to consumers is no longer a lawful activity without specific permission. The reality is that what matters is providing a clear opportunity to opt out of such communications and then respecting that decision.”

Mark Fretwell said: “Under Financial Conduct Authority guidelines lenders have a duty to act in the best interests of their borrowers and at Chrysalis, we have always led with a ‘customer first’ approach, so this is the basis with which we have always approached our platform solutions and decision-ware. Therefore, we welcome the renewed focus GDPR brings to the industry. It is clear that informing a customer where they are in their trade cycle; in some cases perhaps having to inform them of pending excess mileage charges – or more often, what beneficial opportunities they have to renew their current car – falls under such a responsibility.

As a substantial holder and processor of customer data for renewal marketing purposes, Chrysalis proactively sought written advice from a leading QC in the area of European privacy and data law to ensure clarity for the business and its clients on the new rules. The company concluded that GDPR compliance generally reflects ‘best practices’ which most businesses should already employ.

Specifically the company looked at 6 scenarios on behalf of their finance company clients:

1. What preparations will allow our clients to be able to process and directly market to their finance database in order to make contact for such purposes as beneficially managing the customer trade cycle resulting in customer contact at both early renewal and maturing contract phases, for new customers post GDPR introduction?

2. What preparations will allow our clients to continue to process and contact existing customers for both early and maturing renewal as part of beneficially managing the trade cycle, post GDPR introduction?

3. Will our clients be allowed to contact existing customers if re-solicitation permissions were previously set to ‘no’ in the existing database pre-GDPR?

4. Is re-permissioning a necessary action our clients should be taking?

5. If re-permissioning is undertaken by an associated party in relation to the data subject, eg: by the brand partner, and the customer does not respond, is our client able to continue to process the customer’s data for renewal contact and if so on what basis?

6. How can our clients prepare so that they can continue to process data for and contact lapsed finance customers post GDPr introduction?

In conclusion, Mark Fretwell said: “The advice we received is clear, that in most scenarios where a finance agreement exists there is a legitimate basis for maintaining ongoing customer contact – even with ‘Lapsed Customers’.

“Where software systems are used to generate customer communication opportunities this in fact provides an opportunity for dealers and funders to demonstrate both their compliance and the quality of their decision making in supporting consumers’ best interests. It enables them to clearly show that they are treating customers fairly, contacting the customer when it is in their interests to do so rather than when a business is over-stocked or missing its sales target – and enables demonstrating clearly and transparently the basis for decision making. It is an opportunity for the industry to promote and improve its reputation and professionalism”

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Chrysalis Loyalty expansion continues with two new key appointments

EXPANSION continues at international finance retention specialists Chrysalis Loyalty, with two key appointments in sales and customer training.

Stephanie Falconer joins the business as UK Account Director and Lyn Howdon has been appointed to head Chrysalis’s Global Academy.

They are the latest in a series of major appointments this year signalling the company’s ambition to be the recognised world leader in motor finance retention.

Independently owned and UK-based Chrysalis Loyalty currently operates in 12 countries, helping more than 2,500 motor retailers maximise repeat sales by optimising customer communication for dealers, brands and finance providers.

Chrysalis focuses heavily on helping its customers implement customer loyalty programmes through technical and soft skills training to optimise the power of its Key2Key system for users. Lyn Howdon, who most recently led the  UK Academy for leading automotive video services provider CitNOW, will now draw on her 28 year automotive track record to head this function for Chrysalis.

Lyn is one of the pioneers of automotive customer loyalty strategy, having previously developed retention programmes for US-based Half A Car which were successfully implemented across 600 dealerships in the UK, Europe and Australasia.

She went on to lead dealer training for Kia Motors internationally, building the brand’s Worldwide Sales and Service Academy covering 163 countries across five regions.

Her other roles have included running her own successful business focused on training and consultancy to improve customer loyalty and implementing dealer and manufacturer retention programmes globally for Loyalty Logistix.

Stephanie Falconer’s automotive career spans a Who’s Who of leading data and decision-support providers, including CAP-HPI, EurotaxGlass’s and Jato Dynamics. A specialist in software and consultative services, Stephanie has strong relationships with vehicle manufacturers, retailers and finance and intermediary system providers across Europe and the UK. She joins the business from Cox Automotive where she has worked across business divisions serving financing, re-marketing, software solutions, media and insight.

