In the dawn of the digital age we have seen dramatic changes in the way customers shop; the automotive industry hasn’t escaped this.
While it still relies heavily on the physical presence of car dealerships to drive sales, a recent Autotrader's Car Buyer of the Future study highlighted how the key drivers of how customers buy a car are changing. With two thirds of consumers saying they would be more likely to buy from a dealership that offers their preferred shopping experience , customers more demanding than ever, and a range of new competition from online sales platforms, should dealerships place a heavier focus on delivering a great customer experience and building loyalty rather than hard sell?
We have seen that many other industries have experienced similar disruption; from retail and restaurants to taxis, they have all had to adapt quickly. There is often great benefit in reviewing the challenges other industries have faced and how they have innovated. So should car dealers move away from traditional sales methods and begin to think like retailers? What lessons can the automotive industry borrow from the wider retail industry?
1) Empowered customers with new expectations
Customers have clear reasons for visiting a car dealership: to view a range of different models, test drive vehicles, and ensure they get access to additional services or warranties. However, they now have access to a large amount of information and online services, including the new Amazon Vehicles comparison site. Customers are therefore more knowledgeable and empowered than ever before. As a result, they expect sales people to show real expertise and provide information they don’t have access to. They want their visit to the dealership to add value to their own online research, and offer an exceptional shopping experience.
2) From sales advisors to customer service advisors
The importance placed on the role of the sales team is even more important than before. The basics of in-depth product knowledge and excellent customer service skills are still required. Yet, in this changing world, clinching a sale won’t simply come down to offering customers a good price to close a deal. Borrowing from retail means that to deliver customer satisfaction and gain loyalty, sales teams will need to ensure the customer has a great experience, and a seamless journey between multiple shopping channels. Are the sales teams familiar with their brand’s website and online tools? Do they keep up to date with reviews (of product and dealership)? How are marketing campaigns integrated across and between channels? How much about the customer does the dealership know?
3) Representing the brand
Customers are not interested in whether a sales team works directly for the brand it sells or for a third party agent. All they are interested in is getting the retail experience they expect. Is there benefit in altering the manufacturer-dealer relationship so it more closely represents that of a brand and a store? Mini Cooper does this quite well and is able to manage a consistent ‘on brand’ experience between channels. CRM should better tie-in manufacturers and dealerships so that not only customers but staff also have access to the same tools, such as online configurators.
4) Do your teams have the right tools?
This dramatic shift in approach will need to be supported by robust and rigorous training to develop product knowledge and softer customer relationship management skills. As with all retailers that have highly trained staff, employee turnover will have to be monitored very closely as the cost of losing a trained employee will be even greater.
5) Benefits structure
A change to how sales teams are motivated and rewarded will also need review. To achieve exceptional service will a bonus help incentivise the right behaviour? How will sales targets be balanced alongside other KPIs such as customer feedback, loyalty and net promoter score?
6) Work as one business
How do you get dealers to work as one company with one set of KPIs and a single view of the customer? If sales, after-sales, marketing and services team do not share systems and customer information then it is likely opportunities will be lost to build relationships and effectively communicate with customers. Leading retailers are beginning to pool their data into a single view of the customer to ensure they have a relevant conversation with their customer and can maintain their relationship.
7) Embrace new opportunities
New channels available in the dealing of new and used cars should be viewed as a real opportunity for all parties. It’s a way for dealerships to differentiate themselves from competitors. They must also understand how different customer demographics shop and what motivates them to visit a dealership. This will help ensure dealerships can tailor their customer service approach, the information they provide to that customer and the store environment for specific customers. Getting collaboration between dealerships that are often run as franchise groups will remain the challenge given the competition between them.
The automotive industry is at the start of its journey; Tesla’s selling strategy of building a strong retail strategy, from extending its presence outside of car-dealerships to opening and owning its stores, can be taken as an example of this shift. Those companies that embrace changes and innovate could see big rewards; those that don’t could face the same fate as retailers that chose not to change. The role of multiple channels in the buying and selling of cars is here, and adopting a more retail than traditional automotive industry approach may just set aside the winners.
This article was co-authored by Hannah Tharp:
Hannah is a Consultant in Operational Excellence specialising in Retail Operations. Hannah has 5 years' experience in the retail industry much of which she spent working for a leading British retailer.