Change your oil! The missing communication holding back your results.

"My customers buy on relationships." But how do you build the relationships? "Time. And lots of communication."

If you run a dealership, you already know this. Communicating (informally) with your customers is essential to build long-lasting relationships. But did you know that there's another type of communication that's driving employee turnover, reducing customer satisfaction, and costing you sales?

Formal internal communication is often overlooked yet can have a profound impact on your results.

Communicating with customers is the industry

When I first started my career as a mechanical engineer designing forestry equipment, one of my first trips to the field was investigating a machine issue for a customer near Conway, South Carolina. As I rode with Ben, the equipment salesman, on a 105-degree day through an endless expanse of loblolly pine forest, he explained how this customer was a "relationship buyer" and that the most important part of Ben's job was to communicate effectively with him. When I asked, "What percentage of your customers are relationship buyers?" he stated, "Nearly all of them."

Twenty years later, and after hundreds of trips to the field around the world, dealer visits, customer interviews, and having run a large dealership, I'm convinced more than ever that Ben was right. Informal communication with customers, and the relationships that ensure, are not just at the core of the equipment industry; they are the equipment industry.

I state this fact not because it's obvious but because it consumes such a large part of your focus as a leader in this industry that other types of communication often suffer. In particular, formal internal communication is usually in the last place when considering the four types of communication you generally encounter at the dealership.

Internal/external formal/informal: what’s the difference?

In my experience, four general types of communication exist at the dealership: informal internal, informal external, formal external, and formal internal. I explain these further below.

First, let's consider the difference between internal and external communication. Internal communication is the sharing of information or ideas amongst you and your staff within your organization. External communication is the sharing of information or ideas between people inside and outside your organization.

And second, what is the difference between informal and formal communication? With informal communication, information tends to flow freely, often in a one-on-one or small group setting. This type of communication is more relational, and ideas can move quickly. With formal communication, information flows through pre-defined channels within an organization. This type of communication tends to be top-down heavy with less collaboration, though it often forms the backbone of how you do business.  

The relationship between and the characteristics of these four types of communication are shown in the following table:

Of the four types of communication, formal internal is the most overlooked but has an outsized impact on your business results. Let's explore why.

Informal internal communication is going on around you all the time. This is how people generally prefer to communicate (it's fast and easy) and is the default method for sharing information within your organization. This form of communication occurs naturally, and to leverage its power, you should embrace it (and guide it with influencers).

My colleague Ben so aptly described informal external communication as the most essential part of his job. This is how you build relationships with your customers. You, and those working in your dealership, undoubtedly fully grasp this communication's importance and prioritize it accordingly. And your OEM's encourage you to engage and communicate informally with your customers as these relationships can last for generations and, when properly cultivated, can lead to a long and prosperous partnership for all involved.

One of the most important aspects of formal external communication is to ensure there's a method by which you get paid (or how you pay others). It also informs the outside world about your business through branding and marketing.

And now for the laggard: formal internal communication. Bleh. It sounds boring and mundane. Who wants to dedicate time and energy to something so unexciting when you have customer relationships to build?

You do. And if you choose not to invest here, you're missing out on:

• Keeping your best employees
• Driving high levels of customer satisfaction
• Running a more profitable business.

Formal internal communication: it pays to be boring

Informal internal communication just happens. Informal external communication connects you to your customers. Formal external communication is how you get paid. For the majority of dealers I've worked with, this is where the communication ends—little thought was given to the formal internal stuff. 

For example, when new employees on-board, they receive the standard vacation and benefits package (formal) and the occasional email or staff lunch with you for a business update. Everything else they need to know they pick up from their colleagues via informal communication channels.

While this onboarding approach is easily passed off as “on the job training”, it’s a big miss for you and your new employee. Internal formal communication aligns your team to your vision and values; it's what provides the guidelines for how you want your business to run; it defines how you respond to your customers' needs. Without this clear communication, your staff has to figure things out on their own, which inevitably leads to increased frustration, reduced engagement and collaboration, and poor results.

Here are three areas of formal internal communication that deserve your attention:

 1.    Alignment: This involves establishing (and communicating) clear values for your business, a vision that others understand and can get behind, SMART goals for everyone on your team, and a competency-based development plan for each of your employees to help them achieve their goals. Your email updates, staff meetings, or team lunches are all an opportunity to check for alignment and identify roadblocks to your (and their) goals.

2.    Process and procedures: You don't need to map out and measure every process in your organization, but you do need to have all of your critical processes (the ones that add value) identified, mapped, and easily accessible. What you don't want is for your team to waste time determining how best to do their job when they should spend this time with your customers.

3.    Feedback: Communication of the formal internal type need not be top-down and one-way just because it's formal. Providing a channel for employee input and feedback and routinely reviewing and acting upon this feedback fosters an environment where innovation and doing things better are second nature. When you continuously improve your business by leveraging the ideas of the people around you, your employees are more engaged, which leads to more satisfied customers, which leads to more sales (and greater profitability). 

Formal internal communication isn't sexy. It's probably not what you want to spend your time doing more of. And, you might have a hard time seeing the value in looking under the hood of your business when your external customers are the ones who pay your bills.

But make no mistake: if you're still running your business on break-in oil and have yet to prioritize formal internal communication, don't be surprised when it locks up. Like an engine, you need a driveshaft (alignment) to connect your people to your business, a maintenance schedule (process and procedure) to keep things running smoothly, and routine oil sampling (feedback) to make adjustments and prolong the life of the engine.

By investing in high-quality formal internal communication, you can expect your business engine to run problem-free for years to come.

LUKE SHEPPARD is the author of the new book Driving Great Results: Master The Tools You Need to Run A Great Business (pre-order available now), which provides entrepreneurs and managers with nineteen practical and proven tools to build, launch, and manage a successful business. He is the principal of Sheppard & Company, a firm he founded on the premise of helping others to apply the proven business principles he's honed over his 20-year career in the heavy equipment industry. For more information, visit drivinggreatresults.com or contact Luke: [email protected]