Episode SEVEN: The Future of Car Sales
Amazon has changed consumer culture drastically. Customers can go online to find exactly what they want at the price they expect to pay. Has your dealerships moved to an online tool? Your customers want you to.
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Dealers have lost the upper hand. With today's extreme transparency, car buyers have more information than ever before and they aren't shy about using it. Dale makes it clear that dealers must embrace this new retail reality and give car buyers what they want; a transparent and hassle-free buying experience, if they want to thrive.
I have three words to help make the point. A-Ma-Zon. Dale points out that with a few clicks you can find anything you want at the price you expected to pay. You can see what others rated the product and the experience with the seller. The retailers that will win in the future are those who can meet or exceed the new preferences and expectations of the consumer. The gauntlet has been laid and there is no way out but forward.
The research tells us buyers now visit less than 2 dealerships before they make a purchase. The vast majority want to spend less time in the dealership and more than half begin working the deal online. About half want to remain anonymous. Trust and responsiveness trump price. Most say they would buy again from a dealer that provided an enjoyable experience and a majority of buyers still want to negotiate the purchase. In summary, today's buyers want minimal friction and maximum transparency.
Dale gives three steps to extend a giving hand to your customers.
First, give customers more information while requiring less to get it. Research shows that increasing interaction on the VDP reduces bailout rates and increases trust. Customers also tend to be more honest on credit scores and trade-in conditions when they're at ease. Trust goes both ways.
Step two. Dale encourages dealers to make every interaction about making it easier to buy the car, not getting them in the door. Have the answers ready and value their time.
Finally, automate what you can...ESPECIALLY F&I transactions. This saves them time and actually makes dealers more efficient. Everybody wins.
In chapter 5, Dale paints a not-too-distant customer experience in a franchise dealership somewhere in America a little before 10am. A vehicle drives into the dealership lot and parks at the door. A man enters the showroom and a sales associate approaches...
Sam: Morning, Bill. I'm Sam, the guy who's been working with you on your new car purchase. Did you see it outside?
Uh...no, I didn't see it, but I'm just curious, how did you know it was me?
Sam: I saw your picture online and we do have a technology here that sends me a message when my customers arrive. Something to make your life easier. If I could have your keys, I'll give them to my colleague Chris and he'll evaluate the trade.
Bill: Here are the keys. That's interesting about the technology. Is there an app like that for parents?
Sam: Yeah, well you do have the geo-tracking app that you selected online. We'll talk about that in a second. Why don't you have a seat here? Could I get you some coffee? Cream? Sugar?
Bill: Yeah, please. Black is fine.
Sam: Ok Bill, now I promised we'd have you out of here in 45 minutes with your new vehicle, so let's review everything we did online. Ok?
Bill: k. Am I still getting $5,000 for my trade and the new car for $43,780?
Sam: It'll be up to Chris to verify the trade-in offer. That's really the only variable since he has to physically examine the car. He should be done in a few minutes. Everything else is exactly as we agreed. Purchase price is $43,780, a $2,000 downpayment, financed for 5 years which is $481 a month at a 5% interest rate, the platinum service package you requested which include lifetime oil changes and the free washes, and finally, that geo-tracking technology. It's all here on the iPad. Why don't you take a few minutes to review it and I'll text Chris about the status of your vehicle.
Bill: his all looks good to me.
Sam: I just heard back from Chris and he said everything checks out, except for the tires. They were a little more worn than we thought they would be, so he has to adjust the offer to $4,600. If you want to come outside with me, I'll be able to show you what we found.
Bill: ah. No need. I wasn't too sure about saying the tires were in "good" condition. $4,600 is fine. Let me adjust the trade allowance here. Should we add the difference of the tires to your downpayment or include it as part of the loan?
Sam: Let's add it to the downpayment. Ok, this will just take a moment. Ok. You'll see here is where I updated the deal terms. See, there's the new trade allowance of $4,600 and the downpayment is now $2,400. Everything else is exactly the same. Does that look ok?
Bill: Looks good to me.
Sam: Great. Well, it is 10:20, now the fun part. Why don't we go outside and check out the car, make sure everything's ok, and then we'll come back inside and sign some paperwork.
Bill: ow! You really are going to have me out of here in 45 minutes!
Sam: I told you, Bill, we're straight-shooters here. When you said "I want to be out in 45 minutes", I told you that's what we're going to do. Let's go soak up some new car smell.
Bill: et's do it. And I was only kidding about the 45 minutes. It's just that this is so different than my last experience buying a car. It's actually kind of fun.
Dale asks: "Does this scenario strike you as a bit far-fetched?" It shouldn't. This is the exact scenario most large dealership groups are working toward. The faster, more-transparent experience customers desire.
Sure, there's been plenty of pushback. There's a lot of legacy invested in the old way, but online buying, one-price selling, and streamlined interaction will be the new way. Dale cites groups like Autonation and Sonic ever expanding their efforts in this area calling them "essential steps" in their reinvention. Over time, Dale believes holding on to the old way will be an increasing barrier to dealers future success.
So, where do you stand in this reinvention? And what is your next step?
Dale Pollak’s ‘Like I See It’