Tuesday, June 25, 2013 | Edited by Daniel Moores
||Automakers in High Gear for Summer Car Deals
Manufacturers Under Pressure to Maintain Momentum
After a few years of late-starting, lackluster deals, the summer auto sale may be back in full force.
Light vehicle sales were up 8.2 percent in May compared to the previous year, according to research firm Autodata Corp. Sales year-to-date are 7.3 percent higher than in 2012. That demand, paired with fairly lean inventory on lots, should have put automakers in the driver's seat as it did last year -- which led to cash discounts, financing deals and other offers staying fairly flat.
But the recovering economy has put automakers under some pressure this year to keep up the momentum by increasing sales and gaining market share, said Lincoln Merrihew, vice president of transportation at market research firm Compete. "That can get pretty tough," he said.
At an American International Automobile Dealers Association meeting in May, executives for brands including Kia and Hyundai predicted a competitive summer with incentives that could limit profitability.
Adding to the push, dealerships also have a few more cars on the lot to clear for new models than they did last year. Earlier this month, automakers reported having a 57-day supply of vehicles, versus a 52-day supply a year ago.
Though improved, the summer sales aren't likely to be quite as big as those drivers might have seen before the recession, when automakers had even more supply, said Jeremy Acevedo, an analyst for Edmunds.com. Drivers are also likely to see more diverse deals than the all-cash offers of years past -- financing offers, lease deals and unadvertised cash that brands give to dealerships are all on the table.
"For consumers who are getting back into the market, and haven't bought a new car recently, it might be a different experience," Acevedo said.
Better deals are often on less-popular models, and this year, that includes electric vehicles, said Alec Gutierrez, senior analyst at Kelley Blue Book. For example, General Motors currently offers as much as $5,000 cash toward the 2012 Chevrolet Volt; the 2013 model has an up-to $4,000 cash deal. Some models, including the 2013 Nissan Leaf, can be leased for as little as $199 per month.
Cash offers on large trucks -- often heavily discounted in the summer -- are also high. Many of the biggest are on models recently redesigned, including the Chevrolet Silverado and GMC Sierra, Acevedo said. 2012 models of both vehicles currently have up to $5,500 cash on most configurations, for drivers willing to overlook an older design.
Popular and luxury models are sporting offers, too. Some Cadillac models are available for zero percent financing, and BMW offers rates as low as 1.9 percent. "Even the (2013) Ford Fusion, they're pushing $500 to $1,000 cash," said Gutierrez -- an unusually high amount, given that model year was redesigned.
With a variety of deals on the table, consumers should be careful to compare all their options to determine whether say, financing or cash is the better deal, said Acevedo. Offers may not be as enticing as they first appear. Or as transparent. Sites including KBB.com and Edmunds.com often list unadvertised deals shoppers would need to know about and ask for.
Negotiate a trade-in value for your old vehicle before choosing a new one to buy, or a dealership to buy from, said Merrihew. "If I'm a dealer offering $1,000 in incentives, I can undervalue your trade-in by $1,200 and still come out ahead," he said.
If the summer proves as competitive as experts expect, shoppers should also pay attention to deadlines. Sales could shift swiftly. "It's a moving target, so if one brand does something that works, everyone will copy it," Merrihew said.
Drivers looking for rock-bottom prices may be better served waiting until August or even September, when dealerships are pushing the last of the 2012s and many 2013s out the door, Gutierrez said. Deals tend to be bigger then, although selection will have dwindled. It may not be possible to get the color or options desired.
(Source: CNBC, 06/20/13)
||Outback, Panera Lead 'Customer-Centric' Rankings
Outback Steakhouse and Panera Bread are tops among U.S. restaurant/food service brands when it comes to responding to the needs of their customers, according to a new Customer Centricity Index (CCI) from Dunnhumby, which analyzes and distills insights from more than 400 million customers worldwide for retailer clients.
Dunnhumby's new CCI weighs U.S. customers' perceptions of retailers against seven "pillars" or primary business areas most critical to achieving long-term customer-centricity (experience, loyalty, communications, assortment, promotions, price and feedback), to help retailers understand where and how they can improve.
