When focusing on the demand or revenue generation side of business, all retailers are faced with three basic challenges:
• retaining existing customers,
• improving the profitability of existing customers, and
• attracting new customers.
Research has shown that the cost of attracting new customers often takes at least one year to achieve a payback. So businesses have an incentive to retain existing customers in order to, first, recover the cost of recruitment and, second, to increase their profitability over time by helping them capture a larger share of the customers’ spending, usually through additional services.
As Frederick Reichheld demonstrated in his seminal work, “The Loyalty Effect,” decreasing the defection rate of existing customers just 5% can increase an automotive services company’s profitability by 30%.1
Among the leading tools for creating loyal customers is great customer service and personalized experiences.2 The Internet allows small firms to provide personalized customer service at relatively low cost, which allows them to compete with much larger firms with far greater budgets.
The key to developing an effective Web site is to have a clear goal of what you want to accomplish with your site and to provide online functionality for those activities that will generate a positive response from both prospects and customers.
Designing a Web site
There are many definitions of a Web site, but the most accurate is:
A Web site is a software application that automates human activity and is accessible through a browser.
When designing a Web site, you need to have a clear vision of what the site should do, both in terms of the activities or functionality it should provide, and the way it looks and “feels.” Early on, you should focus on what the site should do and how it should do it, and leave the graphic design to the end-of-the-design process. That functionality is the heart of the customer experience, and that experience should reflect the way you like to treat your customers.
As Forrester Research has observed, the four top reasons3 a consumer returns to a site are:
1. high quality content,
2. ease of use,
3. quick to download, and
4. frequently updated.
Since the vision for the Web site will undoubtedly exceed the initial budget, a Web site development partner should help you craft a phased approach that builds out the site over time. You should start with a basic site that provides value to customers and evolves into a powerful customer attraction and retention tool. As noted by Cami Noce, president of Web site development firm Thetawave (www.thetawave.com), and who has worked with several independent tire dealers around the country, building a Web site is like a dining experience. “You don’t get your meal all at once. The appetizer comes first, then the salad then the main course and finally dessert.”
The site design process should involve an initial strategic planning workshop that is used to outline the site goals and functionality. The involvement of store personnel at this time is fairly high, requiring at least one and usually up to three sometimes lengthy meetings to define the site.
Developers will document the outcomes of the meetings and create a scoping document that outlines the site design, usually in graphic form for easy review and recognition.
During these sessions, the processes currently used to fulfill key customer service and sales functions will be discussed and mapped. The first and most accessible functions to provide are those involving customer service.
Online customer service
For tire retailers, typical customer service includes answering questions, resolving customer problems, scheduling appointments, providing quotes for tires, and keeping track of routine maintenance records. All of these can be easily addressed in a Web site. The degree of functionality can vary, from simple pages of information and customer submitted forms that the retailer responds to the next business day to online search tools and automated quoting systems.
The most important step is to first determine which functions will be provided, and then build a site that is within budget but which can be upgraded on a regular basis as resources permit. Figure 1 shows a simple site planning diagram focusing on customer service.
In addressing the content for each function to be provided, you will need to define what customer service objective that functionality services, how it is handled now, what the first iteration should be like and what the ideal state should be. Typical goals for each of the functions described here include:
Company information. This should provide customers with a high level of comfort about who the retailer is and where he can be found.
Typical information provided may include key personnel, the company’s customer service philosophy, company history, community involvement, store locations, store hours, products and brands carried, and services provided.
Answering questions. This function should provide customers with lots of information addressing any questions they may have that will help them choose a retailer. Spending an hour with a counterman will help the site developer identify the most frequently asked questions a customer will have at any point in the tire retailer selection and purchase decision cycle, from the first phone call to the moment they leave the shop with newly installed tires and a fresh oil change.
Problem resolution. This function should allow customers to provide feedback to the retailer that can be acted upon to improve each customer’s experience. This can be a powerful tool for improving customer service.
Conrad’s Tire and Total Car Care, a Cleveland, Ohio-based retailer with 26 stores in northeast Ohio, recently implemented just such a tool on its Web site. After receiving service, customers are sent a postcard with a Web address they can visit to rate their service experience.
By allowing this less confrontational method for customers to give feedback, Conrad’s has found that the system has engaged many more customers in their customer service improvement processes.
“You always know the customer you pleased and the customer you haven’t, but you don’t know the middle of the road customer who wasn’t dissatisfied but wasn’t completely happy,” says General Manager Dominic Umek. “The site has emboldened these customers to communicate how they felt about their experience.”
Scheduling appointments. This function should allow customers to view the available time slots at the locations most desirable to them and pick a time and date that is most convenient to them.
Providing quotes. This function should allow customers to indicate what kind of vehicle they have and their brand or tire preference and receive a quote. Online price shopping has been one of the biggest innovations of the Internet, and customers today expect to be able to get pricing over the Internet rather than having to make phone calls.
An online quote system can be as simple as a form the customer completes and submits to the retailer for a call-back or e-mail the next day, or an online tire selector that can give the customer a price in a few moments.
Maintenance tracking. This function would allow customers to maintain and track their vehicles’ maintenance records online, allowing them to set up reminders and schedule appointments on their own.
The benefits to the customer of online customer service include the ability to obtain service at times convenient to them, to take control of their shopping and vehicle care process, and to do it whether at home or at work.
Online customer service frees up time for your sales staff and countermen; builds a deeper relationship with the customer, and increases the number of customers that can be served without having to hire more people.
Challenges, technology and budgeting
Conrad’s Umek, who overhauled the company’s site in the last year, says the biggest challenge in implementing the site was upgrading the technology infrastructure of his stores. Noting that the tire industry is behind other industries in taking advantage of the Internet, he observed that “consumers now use the Internet to shop for and buy all kinds of products. It’s not foreign to them. Plus, most of our staff is already into computers using home-based PCs themselves.”
Noce of Thetawave echoes Umek’s comments, stating that the biggest challenge for tire retailers is to adopt the technology that the “market already uses in other industries.”
The cost of implementing a Web site should not be daunting either. Noce says she has put customers into fully functional Web sites “for just a few thousand dollars.” In fact, the cost of a quality site should be no more than the cost of “an aggressive direct marketing program,” adds Umek.
1 Frederick F. Reichheld, “The Loyalty Effect,” 1996, page 36.
2 “Forrester Research Bulletin” on Customer Relationship Management, 2000.
3 Smith, PR and Dave Chaffey, “eMarketing eXcellence,” 2nd Edition. Elseveir Butterworth Heinemann. 2005, page 173.
Michael Schiller is managing director of Firebox Research and Strategy, a brand strategy and research firm based in Cleveland, Ohio. His overview of his “Internet opportunities for tire retailers” series began in our November 2007 issue.