Chrysalis Loyalty founder and CEO Jolyon Barker said: “Stephanie and Lyn are leaders in their respective fields and a perfect fit for Chrysalis as we drive the business toward our ambition of being the recognised world leaders in automotive customer retention.

“Our success to date has stemmed from understanding the challenges and needs of our customer, helping them to implement world class customer loyalty systems and then run them as effectively as possible. The skills they bring – and their commitment to understanding and properly serving the needs and interests of customers – will be invaluable as Chrysalis transforms the customer retention landscape in the UK and beyond.”

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Chrysalis Loyalty steps up integration with best-of-breed 3rd party systems through its open API

A DRIVE to integrate more 3rd party systems with the open API of Chrysalis Loyalty’s Key2Key customer retention system has been announced.

Chrysalis says the move will enable its dealer and captive finance customers to dramatically boost the quality and impact of their customer loyalty programmes.

The Key2Key API has always been ‘open’ for integration with best-of-breed 3rd party system providers operating in the field of customer loyalty.

Photo by rawpixel on Unsplash

But fresh technological developments around the industry are opening up new possibilities which Chrysalis say they are determined to enable as quickly and easily as possible.

Chrysalis founder, Jolyon Barker, said: “No matter how well designed and comprehensive, it is unrealistic to expect one system alone to best-of-breed in every aspect of the increasingly sophisticated processes used in automotive retail.

“That is why the right thing for us to do for our customers is to encourage the best 3rd party providers to integrate through our open API by being as accommodating and supportive as possible.”

As an example, Jolyon Barker points to a project under way in Europe in which an enterprise email marketing system is being integrated with the Key2Key platform to increase transparency for dealers and their brand’s captive finance arm around customer communications.

The integration will eradicate poorly timed or inappropriate communications by ensuring dealer, brand and finance provider effortless transparency as well as instant analysis of the effectiveness of their customer contact.

In a recent white paper detailing customer retention best practice Chrysalis Loyalty highlighted the importance of ‘joined up’ data and communication between dealers and their brands in generating the highest possible sales renewal rates – and proving the best customer experience.

Chrysalis believes that its users are best served by enabling integration of best of breed 3rd party systems to its market-leading customer retention tool.

For example, by integrating two-way data sharing between Key2Key, which highlights the optimal moments to contact a customer for renewal, and a sophisticated call tracking and conversation sentiment analysis tool, users get the benefits of both systems – and additional benefits from combining data to leverage powerful insights that can help transform their performance.

Jolyon Barker said: “Businesses like our own can choose between insisting on developing proprietary solutions to every improvement in their service, or they can do what’s right and work with the best to create maximum value for their customers.

“Because information sharing is so vital to profitable and efficient operations in automotive retail it is wrong to force users to develop their own workarounds when the integration of data between tools can make each one exponentially more valuable.

“Our latest integrations will start eradicating timed or pitched customer communications by creating unprecedented transparency and insight. Our customers will see results within a very short timeframe because we have encouraged the integration of a best-in-class tool through our API.”

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Dealers should focus on higher renewal rates – not pursue a ‘race to the bottom’ on monthly payments

Dealers should focus on higher renewal rates – not pursue a ‘race to the bottom’ on monthly payments, says Chrysalis

DEALER ‘ADDICTION’ to the lowest possible monthly PCP payments is unsustainable for motor retailers and their brands in the long term.

Instead they should be focusing harder on boosting sustainable business by shortening the change cycle – which means working harder to qualify customers.

That’s the view of finance retention specialists Chrysalis Loyalty as evidence grows that longer PCP terms are increasingly being used as a quick fix in an increasingly challenging market.

Many dealers and brands are already losing greater long-term profit opportunities – and risking their relationships with customers – by chasing short term wins from 48 month PCPs.

But if dealers fail to challenge the industry mantra that ‘it’s all about the monthly payment’ they only pursue a race to the bottom, rather than sustainable growth, say Chrysalis.

According to Mark Fretwell, of Chrysalis Loyalty “some dealers are addicted to the lowest possible monthly payment as a way of signing the customer immediately while sacrificing future loyalty and profitability”.

Using the example of switching a 48 month PCP to 36 months on a popular volume brand model, he argues that both the dealer and customer benefit from shorter PCP terms in the medium to longer term.

