There’s a big push in our industry right now to bring as much of the car buying process online as possible. Startups are entering the space believing that consumers want this ability and automotive vendors of all sizes are creating products to facilitate that.
However, some dealers are afraid to adopt these solutions for fear of loss of control and decreased profits. It’s certainly much easier to sell product – especially the increasingly important products in F&I – if the customer is sitting in front of you, rather than through some website widget.
Today’s car buyers visit numerous websites to gather information about vehicles and many arrive at the dealership knowing which vehicle they want and exactly what they want to pay for it. That’s not going to change. But what if I told you that the more “digital” car buyers get, the more they actually want to visit your showroom? Well, according to a recent study by Accenture, that’s exactly what’s happening.
According to the study, 60 percent of digital car buyers stop at the dealership more than twice before buying a vehicle, compared to 47 percent of those consumers less active online in the car buying process.
The ability to complete some of the car buying process online is simply a way for the digital customer to reduce the amount of time spent physically at the dealership completing the transaction. The report suggests that the reason the digital customer needs less time at the dealership is that they’ve already made their purchase decision online. But there seems to be a contradiction here – how can a digital customer visit the dealership more, yet need less time at the dealership? The reason is that by the point that they’re ready to buy they have already gathered the information they needed through digital sources AND have visited the dealership multiple times in order to collect physical information (view colors in person, ask questions, compare trim levels in person, test drive vehicles, have their trade-in appraised etc.). So, at the point they’re ready to buy, those widgets and online car buying facilitation tools simply help them get ahead in the process.
However, decreased time at your dealership means you have less time to create a relationship with the customer. If the industry transforms into a straight transaction-based business, then the customer could potentially have no more loyalty to your dealership than your competition.
How do you build a relationship with a customer who wants to spend less time buying a car? You begin to build that relationship from the moment the customer walks in the door. According to the study, it’s much more likely that the customer you just greeted is a digital car buyer than a conventional one. Yet, in many cases, our current road to the sale focuses on exactly that… the sale. Most manager introductions, service drive walks and other relationship-building opportunities for dealerships happen AFTER the sale. If you have a digital car buyer, you may not have as much of an opportunity to do these things.
Start building value in your dealership from the moment the customer walks in the door. Consider integrating service walks and manager introductions into the beginning of the sales process, not after the customer buys a vehicle.
Perhaps then you have a better chance of convincing the customer that they should buy from you and should also bring their vehicle back for service.
If they already know what they want, how much they want to pay for it; what their trade-in is worth; and every other piece of information; then why start the whole process trying to give them something they already have? How about selling the dealership first?
As online vehicle buying tools become more utilized, this simple tweak in the initial contact with a customer could mean the difference between seeing them again…
…or having them visit the most convenient competitor.
Working retail in the auto industry can certainly be taxing. Salespeople work 60-70 hour weeks to make a paycheck. Sales managers do so while also having to manage the sales team, create multiple reports and handle a multitude of tasks — and the service department is just as overloaded.
Not surprisingly, frequently the excuse, “there’s not enough time,” comes into play. However, it is important to remember that the entire existence of a car dealership – as a business – is to sell and service cars. Growth and profitability is dependent upon satisfying the needs of many customers which, at times, can be overwhelming. When the GM is breathing down a sales manager’s neck to have a report done by a specific time, all while trying to desk a deal and handle heat, it’s easy to lose track, or miscalculate priority. It’s almost like the chicken before the egg argument.
So what IS most important?
The most important thing is to make the customer first. There’s a great old saying by Henry Ford: “It is not the employer that pays the wages. Employers only handle the money. It is the customer that pays the wages.” This is absolute truth. Without customers, no business can last. It will fail and there won’t be any managers or salespeople any longer.
