EVERY so often, something happens that inspires me to write about it.
Sometimes, it is something outstanding that gives me a ‘wow’ experience. Other times, it is something that astonishes me in how old school bad it is.
Today I had the misfortune to experience a bad one, but to draw a positive, it serves as a great example of how social media and more importantly, the next generation of social media – the reputation economy – will affect us all in business.
Buying a car
It’s well known that the car industry has struggled for a few years, particularly since the credit crunch of 2008. Part of the reason for this, is that for many people, a car costs more than anything else they buy. In fact, even more than houses on a long term basis.
How does a car cost more than a house?
If you buy a house and spend £5,000 a year on the mortgage, after 25 years, historically, the house has increased in value. This offsets the investment and generates a profit. If you spend £5,000 a year on a car, it disappears. Over 25 years, having a car will cost you £125,000 and at the end you will own nothing. A house on the other hand might be worth double.
In an economy where credit is easy to come by, people tend to buy better cars and buy them more frequently. The car industry is also unique, in that it sells products that can cost £20k+ to ordinary people.
Because cars can last for many years this also means that there are a lots of different types of car traders within the industry. For example, you can buy a car from someone else, a dealer selling on the street, from a franchise representing a manufacturer and maybe even from the manufacturer themselves.
This also means that reputation and customer satisfaction are a very important part of the sales process, particularly for the dealerships who represent a brand, who rely on repeat sales and referrals for much of their business.
The buying experience
Like most people, I went to view a car at a dealership, agreed a price and a trade in price for mine.
I was looking round the new car on the way out of the showroom and I noticed some damage on the door. The sales guy made a big fuss about the damage and explained that he couldn’t possibly sell the car until it was repaired. He would be sent immediately to the body shop and then I could come and see the car again, after the weekend, to make sure I was happy with it.
Sounds like excellent customer service so far, doesn’t it.
The weekend passed and then I received a phone call from the dealer to say that they had sold the car to someone else. The sales guy explained that this was not a problem however, as they had another car, exactly the same arriving later in the week. The only difference is that it was quite a bit more expensive .
What do we do next?
I phoned the dealer back to ask for an explanation and was hastily referred to the sales manager. He was obviously an old hand at dealing with this kind of thing.
He explained that someone already bought the car yesterday. I asked if they bought it with the damage and the answer was yes. I asked how it could have been bought with the damage yesterday, when it had been repaired ‘over the weekend’ – the short answer he admitted is they never intended to repair it.
Is this starting to sound like a car dealer you have come across in your local town or village?
Why reputation is so important?
I also mentioned that my father in law is a previous customer and had recommended 5 people to buy cars from them. He said well, with all due respect, they will sell lots of cars with or without my father in laws recommendations. He then said something, that got me thinking about writing this post.
“What we do is very simple. We buy cars from one place and then sell them to customers for a profit.”
This caught me out a little, so I stopped for a moment and gave my point of view.
“There are lots of car dealers out there and lots of cars. I have a choice of more cars and dealers than you can imagine. There are more than 450 models of this exact car of this age within a 50 mile radius.
What you actually do is you is create satisfied, happy customers and they refer other people to you to buy your cars. The product is a constant. The difference is the value you add.”
He didn’t get it.
The economy of the future
In the future and maybe already in some cases, our reputation will be available to our customers in the blink of an eye. In fact, it may well be the factor that decides whether we stay in business. I explained to the sales manager that the most important thing in the world is our reputation and that I would be sharing the story as a lesson to all of us of how not to do business.
They probably didn’t tell me about not repairing the car for a few reasons:-
- To keep me from buying another vehicle while they sourced another at a higher price with more profit.
- To buy some time, so they could find a buyer for the car with the damage unrepaired. In this case a guy travelled from London to buy it.
- Because they had an interested person looking for a car, but thought they could make more money and sell two cars instead.
How could this damage their business?
Although it may be a standard sales tactic, the risks in a social world is that this has damaged their reputation and a customer can easily share their experience with others.
Remember that in a social network, the people who would be likely to share this are:-
- Local to the dissatisfied customer and therefore the car dealer
- Close to the customer and therefore very trusting in their opinion
- Likely to contribute to the discussion and therefore share this with their won networks
If I shared this information with everyone I met who wants to buy a car and they then shared it with others, eventually it will begin to damage sales. In a world where people only speak to one another, the risks are limited. In a world where you can share with a massive audience almost instantly, this risks are much higher.
How do we adapt to this?
In less than 5 years time, we will all be connected in more ways than we can imagine. It might only take a single incident like this, exposed to a wide enough audience to ruin our reputation and this could take unimaginable resources to repair.
The takeaway from this for me was to realise that social media means we have to improve our customer service. The car industry might be near the front of the queue in need of change, due to the size of the industry and the value of the product, but all of us need to take note.
If you have any examples like this, let us know in the comments.Share