Based on industry-standard CAP residual values and a finance rate of 4.9% he contrasts a zero cash down four year term for the car with a deposit of two monthly payments and a term of 36 months.

The increase in the monthly cost to the customer is less than 10% while the opportunity to renew the vehicle for little or no cost to change comes more than a year sooner.

“The model we use to illustrate this is a representative volume vehicle with an on-the-road price of £29,050* and a £1,000 brand deposit contribution toward the deal,” he explains.

“The temptation for the dealer is to go for a 48 month PCP to achieve a monthly payment of £452. But by encouraging the customer to put down a deposit of two monthly payments and increase the monthly payment by less than 10% to £496, the term can be reduced to 36 months and they will be able to enjoy a new car much sooner.

“If this approach were implemented at scale it would result in a 33% increase in sales volumes from renewing customers over the longer term”

“It is even possible for the dealer to achieve a 100% long term increase in this example by explaining to the customer that a £4,000 deposit and a 24 month PCP will enable them to halve the time in which they can change their car.”

Mark Fretwell acknowledges that such an approach involves much more rigorous qualification of customers. But he argues that the increase in overall sales volumes over time – and the customer goodwill that stems from being able to change cars sooner – will bring substantial rewards.

He says: “Instead of taking the path of least resistance with the lowest possible monthly payment conversations should focus on the bigger picture, which must include how often the customer likes to change their car.

“This is about giving the customer all the information they need to make the best decision for them as well as for the dealer.

“The benefit of a relatively small increase in payment and the addition of a deposit makes for a more sustainable long term strategy.

“If we do put customers into four-year deals we know they will want to change earlier but will inevitably find out that they cannot. They are then less satisfied with their existing vehicle but feel stuck and that can only come at a cost to your relationship with that customer.

“Of course brands can keep increasing their deposit contributions to keep the business flowing, but ever-increasing support of that kind is still not a sustainable business model.

“In such a low monthly rate-driven environment how long will it be before we start talking about 60-month PCPs and how will the customer then feel when their opportunity to change has been pushed even further into the future?

“As we face a more challenging market today than for several years it surely makes sense to work a little harder now to maintain the quality of customer relationships and preserve the opportunities to renew.”

 

*How the quotations are calculated: monthly payments highlighted in bold

PCP length (months) 24 36 48
On the road price £29,050
Brand deposit contribution £1,000
GFV (95% of CAP Gold Book)

February 2018

£13,870 £12,136 £10,188
With £0 customer deposit £525 £452.13
With £992 customer deposit £496.10
With £4,000 customer deposit £502.79

 

Picture credit: freestocks.org

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Chrysalis announce appointment of product and marketing director

Expansion is under way at finance retention specialists Chrysalis Loyalty with the appointment of Mark Fretwell to the role of Product & Marketing Director.

Mark Fretwell – whose automotive data and technology background includes senior positions at CAP and KeeResources – is the first in a series of planned appointments in 2018 as Chrysalis Loyalty accelerates an ambition to be recognised as the global leader in motor finance retention.

Independently owned and UK-based Chrysalis Loyalty currently operates in 12 countries, helping more than 2,500 motor retailers consistently and sustainably generate repeat business by identifying the moment a customer can most cost-effectively trade into a new car.

The company partners with nine major automotive brands and finance providers through their franchise networks and the expansion plans range from deeper and wider British market penetration to launching into new geographical territories worldwide.

Founder and CEO Jolyon Barker said: “We are primarily a technology-driven expert data business and that is why Mark is such a great fit for us at this exciting moment, bringing with him more than 20 years’ experience and understanding as well as an impressive track record of success in that world.

“Mark is also highly entrepreneurial and understands that success means delivering value to both sides so his appointment is equally good news for our customers too.”

Branded as ‘Key2Key’ the Chrysalis Loyalty system has been transformational for dealers, who typically report the doubling of their retention and renewal rates after adopting it. By automating the identification of customers in a position to change, Key2Key addresses one of the most challenging tasks in the dealership, delivering pre-calculated offers that produce high levels of repeat business and are also in the best financial interests of the customer.

Mark Fretwell said: “Smart use of data to remove friction and unlock commercial opportunities is one of the most exciting fields in the automotive world and Chrysalis Loyalty is a real innovator in that space. We already have exciting plans to expand our offering in the UK and elsewhere around the world and I’m delighted to be in at the beginning of this new chapter for the business.”

 

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