Customer management key to car dealer success

WM Circle Logo

By: Wise Marketer Staff |

Posted on July 20, 2006

Car dealerships using customer management systems are performing 23% better than those that don't use such systems, according to the latest research from the University of Maryland's Robert H. Smith School of Business.

The research study conducted earlier this year by the Smith School was based on a survey issued by researchers in the school's Department of Decision and Information Technologies and distributed through online automotive marketplace Autobytel to thousands of dealerships (including those that already use Autobytel's Web Control system and Retention Performance Marketing programme).

Performance link
The initial survey results in February 2006 suggested that dealerships using customer management systems were performing 15% better than other dealerships. However, having completed a thorough analysis of the data, the final figure was found to be as high as 23%.

"The study's results further validate the transformational effect technology, and CRM in particular, is having on the retail auto industry, particularly in improving the relationships dealers have with their customers," explained Jason Kuruzovich, lead researcher for the Robert H. Smith School of Business at the University of Maryland. "Today's informed consumers want to work with dealers who give them the most relevant information in a timely and direct way. It's apparent that dealers who properly use technology in their customer communications are ahead of the curve in delivering what consumers want."

Not just about the technology
But while the benefits of CRM are clear from the study's results, one of the most significant findings was that simply having the technology in place at the dealership does not make a significant difference in performance. Dealerships that see the greatest success share three distinct characteristics:

  1. They are using the technology on a daily basis;
  2. They have implemented business process change tactics (such as providing incentives for sales staff who use the system);
  3. They are taking full advantage of the automation capabilities of such systems.

Increasing closing ratios
For example, Autobytel's Web Control customer management system (as used by several of the dealerships surveyed) contains tools that allow them to broadcast e-mails that are content-relevant to customers based on their position in the purchasing cycle. Consequently, if a consumer is interested in a vehicle but has to put off the purchasing decision for a few weeks, the dealership can use the CRM system to stay in touch until they are ready, thereby increasing the chance they will buy from that dealer.

Autobytel reports that some of its software users have noted an increase in customer closing ratios from 5% to 20% within the first four months of usage.

Meeting consumer needs
The study's findings also shed new light on how dealerships can better serve their customers. In the current web-driven environment, consumers want information to be delivered on-demand, and in an easy-to-read format that meets their specific needs. If dealers use the right technologies to help handle such customer requests, the study suggests that they can reasonably expect to perform better than their competitors.

According to Ed Braunbeck, vice president and general manager of AVV Inc. (a subsidiary of Autobytel that developed the Web Control system), "It is exciting to see an academic institution like the University of Maryland's Smith School of Business take a pioneering role in producing research that clearly validates how technology is making it easier for dealers to offer an enhanced customer experience that translates into better overall performance for the dealership."

The study defined a "customer management system" as being an "information system used to attract and manage leads/customers through pre- and post-sales activities". As initial results confirmed earlier this year, 91% of survey respondents reported that customer management systems have created value in the vehicle sales process.

For additional information:
·  Visit Autobytel at
·  Visit RHS School at