Amid the chaos and pain, is there an opportunity for reinvention?
During the months after the COVID-19 lockdowns, the focus of all businesses will clearly be on hard issues: getting the business back to capacity, regaining lost revenue streams and working on operational protocols for the immediate, mid-term and long term future.
There is consensus that consumers will behave much more cautiously in the future.
Lots will have changed by the end of the summer. Market and business cycles have been disrupted, organizations have learned new and different (often more efficient) ways of conducting business and we’ve all changed in the way we view the world.
There have been multiple studies conducted about how our experience with the coronavirus will shape our behaviour as consumers.
Most of these studies have focused on the near-term: will consumers delay major purchases? Will this change purchasing patterns and preferences? Will we want to change the way we interact with service providers and retail stores?
The answer to all three is “yes”, but there is an underlying theme to all the data I have seen: consumers will be more cautious and more conservative in most of their decisions.
In an on-going global consumer study, consulting firm Deloitte identified some interesting consumer attitudes that will shape the auto industry in the coming years.
Surprisingly, Canadians are quite conservative in their view on purchasing a vehicle online.
The nuance here may be that, while the bulk of the vehicle selection and even the negotiation may be online or virtual, Canadians are more comfortable closing the deal in person.
Given the efforts of many dealers to increase the virtual experience over the past few months, this conservative attitude may shift, but it still remains true that the vast majority do not feel that they are ready to move too far too fast.
Even younger consumers (18 – 34) in Canada are conservative: only 26per cent think they will buy a vehicle online. This runs counter to the many claims and studies showing that completing a vehicle purchase completely on-line will grow exponentially. Deloitte’s numbers say it’s certainly not time to shutter dealerships just yet!
Changing work patterns of customers will have an impact on dealerships.
Especially if you live or work in a major metro area the impact this pandemic has had on work-related lifestyles is very apparent. Traffic is generally much lighter than usual as millions of Canadians work from home.
That and the fact that retail outlets have also been closed, have both contributed to this. Even as we move back to full operation, it seems that a new pattern of a much more flexible workplace has been established.
Given the efforts of many dealers to increase the virtual experience over the past few months, this conservative attitude may shift, but it still remains true that the vast majority do not feel that they are ready to move too far too fast.
A recent statement from BMO indicates that the bank is anticipating that 30 per cent to 80 per cent could consider a blend of working from home or office in the future.
An article in the New York Times also indicates that “large corporations are in no rush to get employees back to their offices.” The article also mentions that Google and Facebook have told their employees that they can stay home until 2021.
I would certainly want to own shares in companies that provide secure platforms for real time collaboration across offices and employees’ homes.
There are also companies like Hubstaff, who provide organizations with the ability to monitor activity and productivity of staff working remotely.
Dealership staff will also be more open to change — in fact they may demand change and expect management to be able and willing to adapt.
Car dealerships are not technology companies and they are also more complex operations than many retail businesses, so the broad adoption of work from home may not apply.
But what is important is how this trend might impact how the customers of car dealerships will conduct their lives. The usual morning and evening rush may not be as pronounced as consumers have more control over their schedules. Here are just some of the possible impacts.
In sales
• Much of the sales and F&I activity can be done remotely, with only one meeting required at hand-off of the vehicle. This is likely already happening at many dealerships, but it could become the norm in the future.
• As is being done with Cadillac Live, the new environment could see more dealerships bringing the showroom to the customer’s home, with virtual vehicle demonstrations and sales presentations.
In service
• Service consultation could be done remotely. If the customer needs to point something out to the advisor, that can be easily done with the help of video tools.
• Less driving for consumers who don’t have to commute as much. Does this mean less service business?
• Longer intervals between customer interactions. Different marketing might be required to maintain customer contact.
In facilities and operations
• Less traffic and less fluctuation in traffic at the dealership could mean less need for large facilities.
• More consistent workflows could facilitate efficient processes and deployment of human resources.
• More resistance to meeting in “public” places may lead to different design options, with fewer group seating areas and more separation of staff and customers.
• The presence of masks, sanitizer and hand washing stations will likely be permanent.
There will be a psychological impact on all of us as consumers
Will the changes in behaviour endure, or will they fade gradually and we’ll find ourselves drifting back into all the old ways of doing things?
Will the changes in behaviour endure, or will they fade gradually and we’ll find ourselves drifting back into all the old ways of doing things?
I think we will likely drift back to many of our old ways, but as always, necessity is the mother of invention and we’ve seen plenty of innovative thinking by businesses, including dealerships.
We’ve also had our eyes opened to who’s really an “essential worker” (think of the auto service technicians, the truckers and the young person who stacks the shelves in the grocery store — let alone the health care workers who toil long hours at hospitals and care facilities).
In recent columns, I talked about getting the basics right, getting closer to your customer and making sure your organization’s values are strong.
I believe even more strongly that these factors are what will drive success longer term. They all have to do with how you respond to your customers and how you hold on to them.
They also have to do with how your staff feels — are they proud to be part of your organisation? Do they feel more connected after what they’ve been through? There is no doubt that their feelings will filter through to your customers.
Philosopher Frederich Hegel said: “We learn from history that we don’t learn from history.”
Let’s prove him wrong on this count at least. I believe we have learned a lot and that it would be a pity to find ourselves struggling to adapt again in the future. Assume there is going to be a second wave, so don’t ditch everything you’ve put in place or learned.
Editor’s note: The Canadian auto dealer team would like to thank Richard Cooper for his years of excellent insights. This will be his final column, as he’s choosing to take a hiatus. We will miss his insights and his focus on always striving or providing a better customer experience. It was a powerful message, and one even more suited to today’s times. You can contact Richard at: richard.cooper@cooperassociates.ca
