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A recent event held by Edmunds named “Hackomotive” brought together some of the brightest technology innovators in the automotive industry.

The purpose of this event was to streamline the automotive buying process for consumers. Technology and shopping portals are increasingly becoming more prominent in our industry.

A couple of companies that are gaining steam include the Google Autos program that passes along leads via anonymous contact information, and TrueCar’s no-haggle pricing. These highlight how today’s consumers are seeking ways to avoid many of the pain points involved in the process of purchasing a vehicle.

Some notable entries in this event included Carvoyant, which allowed customers to test drive vehicles without going to a dealership or even speaking with a salesperson, along with the ultimate winner, CarCode SMS, which let consumers interact with consumers via text messaging. This trend of anonymity and consumer desire to no longer interact directly with dealerships is something to keep an eye on. It presents some unique challenges that it would be wise to plan for:

 

  • Time – It regularly takes far too long between when the customer walks on the lot and when they leave with their new vehicle. Today’s consumer is busier than ever. Many seek to avoid the relentless back and forth that inevitably happens in most dealerships. As a result they are gravitating towards shopping portals and pricing tools.
      
  • Confrontation – The consumer tends to feel pressured by the salesperson. They regard them as forceful, trying to make them buy now, rather than a source of assistance in the process.  Today’s consumers are equipped with more knowledge about the vehicle than the salespeople – including the pricing. When they finally do acquiesce and go inside to talk numbers, they get hit with sticker price, low trade values, high interest rates and large down payments. This is usually all in the dealer’s efforts to maximize gross profit on the deal. It is important to adapt to today’s consumer. Change with the times and update these selling techniques that were in place 20 years ago when information wasn’t as available.
      
  • Harassment – When consumers are reaching out to dealers for pricing, frequently all they get in return is their phones ringing off the hook and 4 e-mails per day with multiple dealers trying to contact them. Nobody wants to be continuously bombarded by salespeople. This is the exact reason consumers like processes in which they can be provided with the answers they seek anonymously. It’s not that they don’t want to buy a vehicle. They just want to avoid the process and time involved. The only recourse they can see to eliminate this is to avoid providing contact information; and/or seek alternate means of procuring information through anonymity.

 

The rise of these services and consumer desire to buy factory direct can be tied right to the consumer experience. If consumers had great experiences in their auto buying journey, we wouldn’t be seeing some of these trends, and these trends wouldn’t be gaining as much ground. Customers want information, transparency and customer service. It doesn’t matter where you’re shopping – Nordstrom, Best Buy, Wal-Mart – if a salesperson was following you around the store continuously asking you to buy something every 5 minutes, you would get annoyed. The same basic principle applies to any retail environment, including car dealerships. Here’s a great example of one dealership that has successfully changed up its processes, that was recently posted on Edmunds.com

 

If dealerships work to create a fun shopping experience for consumers; give them the information they need when asked and create a more efficient process, consumers may in turn feel comfortable visiting dealers and sharing their information once again. Dealerships that create a more efficient processes and reduce as many of these consumer pain points as possible, will be well positioned to attract customers and generate more sales.

Views: 264

Tags: Autos, Google, TrueCar, automotive, customer, dealerships, edmunds, experience, hackomotive, sales, More…service, technology

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Comment by Brian Bennington on April 8, 2014 at 12:46pm

Well, Richard, another thought provoker.  After stopping my work to read, reread and contemplate your post, I couldn't remember what you do even though I was sure I checked you out previously.  When I read your bio, I remembered that I did start reading it before, but nodded off before I finished.  I know your job is important, but marketing and servicing claims automation for service departments sounds a little light in the "exciting job" department.  (It's what I'd describe as a "yawner.")  Really, you appear a lot more intense, handsome and adventurous than your bio indicates.  I would have guessed you as a CIA or FBI operative, or at the very least a "Thomas Crown" caliber of jewel thief!

Anyway, reading your observations about "Hackomotive," the growth of "Third Party Negotiators," (TPNs) and the new "eliminate initial consumer-to-dealer contact" software/apps coming on line, they're bound to erode dealership creditability.  After all, the primary marketing premise of these services & products is to encourage the use of a "middleman" to insure the forthrightness and honesty of dealerships.  And, if you notice the marketing their utilizing, it starts with someone explaining their "fear" of dealership and ends with a TPN coming to the rescue.  That's the way insurance is sold, and all TPNs do is offer a "Negotiation free insurance policy" with the premium paid by the dealer.  Fear is an excellent time-tested motivator, and you have to admire the TPNs for capitalizing on it.  As their success increases, I expect they'll update their model to include "fees" for any additional vehicles their "leads" return to their contracted dealer to buy.  And, I'd bet some dealerships will participate in it.

As to your "The rise of these services and consumer desire to buy factory direct can be tied to the consumer experience" doesn't even slightly take into consideration the influence of the constant and continuously increasing "drumbeat" of messages alluding that the consumer "better not trust the dealer" from everyone who can make a buck from their results.  In today's marketplace of "over promise and under deliver," I'm sure you know the power of "spin," especially backed with statistics that have been "tortured" until they'll substantiate anything.

Finally, I'm having a hard time seeing how your blog's "What's happened to customer service" title relates to this.  If you believe these problems are all generated by dealerships, I kind of get it.  But, I think the actual improvements most dealers are trying to incorporate will be counter-balanced, or even overshadowed, by the negative marketing mentioned above.  Please know that I do not have a "dog in this hunt," as I've commented before to you my business is retention and referral development.          

Comment by Richard Holland on April 3, 2014 at 5:46pm

Thanks for the compliment, Ryan! It's a disturbing trend, for sure. 

Comment by Ryan Leslie on April 3, 2014 at 7:13am

Well written Richard, thank you!

This line really resonated with me:

This trend of anonymity and consumer desire to no longer interact directly with dealerships is something to keep an eye on. It presents some unique challenges that it would be wise to plan for...

We have seen an interesting change in consumer behavior on DealerRater that speaks to this observation. Dataium substantiated the observation for us in a whitepaper soon to be released. When the consumer path goes through the individual salesperson's page on DealerRater the consumer is 12x more likely to convert to a lead than if they visit the dealer's website alone.

It seems that the lack of desire to interact with the dealership is mitigated by the virtual introduction to the human being representing that dealership. A trust factor is established when I know who I am calling as opposed to asking for "used cars." I'm reminded of The Trust Factor study performed by About.com in July 2012 that found that the existence of trust drives consumer decisions, with 84% of respondents reporting they will not engage with a brand until trust has been established. Trust is established by the employee on behalf of the brand it seems, not the brand on behalf of the employee. That could be the premise for another article.

Again, very interesting stuff Richard!

Comment by Alexander Lau on April 3, 2014 at 6:31am

They didn't allow me to submit. I'm ready to blow the pants off of the automotive world's ass with a new application on a different platform.

http://www.carcodesms.com/ all this does is force the dealership to spend more money on resources. A massive assumption. 

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