We are into the second century of car-selling. It’s a tough new world. One of our
salespeople recently spoke with the owner of a Southern California Ford dealership.
“Two years ago, I was selling 400 cars a month. This month I’ll be lucky to sell
125. How does a business adjust to that?”
For most dealers, these are challenging times. The economy has stagnated. Consumer preference
have lurched sharply towards high-MPG vehicles, catching most OEM’s
off guard. Some brands are worse off than others, but most are posting declining
sales. And to top it off, the very way cars are being purchased has changed so fundamentally
most dealers are left confused and frustrated.
Savvy dealers recognize that it is not enough to hunker down. Yes, the economy will
eventually come back. Yes, manufacturers will eventually reposition their lineups
to adjust to changing consumer needs. But especially now, with the number of active
prospects at a low ebb, it’s vital to have prospect management processes so tightly defined
and managed that you out-perform and steal share from your competitors.
It’s a simple fact that breakthrough innovation usually emerges from the toughest
of times. The dealers who do so will be positioned for significant competitive advantage
as the economic environment improves. They are the ones who will prevail in Century
2.0TM of car selling.
For years, dealers have recognized the importance of their Internet lead management
process to sales success. The showroom, once the be-all-and-end-all, now shares
the stage with the Internet department. But the requirements for Internet success
are different in fundamental ways from those for showroom success.
Unlike the showroom customer, the Internet customer holds the information advantage.
Having established a vehicle preference, she next shops for the dealer. She seeks
information on availability and price, but above all else she requires transparency.
She’s busy—she needs information quickly. She wants her questions answered, and
then when she selects a dealer for an appointment and test drive, she expects polite,
prompt, personal service leading to an efficient paperwork and delivery process.
All of these steps are critical. But it’s clear that one step holds the greatest
risk of losing a customer, and it’s the one that happens right away:
The speed and quality of the initial response to a lead.
Let’s remember—in the car business, product is basically the same at all dealerships
of the same make. So the Internet customer’s choice of dealership is primarily driven
by price, availability and service.
She asks a simple question: “Which dealership will I choose?”
To get to the answer she takes an effortless but fateful step. With the click of
a button, she initiates a Darwinian contest between 3‐4 dealerships, each of whom
simultaneously receives her lead. Who responds quickest? Who is confident enough
to transparently present the price? Who shows the most availability? Whose response conveys
professionalism and promises a customer-focused experience ?
This is the gauntlet hundreds of thousands of consumers throw down in front of US
auto dealerships every day.
In this light, the current facts are staggering:
• The average response time on Internet leads is over 12 hours
• 32% of leads never get answered at all
• Only about 20% of dealers respond with a price quote
In the midst of the greatest challenge to the auto business in many years, how can
that be?
The dealer who can fix the problem of “speed and quality of initial response to
a lead” pulls a lever which will redirect a flood of active prospects to his store,
leaving competitors in the dust.
It’s important to note that the Internet customer is not bound by the old geographic
constraints that once limited her shopping options. She can hold multiple dealers
at bay, behind a digital wall, until one has proven his worth.
How does the dealer prove his worth? Follow the “new way”:
• Respond 100% of the time in 10 minutes,
• With a price quote (transparency),
• In a professionally designed and crisply worded email template,
• Showing multiple new and used cars available right now surrounding the requested
vehicle,
• Sent from the Internet salesperson that will help the customer from first phone
call to final delivery,
• Then call the customer to make a personal introduction.
Unfortunately, it has proven achingly difficult for many dealers to accept that
they must make this change at all (as a professor from UC Berkeley once asked, “How
do you run your business when everyone has access to all information?”). Even for
those who have accepted the need for change, most have struggled to implement this
“new way” economically.
There have been many failed attempts. Once upon a time, boat builders seeking to
increase speed settled on the notion that speed could best be achieved by adding
more masts. The Thomas Lawson was a schooner, christened and launched with much
fanfare at the turn of the century; it boasted seven masts. Problem: it was so weighed
down with steel and wood that it wasn’t faster, it was slower. Then along came a
storm. Top-heavy with a forest of masts and sails it couldn't weather the gale and
it ran aground and sank. Adding another layer of “the same old way” didn’t result
in a new way—it just made things worse.'
Progressive dealers have flirted with “new way” concepts, experimenting with many
structures, processes and tools. But as with the Thomas Lawson, each has had a problem.
Internet departments without automation tools face the problem of the absent salesperson
(on a test drive, in the finance dept, etc), causing leads to go unanswered. BDC
structures force the customer into a handoff, are expensive and extract a heavy
cost in management oversight (staffing issues, etc). CRM systems only work once
the Internet salesperson is sitting at his desk. Management mandates (asking Internet
salespeople to respond to leads right away “no matter what”) ignore the real constraints
salespeople face, such as spending time with other customers, business hour limitations,
work schedules and other responsibilities.
It’s just cold reality, as the data persistently shows, that the dealer hasn’t been
able to fix this problem on his own.
The good news is that dealers now can access new tools which make the “new way”
possible. And that’s a good thing, because fixing the initial response problem is
game‐changing.
For the dealer, this “new way” has been shown at some dealerships to double Internet
sales. Close rate improvements in the 20% to 30% range are routine. Think of it:
if half the dealers in the country were to adopt the tools and business practices
that deliver this customer experience, the impact on the other half would be catastrophic.
Dealers must ponder in which half they wish to be.
For the OEM, it’s equally game‐changing. What holds OEM’s back from a more dramatic
shift in marketing spend into the Internet? It is the knowledge that the fruit of
that investment is more Internet leads, leads which flow into a broken Internet
lead management process. Fix the process and OEM’s will turn a fire hose of marketing
dollars onto digital platforms that drive consumers towards Internet lead submissions.
So there is a fork in the road.
Some dealers, despite all evidence to the contrary, will persist in believing that
it’s still possible to hide pricing information until the customer gets to the dealership—not
realizing that the number of customers lost from lack of transparency far exceeds
the number of customers lost due to price competition. They will accept response
times of two hours—five hours—or even 24 hours, seeing their very real staffing
constraints as an unsolvable obstacle to better performance. Shaped by a world that
no longer exists (where rough geographic boundaries limited inter‐dealer competition,
the vast majority of traffic came to the showroom, and where available tools did
nothing to address responsiveness), such dealers will struggle to cope in a more
complex world.
But progressive dealers know that this new world is upon us. And this new world
demands a “new way”. They will continue their search for solutions that can help
them do what must be done: get a response back to the customer while she’s still
at the computer, night or day, seven days a week. Get her the price. Give her vehicle
choices. Present a professional email image. Then call her. Set an appointment.
Streamline the test drive, paperwork and delivery process.
The good news—the game‐changing news‐‐ is that solutions now exist to help dealers
deliver this vastly improved consumer experience. Armed with these solutions, the
progressive dealer is poised to speed to the front, leaving his dealer competitors
capsized in his wake.
|