The existence of a car dealership is entirely dependent on ensuring that people buy and service their vehicles with them. If those things don’t happen because managers are overwhelmed or have higher priorities, business will drop. On the contrary, however, by putting the customer first, the customer feels appreciated, valued and is taken care of. This fosters loyalty, referrals and repeat business which, in turn, grows the business rather than seeing it falter.
Customer loyalty and advocacy will only be encouraged and developed by making the customer the priority. And I’m not just talking about handling heat, ensuring that there’s enough floor coverage or available service bays. Customers and their questions, care and problems, should be a priority.
If the customer doesn’t feel that spending $30,000+ on a vehicle is appreciated, they’ll go someplace where they feel appreciated. Treat the service customer like they’re a nuisance and schedule them 4 weeks out for an appointment and they will find someone who is willing to help them when it’s convenient for them, not for the business. Imagine going to McDonald’s and having them tell you that all of the employees are taking a break so you’ll just have to wait. Or that they’re simply too busy to assist you at the moment so come back later. Would YOU come back? Probably not. And neither will your customers.
I guarantee that if you take care of your customers first, those reports will look better each and every time you send them to the GM or dealer, and they’ll forgive the fact that you were tardy. Bottom line is that a report isn’t going to bring in revenue, leave reviews or service its car with you… but a customer will.
A recent article in Automotive News reports that the three-year employee retention rate at dealerships reached a new low, dropping by 2%. In fact, the study showed that only 1/3 of sales consultants stay at a dealership for 3 years or longer. The article went on to share that the average tenure for sales consultants has steadily dropped since 2011, when it was about 3.8 years. Last year? 2.4 years. According to the article the result is: “…reduced productivity, reduced median and average earnings, and reduced dealership profitability.”
What’s the answer to retaining employees? Perhaps we should start looking outside of our industry, analyzing companies that people love to work for and figuring out which of those attributes we can adopt in dealerships.
Consider starting by simply asking employees if they’re happy or not, what could be changed that would make the dealership a better place to work, etc. However, be sure to do this anonymously, or you probably won’t get honest answers. Then sit back and be prepared because some of the answers you get may sting. You can’t, however, make changes without knowing what’s wrong and unhappy employees generally aren’t going to tell you to your face.
Our workforce is getting younger. These days, many aren’t willing to work under the taxing conditions that we experienced. And it’s usually not because they’re lazy, or have a poor work ethic. It’s because our society and culture has changed. People prioritize things differently. And this trend isn’t going away. It’s only going to keep shifting
If we continue to try and operate dealerships the same way as 10 years ago – mandating “bells” and 70+ hour work weeks – we’re going to keep watching the front door revolving – existing employees leaving and new faces coming in. And if you don’t think your customers notice, you’d be sadly mistaken.
Making employee retention a priority can, by itself, improve customer experience and loyalty. In addition, you will save money that would otherwise have been spent hiring and training new staff. Isn’t the whole point of retention and loyalty to increase revenue? Well those two words apply just as much to your employees as they do to your customers. Never forget that.
Have you ever tried to call a dealership – whether it’s to inquire about a vehicle or schedule a service appointment – just to get placed on eternal hold or thrown into someone’s voicemail? Many consumers have and, just like you, they don’t like it.
People are busy. When they pick up the phone to schedule a service appointment, or try to get information about a vehicle when they are in-market, if the first impression you give them is hold music, or voicemail boxes, they could easily move on to the next dealership – especially if they are a sales customer.
Most dealers, however, just assume that everything is going smoothly because they don’t hear complaints about the issue. The reason they don’t hear is because the people who WOULD complain don’t bother to call again – and, perhaps, never come in again.
Every dealership has a receptionist. Some have one for sales and one for service. Some even assign call tracking numbers to each department so that they can monitor the outcomes of these calls. Or, at the very least, track the volume of them. The problem is that many dealers will have two or three phone numbers on their website – sales, service and parts. The customer, however, doesn’t know or care about the difference. They just call the first one that they see. So inevitably dealers will have sales calls coming in on the service line and vice versa. Oftentimes there is a single “main” receptionist handling all of the calls and routing them to the proper departments. But they can easily get overwhelmed. What happens to those customers that called for sales, were put on hold and then hung up? Or they called for service to schedule an appointment and the same thing occurred?