The results of Dunnhumby's first CCI report, focused on the restaurant/food service sector, confirm that companies with higher CCI scores also tend to have higher long-term comparable sales growth over a two-year period.
Restaurants face more operational challenges in becoming customer-centric organizations than other categories of retail because franchise models "often make it difficult to consistently deliver the same customer experience across outlets and, ultimately, to build long-term loyalty with customers," says Euan White, SVP, consumer markets for DunnhumbyUSA. "Our research shows that customer-centricity is a key indicator of business health and potential for growth. It also shows that food retailers that understand what drives customers to their brands are leveraging that insight to differentiate themselves from the competition and drive sales."
The overall top-10 U.S. CCI ranking -- across all restaurant formats -- shows Outback and Panera to be #1 and #2 respectively, followed by (in order) Texas Roadhouse, Olive Garden, Chili's, Red Lobster, Chick-fil-A, In-N-Out Burger, Cracker Barrel and Applebee's.
Other restaurant brands making the top 25 overall ranking (in order), are #11 Cheesecake Factory, followed by Subway, Chipotle, IHOP, Jimmy John's Gourmet Sandwiches, Arby's, Panda Express, Wendy's, Jack in the Box, Taco Bell, Five Guys Burgers and Fries, KFC, Dairy Queen, McDonald's and Burger King.
Dunnhumby also analyzed customer-centricity within the three primary restaurant categories/formats: casual dining, fast casual and fast food.
The results show that in addition to heading the overall restaurant/food service ranking, Outback and Panera score at the top of their respective categories, casual dining and fast casual.
The CCI leaders in the casual dining sector, after Outback, are Texas Roadhouse, Olive Garden, Chili's, Red Lobster, Cracker Barrel, Applebee's, Cheesecake Factory and IHOP.
The leaders in the fast casual category, after Panera, are Chipotle, Panda Express and Five Guys.
Chick-fil-A leads the fast food sector ranking, followed by In-N-Out Burger, Subway, Jimmy John's, Arby's, Wendy's, Jack in the Box, Taco Bell, KFC, Dairy Queen, McDonald's and Burger King.
Other key findings:
* A strong customer experience, personalized communications and a tailored assortment mix that meet customer needs had the largest impacts on customer-centricity/CCI scores and rankings.
* Across all restaurant/food service categories, price was important to customers, but it was more heavily tied to perceived value than actual lowest price. For example, Outback's CCI score for price was slightly higher than competitors', even though it had a similar or not-much-lower price point -- indicating that Outback customers perceive a stronger value for their purchases than at competitive restaurants.
* Customers rated casual dining and fast casual restaurant brands higher than fast food brands in terms of experience and opportunities for them to give feedback and interact with the companies -- which tended to result in higher overall CCI scores for these types of restaurant formats, versus fast food formats.
* Outback scored high in assortment and feedback, but excelled within both the overall restaurant/food service and casual dining rankings based on the "experience" factor. Insights from customer responses reflect the quality of the brand experience and how it translates seamlessly across the way the brand is marketed and the products it serves. Customers said that Outback does an excellent job of making them feel that they are immersed in the casual, Australian-themed brand experience/atmosphere -- and "experience" attributes are most influenced by the interaction customers have with restaurant employees, reports Dunnhumby.
* Panera scored higher than its fast-casual competitors in each of the "seven pillars," and scored significantly higher in loyalty. Customers indicated an appreciation for Panera’s personalized MyPanera loyalty/rewards program, including its "surprise/delight" features.
* The fast food category leader, Chick-fil-A, outscored competitors on the experience, communication, feedback and assortment factors. Customer responses indicated that they are passionate about the brand, the quality of its food, and the menu assortment/variety that it offers.
To create the CCI restaurant/food service rankings, Dunnhumby asked customers of more than 100 restaurant brands, over a nine-month period, to rate these brands on 40-plus customer-centric attributes based on Dunnhumby's "seven pillars" of customer-centricity. Brand scores are based on a weighted average of those results that link the various factors of customer-centricity to loyalty and likelihood-to-recommend. Respondents were classified as customers of a restaurant brand based on trips occurring at the restaurant during the previous three months.
