Sunday, May 09, 2010

Customer Retention

Well, I got a new car today at Galpin Ford -- a Ford Fusion.

It's the fourth car I've leased in the last decade and three of those times I've ended up doing business with Galpin -- the No. 1 volume Ford Dealership in the World.

I wouldn't say I'm a repeat customer at Galpin because I'm particularly loyal to Galpin -- rather, I'm loyal to my wallet. And three times out of four Galpin has offered the best deal (as far as I could tell).

Regular readers may recall that Galpin angered me a couple of months ago when they sent me a letter offering to end my current lease early and put me in a new Mustang for less than my expiring lease. But when I got to the dealership they couldn't live up to their own offer.

I blogged about my experience and Galpin's General Manager, Terry Miller (photo above), quickly called me to apologize. And he promised that when I was ready for a new car he'd personally handle the deal if I'd give Galpin another chance. So that was nice.

I approached car shopping a little differently this time. In the past I've put a lot of energy into negotiating the "price" of the car -- I'd get the Consumer Reports information that details exactly how much a car cost the dealer (after the dealer holdback). I'd start by offering the dealer $100 above what the car really cost them and we'd negotiate from there. But then when it came time to finance the lease I'd lose control of the deal. Between setting the residual value and the money factor (equivalent to the interest rate) it always seemed to me the leverage shifted back to the dealership.

This time I identified three cars I was interested in (Mustang convertible, Mustang coupe and a Fusion). I figured out exactly how I wanted each type of car equipped. I created a grid listing the three cars vertically and then three different lease durations (2 years, 3 years and 5 years) horizontally.

I emailed my worksheet to about 8 Ford dealerships in Los Angeles County and asked them to complete the sheet by entering the lowest monthly lease payment they would offer for each of the nine options. Ultimately, it's the monthly payment that represents how much a leased car costs me, not the sales price.

A couple of the dealers didn't respond at all (including Sunrise Ford where I'm a past customer). Three of the dealers offered prices completely not competitive. And three of the dealers were pretty close at the low end of the range.

Worthington Ford ("Go see Cal") had the lowest price and I was ready to get a Fusion from them but then it turns out they "inadvertently" calculated their offer incorrectly and wanted to raise it. At that point the offer from Galpin became the best one.

In the last 48 hours a couple of dealers tried desperately to convince me their deal was better (it wasn't). I simply told them I was done "shopping and negotiating" but I'd be back on the market in three years and they should make a note of my name and next time simply make me their best offer from the get go.

In the meantime, I'm pretty excited about the Ford Fusion (Motor Trend's Car of the Year). Seems to have lots of cool electronic bells and whistles I'm looking forward to figuring out.

It looks like I'm driving to Fresno tomorrow, so we'll see how it does going over the Pinnacle.
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