There’s no need to go on about how things are changing in the consumer world — we all know that and accept it. But, so what? What should we do about it?
I’d like to highlight three areas where I believe dealerships will feel more challenged as the tide shifts and the auto retailing world deals with the digital native customer.
1. Why is it still so difficult to buy a new car?
Here’s a quote from a 2017 report from Bain & Co., based on their Global Auto Study.
“Digital natives are becoming mainstream car buyers with completely new expectations, and older generations are picking up new habits. Conditioned by Amazon and other online experiences, car buyers increasingly follow omnichannel customer episodes: They research, select and buy cars in different ways than their non-digital predecessors, and increasingly they expect the same capabilities and service quality when shopping for cars as they experience in other aspects of their digital lives.”
Not really news overall, but the last few lines caught my attention. There is no doubt that buying a new car is very different from buying a new pair of shoes.
It’s more complex, there are more decisions to make and it takes much longer. But that’s the point — the customers of tomorrow (and many even now) don’t see it that way.
They wonder why it’s so complex and they want it to be more simple, faster and free from the confrontational elements of even a positive purchase experience at a dealership.
They want it to be more like their other purchase experiences. I believe that the key issue is that the auto-retailing model is still evolving and has a long way to go before it will more fully meet the expectations of these consumers.
While advances have been made, the overall model has not changed radically from years past.
Accepting that radical change will not happen overnight, there are some things that dealerships can do to close the gap between expectations and reality.
The technology side is getting a lot of attention, with many solutions and tools available to follow and manage sales leads, monitor social media and to connect with customers. On the service side both CRM and service lane technology solutions are plentiful.
The technology side is getting a lot of attention, with many solutions and tools available to follow and manage sales leads, monitor social media and to connect with customers.
One of the bigger challenges according to Bain & Co., is to make sure that all of these different solutions can work seamlessly together.
Their point is that these consumers tend to switch between on-line and off-line channels of communication very easily. Their study calculates about nine weeks from the start of the research process to purchase.
All channels need to be seamlessly connected as time is of the essence and prospective customers will be deterred by lack of continuity.
The other side of the equation is the human side and, rather than diminishing in importance, it will increase in importance as technology becomes more ubiquitous.
It’s not to just put a human face to technology, but to make sure that the right people are there to ensure
that technology works for everyone’s benefit — the dealership and the customer. Questions to ask are:
- Do we have the right people?
- Do they know what we expect and what the customer expects?
- Do they have the right skills?
- Do they have the right tools and technology?
- Are we treating them in a way that makes them feel valued?
2. Are you losing your grip?
Dealerships have always positioned sales consultants as trusted advisors to customers as they make a decision on a new vehicle.
We know from years of asking buyers that this is often the case and that dealerships also often fall short and consumers remember the adversarial nature of the experience and not the “trusted advisor.”
They may point to the business office, not to the sales consultant, but the lasting impression is that many went to do battle and not to be advised.
As the purchase process changes and customers use the many tools now available for research and to get them almost to the point of signing, the dynamics of influencing the final decision are also changing.
The Bain & Co. study found that, when it comes to the decision on brand, friends / family have most influence and dealerships the least.
While this relates to the brand decision it’s probably true that, when the customer comes in to the dealership to do the deal, there is a very good chance that they have a back-up position — another vehicle or another dealer.
In research that I have conducted over the years on customers who “walk”, anywhere between 35 per cent
and 50 per cent walk because of a poor experience at the dealership, not because of a factor such as price.
Having a strong on-line presence and capability and some tools to manage leads and service scheduling won’t cut it for many of these customers. They are behaving differently and will expect dealerships to
do the same.
About half go to another brand, not another same brand dealership. The implication here is that selling the brand is still a very important part of the dealership’s role.
It will likely become increasingly difficult to prevent further erosion of the dealership’s role in the consumer decision as the market changes and customers more comfortable with other sources of information become the majority.
Dealerships should not wave the white flag and cede this territory, but should adapt to be able to advise the customer knowledgeably and transparently about both the brand, the technology in the vehicle and about the ownership experience.
It’s no longer just about regular scheduled services, but also about how the vehicle and its technology merge with the customer’s life.
3. The brand vs. the dealership
Consumers have access to so many choices and can compare choices more easily than ever before.
This is what they do in other retail environments and the digital native is likely to be highly adept at this. Most studies of these consumers show that, while they can still be brand loyal, they are more open to considering different brands (especially mass market consumers).
So how can you hold a customer to your dealership, when there are so many options and when consumers can easily move between brands and between dealerships? The Bain & Co. study identifies three key ways to do this:
- Personalisation of approach and services — not just in a superficial way, but in a way that shows the customer you’re listening and learning about their needs.
- Managing channel boundaries effectively — ensuring the seamless transfer of knowledge about the customer as they communicate with you, switching between on-line and off-line channels.
- Bringing prospects and customers into your “ecosystem” — making sure they can access information relevant to them and that you share information with them. In an ideal world, proprietary apps are the most effective way of achieving this (but they need to be user friendly and bug free!).
There is a complete shift taking place.
Not just in vehicle technology, but also in the way digital natives see vehicles and technology and the role that dealerships play.
Having a strong on-line presence and capability and some tools to manage leads and service scheduling won’t cut it for many of these customers. They are behaving differently and will expect dealerships to do the same.