(Source: Marketing Daily, 06/13/13)
||Analysis: As Boomers Age, Harley Hunts for Younger Riders
Harley-Davidson Inc doesn't do much quietly. Its motorcycles are notoriously noisy. Its slogans - "Screw It. Let's Ride." -- are loud, too.
So why was the Milwaukee company quiet last year when by its own numbers it successfully zoomed past a demographic hazard analysts had fretted about for years?
Some background: In a recent interview, a top Harley-Davidson executive told Reuters that in 2012, for the first time in years, the average buyer of the company's bikes was not a baby boomer.
For a brand defined by the emergence and, lately, the aging of the post-World War II cohort of consumers, that's a big deal -- proof the 110-year-old company is gaining traction with a new generation of riders.
Yet its top global marketing guru, Mark-Hans Richer, continues to insist it's no biggie -- even though investors have long wondered how Harley would survive as boomers, who embraced its bikes as totems of rebellion in the 1960s and 1970s and drove its growth in the ensuing decades, rode off into the sunset.
One top analyst, Robin Farley at UBS Investment Research, suggests the company's muffled messaging reflects its desire to avoid having the accomplishment examined too closely. That's because by her calculation the average age of riders is still going up, not down. The company disputes her math but says even if she were correct, a new marketing focus means metrics like average age are less important than in the past.
Farley is skeptical. Average age is important because "that's ultimately the core customer," she says. "That's one of the reasons they don't want to talk about it."
Beyond the Boomer That Brung Ya
Harley-Davidson has long known its reliance on an overwhelmingly white, male and middle-aged consumer base would ultimately challenge sales in North America, where it still earns two-thirds of its revenue.
So several CEOs ago, the company began an effort to attract buyers born after 1964. An outreach program was launched to gain favor with women and minorities; products were redesigned.
Harley-Davidson regularly claims the effort has been a success -- and trots out supportive research from RL Polk, a leading provider of auto industry data, which shows Harley has been the market leader among riders ages 18 to 34, as well as women, African-Americans and Hispanics, for five years running.
But internal numbers have been hard to find, at least recently. Prior to 2009, Harley regularly reported data on average rider age. It stopped, it says, because the number did not measure the outreach effort -- as much about winning over nonwhite, nonmale riders of all ages as about wooing the young.
Harley-Davidson also stopped talking about its boomer problem, analysts say, because it didn't want to appear to be repudiating the generation that still buys a lot of its bikes but now has a choice of several other brands with the "Made in the USA" cred vying for its dollars.
Still, as the company's annual shipments to dealers retreated from a record of 350,000 set before the recession to the 259,000 to 264,000 bikes it expects to ship in 2013, investors worried the outreach effort was not working and that Harley-Davidson's demographic problem was getting worse.
Not so, says Richer. In the interview with Reuters, he said the company's average buyer is now 47 years old, one year younger than five years ago, and holding steady.
If true, that means that in 2012 the average Harley rider was born in 1965 -- the first year of Generation X, according to the Census Bureau's definition. Given the demographic concerns, that's huge.
Not everyone is buying it, including Farley, who has covered Harley-Davidson for a decade. She says that until the company stopped routinely disclosing the number, average rider age was rising steadily at a rate of about 6 months every year since at least 1999.
In 2008, Harley-Davidson said its average rider was 48 years old, up from 46.1 in 2004 and 43.4 in 1999, Farley says. Extrapolating from those figures, she believes the current average rider is over 50 and, by definition, still a boomer.
After she published a note based on her calculations, she says a company "senior manager" called her to say she was mistaken -- but that the real number was 49 years, 6 months -- a boomer still and not the 47 Richer claims.
Spokeswoman Maripat Blankenheim says the unnamed executive misspoke because he did not refer to "the most recent and more accurate database we are using."
Most analysts accept Harley-Davidson's claims that the outreach is working. Jamie Katz, an analyst at Morningstar, said that while the company has "a long way to go" before it gets back to the shipping rate it hit before the recession, "What they've done on the outreach front is impressive.
"Our biggest concern was that their core consumer -- the older white man -- was obviously decreasing in size."
