VANDALIA, Ohio -

In discussing the importance of customer loyalty and repeat business to his dealership, Larry Taylor — the dealer principal at Beau Townsend Ford Lincoln in Vandalia, Ohio — points to the book Raving Fans: A Revolutionary Approach to Customer Service by Ken Blanchard.

While not specifically about the auto industry, Taylor said the book delves into the importance and benefits for businesses that make the customer a “real fan of your organization.”

“We must make all our customers ‘Raving Fans,’” he said to Auto Remarketing in an interview earlier this year.

Such an outlook speaks to the importance of customer service and generating loyalty and repeat business at Taylor’s own dealership.

And loyalty and repeat business have certainly been key cogs in helping the store become successful on the used and certified pre-owned fronts.

In fact, used-car manager Keith Berger said more than half of overall used-vehicle customers at the store have purchased a vehicle (used, new or CPO).

As it tries to attract customers, the store may do the bulk of its advertising electronically via radio and TV, but Berger stressed that “the biggest (avenue) is repeat referrals.”

“We can’t stay in business selling people one vehicle,” Taylor stressed “We don’t have a mass market (in the Dayton, Ohio, metropolitan area).”

Taylor added that “everything we do” is designed to help foster repeat business and to ensure “that every buyer we have becomes an ambassador” for the dealership.

“It’s imperative they have a ‘wow’ experience,” Taylor noted.

So how does the dealership keep that customer loyalty strong? It’s all about customer satisfaction, and the consumer benefits in the certified pre-owned segment seem to help in that regard. For instance, the program offers a strong warranty for consumers, something that can be vital in fostering peace-of-mind and trust.

“We take care of our customers,” Berger noted.

He added: “If you have a satisfied customer, the more likely they will (be to) come back to buy again.”

Taylor chimed in, noting: “The certified program allows us to give our customers a better experience.”

CPO Since Its Inception

Offering a bit of background on the store, Beau Townsend bought the dealership in 1976. Taylor was brought in as finance manager, working his way up before becoming managing partner and majority owner in 1989. He also has majority interest in the Beau Townsend Nissan store. Berger, meanwhile, has been with the Ford dealership for more than 20 years.

The store — located in the Dayton, Ohio, area — has been offering certified vehicles since the program’s inception in 1990s

“Whenever Ford started (the certified program), we jumped on it and were one of the first ones,” Taylor noted.

Taylor bought Dayton Lincoln Mercury on May 1 and blended it into his existing Ford dealership. The Mercury brand, of course, has been phased out. Taylor said the main reason he bought the store was to be able to certify Lincoln models. As some may know, only Lincoln dealers can certify Lincoln vehicles. A stand-alone Ford store cannot.

The most popular used and certified models at Beau Townsend Ford Lincoln follow the same pattern as the new side, with the F-150, Escape and Fusion being the more sought-after models.

Reconditioning

Another important aspect in the dealership’s operations is its reconditioning, which the dealership conducts in-house. There are five employees who do the cleaning and detail work and the store has vendors who do dent and paint repair.

Taylor emphasized that “we don’t sub any mechanical work out of the dealership at all.”

And when it comes to certifying a vehicle, the dealership will put the vehicle through a 169-point process (per Ford standards) and spends an average of $1,000 to certify each vehicle.

Used-Car Challenges

But like many dealers these days, the store has been faced with obstacles in light of what has been going on in the industry. Overall, Taylor said the store hasn’t showed as drastic declines as the rest of the industry since CPO sales have helped serve as a buoy.

Beau Townsend Ford Lincoln saw its certified sales reached 924 units last year. The CPO sales totals in the last few years has been relatively static, Taylor pointed out.

After posting CPO sales greater than 1,000 units each year from 2005 and 2007, the dealership moved 871 certified units in 2008, 824 in 2009 and then 924 in 2010.

However, taking Lincoln Mercury sales from last year out of the equation, the total (836 units) is right on par with the prior two years (before the store had acquired the Lincoln Mercury dealership).

That said, Taylor sees things looking up. He expects the store to hit 1,100 to 1,200 CPO sales this year.

The store moved 1,452 vehicles overall on the used-car side in 2010, compared with 1,218 units in 2009, 1,332 units in 2008 and 1,556 vehicles in 2007

Meanwhile, new-car sales came in at 1,308 vehicles in 2010. The prior year, they hit 996 units and in 2008, new-vehicle sales were at 835 units. New-vehicle sales in 2007 reached 1,010 vehicles.

Like many dealers throughout the country, one of the challenges Beau Townsend Ford Lincoln faces has been used-vehicle supply. Berger said supply is still biggest obstacle on the used-car side, as leasing was “drying up” throughout the industry in recent years.

Taylor shared: “Because of shrinking new-car sales in recent years, there’s just not an abundance of used cars.”

Ford, though, has gotten back into the leasing sector and “that give us potential to buy those cars from Ford,” Taylor pointed out.

In fact, Ford is expected to have lease penetration between 17 percent and 18 percent in 2011, according to Taylor. And the impacts of the used-car supply shortage aren’t all bad, he noted.

With the scarcity has come an increase in used-car prices. But as Taylor points out, “that’s good for our business.”

For one, it gives shoppers stronger positive equity during trade-ins, as their used vehicles are fetching more.

“Overall, it’s a healthy thing,” Taylor said. “It’s a change and you always have to make change your friend.”

You must adapt to it, and Beau Townsend Ford Lincoln has done exactly that.

For instance, Taylor said store is “very aggressive” in the Ford Credit Accelerate program, which is a closed online auction offering provided by OPENLANE.

He emphasized that the store goes online and is “very aggressive and bidding higher at cars that are coming off lease.” Even though being “aggressive” means the dealership is having to pay more for used vehicles, Taylor pointed out that the low interest rates negates the higher price the dealership has to pass on to customers.

Low interest rates allow for lower payments for customers, and after all, the monthly payment is the key point on which customers often focus, Taylor noted

Web Use

In addition to using the Internet to help the store find used vehicles to sell, the Web is quite important for the dealership in finding customers. Berger noted that the store’s website helps to attract customers from as far out as a 100-mile radius.

In fact, the dealership’s website has helped the store bring in shoppers from outside Ohio, including places like Indianapolis and Kentucky, Berger shared.

Local Economic Pressure

Continuing on, the store has also been faced with the struggles in the local economy. Taylor said Dayton has showed significant job loss as it was hit quite hard by the recession. 

At the time of the interview he said that  unemployment in Greater Dayton was at 15 percent, and the area itself has had population declines. The metropolitan area’s population has dwindled from about 1 million people down to around 600,000, Taylor noted.

In light of these local struggles, the dealership has “had some unique challenges and we’ve remained strong,” Taylor noted.

But despite the economic hurdles, 2010 was the store’s best profit year in seven or eight years, Taylor pointed out.

“And I’m proud of that,” he said. “It’s not been without a lot of hard work.”

And a consistent focus on a satisfying customers.