WITH CONSUMERS SHOWING UP BETTER INFORMED THAN EVER IN DEALERSHIP SHOWROOMS, TRANSPARENCY AT ALL LEVELS HAS BECOME AN IMPORTANT ASPECT OF DOING BUSINESS
As Internet usage has proliferated in the last decade, today’s dealership customers are more informed than ever before. As a result, it means that the role of salespeople within the dealership has changed. Today it is more a matter of consulting and advising a customer rather than using time honoured methods aimed at closing the sale.
One area where customers still have strong misconceptions is in the hard to shake, decades-old impression that they are always paying too much for a vehicle. This is where transparency changes the game.
“If consumers knew how much a dealer really makes on a transaction, they would be surprised,” says Brian Murphy, senior manager, Automotive Practice (Canada) with J.D. Power and Associates. “It is up to the individual dealers to decide how much they want to reveal, but consumers have been led to believe that through the huge incentives advertised in the last decade that there is always money available somewhere.”
COMPARING PRICES
“A dealer I was talking to recently told me he uses information found in our Powerdealer program when he is faced with a customer who is upset about what is offered for a trade-in,” says Murphy. “Our Power Information Network (PIN) data compiles raw data coming anonymously from numerous dealers on trade-ins, sales and various aspects of transactions.
I thought it was a clever way for that dealer to use our data.” Murphy says the dealer in question showed a customer who was upset about the value of his trade-in why the store was offering said amount by pointing to (anonymously of course) how much other similar vehicles were traded for — explaining that these values were real transaction data. “Not only does this help close a sale,” says Murphy, “it brings a huge credibility boost for the dealership in the mind of the customer.”
Josh Bailey, vice-president, Research and Editorial with Canadian Black Book concurs.
He says that the old going back and forth between salesperson and manager is no more, or should be no more. “Customers see though this old-fashioned way and are put off by it,” Bailey explains. He notes that today’s customers have a huge appetite for clarity and won’t hesitate to walk away if this is not met. He says it is also important to understand that the environment in which customers live has changed dramatically in the last 50 years, especially the last 10.
“Customers are always rushed, have less time for anything and are bombarded with special prices all around them, from electronic items to fruit and vegetables and even their morning coffee,” says Bailey.
He notes that while customers don’t necessarily want fixed pricing strategies, like General Motors’ Saturn brand offered, they tend to like the idea of having a certain amount of control during the negotiating process.
“Dealers today need to give their best offer from the get-go and have to be ready to explain the price if the customer balks at it,” he says.
Bailey, who grew up in a family dealership environment, being involved at an early age in his uncle’s Chrysler store, offered the following anecdote: “we would always show the dealer invoice of a particular car to the customer and explain to them the fact we believe we should be doing x amount of profit. It worked very well for us, building trust between the dealership and our customers.”
ON EVERY LEVEL
Dan Robinson, director, business development with the Policaro Automotive Family, says that transparency is a key part of the dealer group’s culture. “We need to have a complete level of transparency — it is not a sign of weakness and most customers understand profit is not a bad word.” Robinson says customers expect a high level of service from dealerships, such as offering courtesy shuttles and staff on hand to help them. “They understand there is a cost to this,” says Robinson.
“Today’s customers need to know what they are paying for and transparency is key.”
Robinson says that in the Greater Toronto Area, customers looking for a popular car can find close to 25 dealerships offering the very same vehicle. “What is the differentiator?” he says. “We strongly believe transparency is key to our success. We need to provide customers with the utmost clarity while consulting with them to find what will truly fit their needs.”
Robinson says that automotive dealerships know more about their customers than any other retailer. “Walmart, The Hudson’s Bay Company and other great retailers would love to have as much info about their customers,” he says. “They tell us everything — driving habits, credit score, address, what they do with their purchase, family information. These customers need to trust us with this so our dealerships can go beyond the transaction. We return this trust through complete clarity. Our transparency brings them to trust us and contributes hugely to our customers’ loyalty.”
“One way for us to be transparent is in our consultancy approach with our customers,” explains Robinson. “Let’s take one of our leasing customers. We would open the books six to eight months before the end of the lease and meet with them to talk about the next step. We will see if any lifestyle changes warrant changing the type of vehicle they are currently leasing. No point in steering a customer towards another sedan if they now have three kids and need a minivan.
We would talk about new needs, new wants and see with them what would suit them as their next step. We will of course also see if taking them out of their current lease a little sooner could be financially advantageous for them, always explaining every step and showing all the numbers so they, first, understand what is going on, and second, feel they are the ones taking the right decision based on the consultancy services and transparency we share.”
“We go further,” continues Robinson, “ by being transparent at all levels and also having customers feel and know that our house is their house. Yes, they can use our conference rooms and other facilities for meetings and other functions.”
While the Policaro Automotive Family may go beyond what many see and understand as transparency, there’s no question that a new kind of rapport is needed between the customer and the dealership for the business to thrive and successfully meet the needs of its clients.
