Driving Away Customers

The title of this post pretty well sums up how I view the typical auto dealer experience. I think that entire sales/service model is on a downhill slide.

cars.jpgNot that every single experience I have had has been negative. I can think of a couple semi-positive ones, actually. And they were good strictly because the individual I was dealing with was low-pressure, informative, and pretty straightforward.

So, I tried to envision the elements of a radically different car dealership that would make me change my mind. What would it be like?

First, there would be an entirely different view of the role of the dealership, and the dealer-customer relationship. The standard method now in use is The Pressured Immediate Transaction Success model (The PITS), whereby all focus is getting the “victim” to make some kind of transaction decision now. That’s not a customer relationship – it’s manipulation. So that has to go – but with what to replace it?

Here would be my dream car-buying experience. I’d walk in the dealership, and be immediately greeted by someone (very warm, very professional) at a reception desk whose role it is to find out what exactly I need there today. Am I browsing? Am I looking to make a purchase? What kind of car? Do I have serious technical questions? This person sets a friendly, upbeat tone – instead of the typical wandering into a showroom, either ignored by overly busy salespeople hunched over cheesy-looking desks, or descended on by some shark that has marked me out as his personal victim by virtue of having claimed me first when I came in (I’ve experienced both of these first-hand).

I am directed to where the coffee is, and invited to make myself comfortable. There is a corner with literature on all the models, plus touch screen video displays where I can learn more about each car. The receptionist introduces me to the right person who, as a first step, sits down with me on some comfortable furniture and asks basic questions about what my needs and desires are. A real sales consultant, who listens, and even asks me questions that I didn’t think of myself. Someone who assumes that I am a person, not a means to the end of meeting his quota of victims that day.

That person then introduces me to the potential model(s) that might fit my needs. There is always a technical specialist available in the area, so that if my questions go into realms of engine and transmission design, detailed comparisons with other models, and other specifications, instead having to tolerate a babbling salesperson who only wants to avoid such distractions in order to make a sale, I’m treated with respect by interacting with someone knowledgeable.

car-salesman.jpgThen, with a nod of the head to the Saturn approach that went so well in its earlier years, we go over the price. Since dealer cost is now readily available with very little on-line effort, there’s no sense playing the game anymore. The price sheet has a list of all the desired options, and two totals at the bottom – the dealer’s cost, and the selling price. One price, same for all, no haggling. I will pay a reasonable mark-up, if I know it’s fair and I’m not being lied to. And no stupid game of going to the backroom and pretending to convince the mysterious sales manager that we really got to make a deal here today. Whoever came up with that customer-hostile model anyway? The whole “deal” mentality should be thrown overboard.

And how about seeing that customer – that adopter – as a long-term client, whose friends and children and professional colleagues all will become adopters as well? What about providing an entire life-cycle of services in a customer-focused way that will build incredible loyalty?

For instance, the general reputation of auto dealer service departments is that they’re the place to go if you want to overpay. Again, the maximize-revenue-from-each-transaction model. And, although I am certain there are many exceptions, my experience has, unfortunately, reinforced that impression. I go to a dealer as a LAST resort, not as a first choice – and that is exactly backwards. Can’t an innovative dealership seek to provide such good, honest, reliable, and affordable service, that I wouldn’t want to entrust my car to anyone else? And since cars are so reliable now, with maintenance more to the fore than repairs, can dealers become more like the Jiffy Lubes of the world, with rapid, predictable and affordable maintenance services? Why give all that steady business and good-will away?

If I had the luxury of re-inventing the entire automobile distribution business from scratch, here is how I would do it, taking into account the disintermediation of the web that really removes a lot of the necessity of the legacy dealership model:

1. Auto manufacturers have a small number of vast regional inventory centers, where cars are available for distribution. This inventory is owned by the manufacturer, thereby removing that overhang of financial pressure from dealers, and ensuring that manufacturers will make the models and configurations that actually sell.

2. Micro-dealers have a limited number of demo models, along with multimedia kiosks that have the ability to fully display configurations, and place orders. These local outposts are where prospective buyers can actually try out models by test-driving and talking with sales consultants. But rarely do they buy “off-the-lot” – the normal procedure is a delivery from the regional center a day or two later, where a far richer inventory of models, colors, and configurations are available. This removes the pressure to move sheet metal off the dealer’s “lot,” since that is no longer the goal. The goal is to get the customer the model they want.

3. Micro-dealers may also encompass, or be affiliated with, used-car sales, quick-maintenance facilities, and/or full repair services.

For many people, access to the Internet means that information is no longer needed from a traditional dealer. Frankly, I simply don’t need a car salesman. Information on models, pricing, availability, etc. is openly accessible, as are customer reviews. If people really know what they want, they can simply order it on-line, have it delivered from the regional facility to the nearest micro-dealer outpost, and be done with it. Unrealistic? Maybe. But as a customer, I’d move to that model in a heartbeat!

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11 Responses to Driving Away Customers

  1. We seem to have reached the same conclusions. It will be interesting to see what kind of experiences some of our readers had. I felt the industry is in such need that a branding effort would just be the beginning.

  2. Lewis Green says:

    Excellent post Steve. I love your acronym. Good recommendations.

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  4. Steve,
    We had sort of the same thought with your “micro-dealer outpost” idea. There is a gap there in the process that could be filled. I’d be interested to know what car industry veterans think of that. Maybe they’d point out some flaws in our theory.

  5. Steve:

    You’ve entirely reconstructed the auto industry distribution channel. That’s good, but I keep running into the reality of of auto makers pressuring dealership owners to get more sales…of owners pressuring managers to get more sales…of managers pressuring salespeople to get more sales…of salepeople pressuring prospects to buy.

    The business won’t change until it doesn’t work the way it’s now structured. And because dealership owners are still making a good living, I suspect it won’t change soon.

    I’m going to use a buying service for my next vehicle.

  6. impactiviti says:

    Martin, maybe there’s a way to reverse the equation. If the micro-dealer outpost is, primarily, a customer-service center – it exists to help customers (in their auto evaluation, purchase, and service needs) and not merely as an extension of an auto-maker – then it can be free to build relationships without all the pressure that comes from moving metal off the lot. In fact, the best micro-dealers will be coveted by the car manufacturers, because what they offer is access to happy customers. Think of how much more profitable they can be without all the inventory and massive real-estate headaches – just a smaller retail show area that can actually become a pleasant destination! I don’t know, maybe I’m dreaming, but it sure seems to make more sense than the current model!

    Let’s be even more radical – what if the various micro-dealers focused on a single TYPE of vehicle (e.g. SUVs), from various manufacturers, allowing for much better selection and comparison! When I go car-shopping, I’m looking for a type of car – so wouldn’t I much rather go to a place that specializes only in, say, minivans?
    - SteveW

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  10. Kevin Dugan says:

    Your dream experience is great…if only it were more of a reality at a dealership.

    I wonder why there is so little diversion from the PITS? Dealers are so cookie-cutter that anyone diverting even the slightest would reap the benefits.

  11. Craig Olsen says:

    With 30 years in the car business, this would be great, however to remove the exisiting dealers from the loop would be impossible. The dealership is a license to print money, not many are going to give that up. I have tried to use the respectful way of selling, usually the customer is so distrustful that that it is hard to make contact to the person hiding inside, but when you do, you have a client to take care of and they will be a customer for life.

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