Whatever the degree of consumer interest in using the internet for car purchasing, it’s vital that dealers exploit the net’s information benefits to maximise sales and customer loyalty, says Philip Wade.
Visionaries for the new world of internet selling would like us to believe that massive numbers of consumers will soon switch to buying new cars over the web. At the other extreme, there are those in the car retailing business who suspect that the benefits of website transactions are grossly overstated. Who is right?
The first thing that has to be recognised is that consumers are extraordinarily diverse, with different behavioural patterns, and nowhere is this more apparent than shopping. People’s shopping preferences and behaviour are in turn affected by such factors as:
• Are they interested and knowledgeable about the product? Usually, they will be experts in some areas (fashion, fine wines, hi-fi, for example) and not at all expert in others (washing machines, fashion, DIY tools). They will tend to gather and remember information about goods that interest them and be able to make fine distinctions between the merits of rival products.
• Do they have much time for shopping? People with busy careers and other commitments tend to prefer the shortest and simplest route for obtaining what they want. For others, shopping around can be a pleasurable activity in itself.
• How much do they trust what salespeople tell them? Some shoppers are distrustful of all salesmen and enter any negotiation armed for battle, while others are more naturally trusting and rely on the expertise of a salesman. There are those who, while sceptical of salesmen, search for one they can do business with and, having found one, can be very loyal.
• Are they concerned about the risk of making the wrong purchase? Concern about this can make the process of shopping unpleasant and full of anxiety. Indeed, it may even persuade some people to put off shopping until they have to.
• Are they very concerned about price? Questions of affordability cause many shoppers to look for the best price but there are those who also see getting the best deal as a kind of sport or proof of their own smartness.
Sales people can use the internet to obtain a mass of information to support the customer, including not only finance and credit approval, but also service cost comparisons
It’s often hard for those in the car business to realise how many drivers are not very interested in cars or who find the whole business of buying one boring or an unpleasant chore. The perceptions of sales staff are themselves skewed by a false reading of their own experience. Statistically, they will see 4 to 5 times as many ‘heavy shoppers’ as ‘light shoppers’ even when both groups buy the same number of cars. The pressures of ‘stock push’ and earning sales target bonuses put all the focus on completing the sale, without bothering to find out about customers as individuals.
A recent study in the US indicates that only some 25% of new car buyers positively want to form a real relationship with a car dealer. The remainder either do not have the time or inclination. They want the simplest and clearest route to purchasing a new car. Many of them are already heavy users of the internet to arm themselves with information.
Even if, as some forecast, actually buying cars over the net in the US never rises much above 20%, the number using the net during the purchase process is expected to rise to over 60% in a few years. With Europe forecast to have soon the same number of internet users as the US, we ignore these trends at our peril.
At this stage, it’s simply not known what the future role of the car dealer will be. In the US, you cannot legally sell a new car unless you are a licensed dealer, so all the internet activity focuses on linking up customers and dealers. Here in Europe there are no such barriers to direct selling over the net, so dealers have to be very aware that they need to prove their value to the consumer.
Leaving aside the very real concerns over ‘touch and feel’, trade-ins and other logistical issues, what are the issues about the actual selling process? I would identify the following two areas where dealers (and manufacturers) must take urgent action to recognise the true needs of their customers.
Processes to Support the Sale: For those car buyers who are impatient or distrustful of salesmen, there is much still to be done to make the whole system responsive to customer needs. The ability to supply the exact car is the first step. As research over the last 7 years by the International Car Distribution Programme has shown, Europe is moving to a much more responsive ‘pull’ system of supply. This improves customer service levels and removes a lot of cost – including the need to give away discounts in order to shift old stock. Internet technology (in the form of Intranets linking factory to dealer) is adding much more. Salesmen, each with a laptop, can access a huge mass of information to support the sale – including real time, on-line confirmation of when an individual customer order will be built and delivered, its exact specification and cost, payment options, instant credit approval, service cost comparisons… and so on.
Of course, much of this could be done on-line by the consumer, but there is no reason why dealer sales staff should not have the same facilities, saving the customer the need to navigate his or her own way through all this information. For the distrustful or impatient shopper, there can be much more transparency in the sales process and far fewer delays. Salesman productivity (time spent per customer, hit rate, cost per sale) should also improve.
Relationship Selling: Assuming the improvements in processes to support the sale are in place, there are many ways in which the internet can also boost the salesman’s capability to be responsive to individual customers. Future sales and service training will be mainly conducted as distance learning over the net. The dealer’s customer database, available to all staff, can include much more detail about the customer’s preferences. Transponders can alert the sales manager or service manager on his pager when a particularly valued customer is arriving at the dealership.
For those customers who are active on the net, the dealer can provide a range of value added services between car purchases – service booking, product advice, warning of when things are expected to wear out, and so on. These things should be available on demand (24 hours a day/7 days a week), avoiding aggressively pushing what the customer does not want.
The car dealer of the future should therefore have the capability of being an efficient seller both to buyers who want a personal relationship and to those who simply want the most convenient and painless buying process. There are likely to be many others competing for the customer’s attention, so being ‘good enough’ won’t win the game. Dealers have to aim to be the best.
Philip Wade is a director of the automotive research and consultancy company HWB International, formerly known as Harbour Wade Brown. He is also a founder director of the International Car Distribution Programme (ICDP) – an independent research project to study the future of car retailing – and chaired the ESOMAR automotive marketing conference at this year’s Geneva Motor Show
This article has been taken from Motor Industry Management magazine which is published by The Institute of the Motor Industry.