The tactics the company has employed to penetrate new markets have ranged from programs at rallies popular with minority riders, to garage parties for women, to redesigns that made the company's bikes appear more "sinister," in the words of William Blair & Co analyst Sharon Zackfia.
The plan has hit some potholes along the way. In 2003, Harley-Davidson bought Buell Motorcycle Co, and in 2008 MV Agusta, an Italian motorbike company. The purchases were part of an effort to sell to riders who thought they weren't yet up to a Harley, said Zackfia.
In 2009, shortly after long-time insider James Ziemer retired as CEO and was replaced by outsider Keith Wandell, Harley-Davidson dumped both bike makers and refocused on its own brand.
It offered souped-up, all-black versions of existing bikes straight out of Batman or graphic novels to kick-start sales to younger riders. Women were enticed with the 883 Low, a lighter, lower-to-the ground model; the V-Rod was meant for boys looking for pulse-racing performance. Buyers were allowed to customize their bikes online and install lucrative add-ons at the factory rather than at motorcycle dealerships, often perceived as forbiddingly clannish.
Katz at Morningstar estimates that outreach customers now account for about one-third of Harley-Davidson's domestic sales, or nearly 50,000 bikes last year. "It's really made me rethink the potential of the business," she says.
Roberta Lamerdin, a 49-year-old small business owner north of Chicago, is one of the new female loyalists. She never figured she'd ride a motorcycle. She changed her mind a few years back when her husband asked her to pick him up at a Harley-Davidson dealership, where he was having his bike repaired.
While waiting she sat on a Sportster 883 Low, the company's flagship product in the push to win over women.
She bought it on the spot. Six years later, Lamerdin leads the local "Ladies of Harley" group, helping new women riders get comfortable in the saddle.
"Men just love it," she said. "Not everybody, of course. Some of the old bikers, the so-called real bikers, don't like it at all. But too bad."
(Source: Reuters, 06/21/13)
Daily Sales Tip: Why Sales Don't Go Through
Closing sales is an art, not a science. Everything we do from our communication style, our dress, to our understanding of the customers' wants and needs can affect our success or failure in closing sales. The way you close a sale depends as much on the product/service you're selling as it does the customer you're dealing with. There are many reasons why sales don't close. Here are 7 of the most common mistakes:
Not Asking Questions
Too many times we pre-judge or jump to conclusions about what our customers want or need. By asking open-ended questions to determine such things as lifestyle, hobbies, spending limits and previous experiences we can get a true picture of what our customer really wants. By understanding the customer we can then focus on the right products and services to offer.
Not Communicating in the Communication Style Important to the Customer
If we communicate to everyone in our primary communication style then we will lose about 75% of our sales. In other words, everyone is different and therefore everyone needs to be treated differently. For example, some people just want the facts and details about a product or service while others may be more comfortable if you tell stories or anecdotes. So, to persuade, motivate and influence others, communicate in the ingredients they find important.
Interrupting the Prospect
Whenever you interrupt someone, sensitivity, commitment, closeness and rapport are lost. In addition, by interrupting we may miss what benefits the customer is really seeking.
Not Paying Attention to the Prospect
To develop the like and trust that are essential in developing any relationship, we must give our full attention to the prospect. Taking calls, talking to other customers, looking bored or uninterested can detract from the relationship we develop with our potential customer.
Showing No Empathy or Sympathy
Empathy means putting yourself in the other person's shoes. For example, if a potential customer wants to go on an adventure trip we offer, but has had bad experiences in the past, we must first understand those experiences before we can discuss why our trips are a best buy.
Not Selling Benefits...Only Features
Understanding the difference between features and benefits is crucial to your success. Features are about you, your product and service. Benefits are the specific results your product or service offer to your client or prospect. When meeting with a prospect we need to address the buyer's critical self-interest questions such as, "So what?", "Who cares?" or "What's in it for me?" You see, people don't buy things, they buy results like happiness, making and saving money, saving time, comfort, safety, security and easier ways to do things.
People don't like to be pressured. They like to buy but they don't like to be sold. By planning your presentation carefully and understanding the wants and needs of the potential customer, you'll make more than your share of sales.
Source: Sales speaker/author Arnold Sanow