Agile Insights Blog

3 min read

Changes In Car Buying Means Changes For Car Dealerships

Mar 1, 2016 1:13:16 PM

Gone are the days of the expansive car lots with knowledgeable sales people and uninformed customers. Consumers are now able to conduct comprehensive online research before they ever arrive at a dealership, with 1 in 6 skipping a test drive all together and choosing to purchase their car completely online instead.

When I bought my first car, I visited several dealerships, negotiating with sales people at each one to try to get the best price. Now, the internet has become the showroom, and I can go online to locate exactly the car I want for the price I want.

With this ever-increasing trend, savvy consumers are spending less time at dealerships, and their expectations for sales staff’s product expertise and service standards have changed as well.

No one wants to be “sold to�? anymore – they want value and service instead. The table stakes just to play the game have changed. It’s no longer optional to have a helpful, impeccably updated website, for example. With all brick-and-mortar auto dealerships trying to differentiate themselves not just from each other but now from a vast array of competitors online, it is becoming harder and harder to stand out.

In response, automotive dealerships have to get more creative to meet customer expectations and standout from competing online options. Automotive News reported recently that some dealerships are using a trick from the luxury resort industry to provide customers with a more valuable experience when they visit in person. The Texas-based dealership has started using earpieces connected to a site-wide radio system that makes contact with every member of their team as simple as pushing a button.

They’ve found a variety of benefits since enacting this system. For example, their ability to communicate and assist customers is so much faster that now customers don’t have to spend as much time onsite to get what they need. This means better customer satisfaction in the service and parts departments, and it has made their sales team so much more efficient that monthly new and used cars sales have increased from 50 vehicles per month in 2003 up to 400 vehicles per month at the end of 2014.

This a winning story of the type of innovation that dealerships need to stay competitive in their changing market. But not everyone is as effective. In their rush to stand out, some dealerships are implementing tactics without properly validating customer needs first, leading to hit or miss results.

For example, a large Midwestern dealership was planning to invest a good amount of money to revamp their waiting area and build a new car wash, thinking that this would increase service revenue by making them stand out from their local competition.

Insights obtained through Vennli’s platform showed that it was much less important to customers to have these onsite perks than it was to have a convenient way to pick up and drop off their cars for service. Customers don’t want to wait at all, so they don’t care about the waiting room. They want quick service or the option to drop off their car – and other local competing options weren’t meeting this need adequately either.

In response, the dealership decided to offer customers a concierge service. Not only was this more effective at driving new business than expensive facility add-ons, but it also has the added bonus of increasing service revenue because customers who leave their car for service spend on average of $3 for every $1 spent by a person who waits onsite while their car is serviced. A double win for the dealership, and a win for customers as well!

Clearly, customer insights and competitive intelligence like this can provide the clarity needed to succeed in a quickly changing market. One of the challenges to growing a business is that there are so many areas that impact growth – sales, marketing, product development, operations, and service - and everyone has limited time and resources. Where can you focus to get the biggest ROI?

Without actionable customer data, it’s too easy to pick the wrong focus. To decrease risk, you need to know exactly what is most important to your customers and also how they perceive your strengths (or weaknesses!) compared to your competition. When you know how consumers decide to come to your dealership vs. another, you can develop a targeted strategy to win their choice.

In today’s fast-paced digitally-dominated market, there is still a strong need for brick-and-mortar auto dealerships, but only those who adapt with their changing customer needs will survive.

Topics: General

Written by Vennli

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