The Demise And Rise Of The Car Dealership

Why Car Dealerships Must Start Building Communities For Their Future Survival

"Daddy, tell me again, people actually used to drive cars themselves.....why?"

In my life time and therefore yours, driverless cars will become the norm. Salespeople will no longer take customers on test drives, finding a convenient location to handover the keys, watching attentively as the customer struggles to master the unfamiliar stick-shift (yes, my Stateside friends, we still favour fumbling with a manual gear shifter here in the UK), where reverse gear has inexplicably moved from top left to bottom right of the gear knob.

Imagine a situation, where a device, worn on the wrist or woven into clothing allows car owners to summon their vehicle, hop in and through voice activation, input their destination and then sit back for the ride, whilst checking their latest social media updates. Science fiction, a world from another century? I'm afraid not, these days have already arrived.

Uber is at an advanced stage of driverless taxi development and Google already has driverless prototypes on the road in California. Some luxury carmakers are already fitting autopilots to their vehicles to help owners handle motorway traffic. Sure there is still a way to go, before driverless vehicles become a natural replacement for the human driver and the technology still has to be proven as a completely safe method of transport, as Tesla's very public crash of one of their vehicles demonstrates. Then there are the unknown factors, driverless technology has to cope with, such as temporary traffic lights or a school crossing warden (lollipop person), suddenly halting your progress.

The Real Challenge For Today's Car Dealership Is Already Here Though

Before you start worrying about cancelling your current driver-required vehicle consignments, there is a more pressing issue you should be considering, if you are a Dealer Principal or the director of an automotive group and that is, where will your future customers come from and are your employees suitably equipped to attract and retain them?

In the past month, I've spoken with 2 friends who shared, in a highly exasperated manner, their experiences of buying a car from a retail dealership. One told me how he'd done all his research online and with the exception of one or two specific questions, he was ready to buy. For the first 20 minutes of his showroom visit however, Angus was on the receiving end of the diligent salesperson's qualifying process; "what are you intending to use the car for sir?", "who else will be driving the vehicle?". It didn't take long for my friend to vent his frustration and ask; "just tell me, how do I buy this car?!"

Then there's my pal David, who spent last weekend, with his wife and children, looking for a car and on two occasions experienced exactly the same scenario. Once again, having researched various car options online, David was certain which vehicle he wanted to buy, he also explained to the salespeople he met that he had the finance in place and was ready to do the deal. Within 5 minutes of explaining his requirements to the salesperson, he was introduced to the business manager, who then proceeded to explain the FCA regulations and presented the options of paint protection and gap insurance. When David explained he didn't require this information and that they had the finance in place, the response was "I'm required legally to explain this information to you sir".

Despite the significant steps taken by many automotive manufacturers and dealers to promote a more friendly and trustworthy car buying experience for the customer, it seems that many are delivering quite the opposite. It would appear that little has changed in the past 50 years, as customers are passed from sales, to the business centre, to aftersales, all of whom appear to have their own agenda and require the customer to build trust with a new individual, with each transaction, whilst the salesperson moves on to his or her next new customer.

The Modern Customer's Retail Experience Online Needs To Be Mirrored When They Visit Your Dealership

Today's car buyer, millennials in particular, demand transparency and to feel that they can trust the people they intend to buy from. They need the purchasing experience to be simple, efficient and quick. In 2015, Auto Trader published a white paper "It's About Time: Streamlining In-Store Processes to Improve the Customer Experience". The main highlights of this paper showed that the average time it takes to complete the new car qualification and sales process is nearly 53 minutes - more than half the amount of time a customer ideally wants to spend in total buying a car. Add to this the average of 21 minutes, to a maximum of 41 minutes, it can take to negotiate the deal, then an average of 43 minutes to go through the vehicle appraisal procedures and 61 minutes to be on the receiving end of the F&I process, then in our time challenged world, you can perhaps understand the trepidation many customers feel before entering a car dealership and the sense of sheer exhaustion they probably experience by the time they leave.  

Auto Trader's study concludes by showing that customer satisfaction is at its highest in the first 90 minutes of their visit to your dealership and then goes on a downward spiral from that point. If your customer spends more than 2.5 hours involved in buying a car, then their level of customer satisfaction drops below buyers' average customer satisfaction scores. The answer then, would seem to be that your dealership must effectively satisfy the customer's needs when they engage with you online, whilst finding ways to reduce the amount of time they have to spend in your dealership - you must therefore become brilliant at building relationships online and offline.

How Do You Build More Trust With Customers And Where Does Social Media Fit? 

As we move toward the end of the second decade of this new millennium, evidence suggests that customers' retail experiences are largely being shaped online, with 79% researching their vehicle options via Google and social media sites before approaching your dealership. Virtually all the information your customers require to enable them to make their purchasing decision and often facilitate the purchase itself, is available on the web. As just one example, customers can now use their mobile phones to compare what other buyers have paid for similar models, through information compiled by data gathering websites and at the click of a button the customer is then connected to the dealer who is offering the most competitive price. Increasingly new car buyers are sitting at home, undertaking their new vehicle purchase online with a salesperson they haven't ever met.

More than 4000 car shoppers took part in another study by Auto Trader.com, the outcome of which identified that 56 percent of those surveyed preferred to initiate their car buying process online and complete the financial transaction this way also. Auto Trader examined the emerging buying behaviours of customers and discovered that over two-thirds of motorists are searching for a new car online between 6-9pm and 57% of these expect a response from a dealership they enquire of within 4 hours - is your dealership geared up to listen out and respond within this kind of time frame and at that time of day? If you're not, you will lose these customers to a more socially savvy competitor. Other studies indicate that 7 out of 8 brands actually fail to respond to online customer requests within 72 hours and yet 900 million complaints are made using Twitter every year.

59% of Auto Trader users use their smartphones to search for cars, 6.5 x higher than 5 years ago. Those using their smart phone, when searching for their car, also tend to purchase quicker. 9 out of 10 Auto Trader users visit retailers' websites first before ever stepping onto your forecourt and 45% of these will only engage with a salesperson when they feel they're ready to buy.

All this means that your dealership needs to review how you currently engage with customers and how you intend to do so in the future. You and your teams are going to have to become more online savvy and this doesn't just mean posting photos of cars with this week's special offer prominently displayed. The days of stack em high and advertise, advertise, advertise are over, but then you know this from the ever decreasing return you're seeing from most press and media advertising.

Building Social Media Communities Is Your Future

If you want your customers and their families and friends to buy from you then you a) need to meet them where they hang out and b) you need to build online communities that you serve - communities where you are continually striving to build know, like and trust with your current and future customers.

In my next post, I will be sharing with you, how you build online communities and how your dealership can engage with today's online savvy customer. This post will be of interest if you want to be one of those dealerships that rises above the rest, whilst others seal their own demise by sticking with old school ways of promoting their brand. 

Many thanks for viewing my post. Please share it with anyone you feel would benefit from the information provided. You can view the original article on my website here.

If you have any private questions on the subject matter you can connect with me on LinkedIn and send me a message, or else you’ll find my contact details on my LinkedIn profile uk.linkedin.com/in/stevephillip . You can also follow me on Twitter at https://twitter.com/Linked2SteveSteve

Steve spent more than 18 years in the retail automotive sector, in the UK and the North America, running new car dealerships and almost 10 years in automotive consultancy roles, working with manufacturers such as Austin Rover, Saab, Volvo, Honda, General Motors/Saturn and various dealer groups.