Chances are that you’re paying a receptionist minimum wage (or close to it) to answer and route the calls. Between sales, service and parts, I bet that there are times when they are overwhelmed. They transfer the call and assume that the call will be answered. Too often it’s not. In each and every one of those cases, many times the dealership either lost a sale or parts/service revenue.
Today’s consumer is all about efficiency and simplicity. The less time you can take up to achieve their goal when they try to contact you, the more likely they are to appreciate and think highly of you. If you make things easy for them, they will appreciate it and have a positive experience.
If it’s difficult to do business with you, the opposite will occur. Customer loyalty is something that is built over time. It’s great to ensure that the customer has an excellent experience and feels appreciated when they’re physically AT your dealership. But that experience has to extend to any contact or interaction they have WITH you as well.
If you’re using call tracking numbers, monitor those calls religiously. Make sure that any unanswered calls up are called back promptly. Apologize that nobody picked up the phone and assist them. I promise that they’ll be impressed. People understand that you get busy. Perhaps they meant to try to call back later, perhaps not. But if you call them back first, not only will they forgive you, but you’ll impress them too.
That’s how you build a loyal (and profitable) following. Make sure that each customer who TRYS to do business with you is able to. Don’t let a dropped call result in a lost sale or repair order. It can easily happen. But it can also be remedied easily. And that pro-activeness can go a long ways to retaining and building a solid customer foundation that you can count on.
With the major shift into leasing certified pre-owned vehicles by several OEMs and major financial institutions, many dealers have predicted a decline in service contract sales. However, according to an article in Automotive News, they would be wrong to do so.
Due to an influx of low-mileage pre-owned vehicles, captive finance companies and others have started to embrace certified pre-owned leasing programs. Lease customers haven’t always been the best candidates for service contracts – especially high line leases, as many of these vehicles come with free maintenance. However, the length of many leases and, more importantly, the length of loan terms have increased.
This is an indicator that many consumers who opt for extended term loans, or leases, would certainly benefit from service contracts as they will either 1) still be in their lease when the free maintenance expires; or 2) hold onto their vehicle for an extended period of time, far longer than in the past.
According to the article, while new vehicles will still outpace used vehicles in service contract penetration, there’s no need to worry about a decline in service contract sales. In fact, both new and used vehicle service contract penetration has increased among prime borrowers, with the gap between new and used vehicle service contract penetration decreasing from seven percent in 2007, to just 0.5 percent in the second half of 2016.
Many buyers – prime and sub-prime alike – increasingly see the value of a steady monthly vehicle expense without the worry of a hefty service bill. Yet there are many finance managers that don’t present service contracts as aggressively to prime borrowers for used vehicles as they do to sub-prime — they assume the customer won’t be interested. While this may historically be accurate, the CPO leasing movement, along with extended loan terms, have substantially altered the rules of the game.
Consumers have warmed up to service contracts and have come to understand the benefits for convenience and financial stability. And, as new car margins continuously decrease due to manufacturer incentives, competition and increasing pricing transparency via third party sites, dealers increasingly rely on their F&I departments to increase profits through back-end product sales. Yet many F&I managers have been trained – via customer interactions and their common sense – that certain customers don’t need or want a service contract, but that is where the shift has occurred and there is opportunity aplenty!
Perhaps in the past service contracts didn’t make sense for certain buyers. However, these days, increasingly car buyers ARE investing in service contracts — both for purchasing AND leasing.
The key to any successful selling process is consistency. Train your finance managers not to assume anything. Present, show the value of and sell service contracts to every customer, regardless of lease or purchase. According to the statistics, they will thank you for it, and it’s a win-win for the customer and your dealership.