I just finished reading an article in Automotive News by Daniel Gorrell on how important it was for the US auto companies to earn the consumers trust back. Interesting article and hard to argue with, but I’ll take it a step further down the distribution chain. I work with retail sales teams and service teams. They don’t need any help understanding the importance of trust; I show them how to build it more effectively with a very distrusting public. The reason trust is important is both simple and obvious; the quicker a sales, service, or parts consultant earns a prospective customer’s trust, the faster transaction consummates and the more profitable the transaction turns out. The Atlanta Business Chronicle reported that during the last year consumer trust in the auto dealer dropped 19% from prior historical lows. The value of trust when selling is well documented; it speeds up the transaction and creates higher profit margins. Lack of trust is an issue.
The problems I encounter are interesting and consistent; no one ever denies or takes issue with the value of trust, yet integrating trust-building skills into the retail automotive sales framework is virtually impossible without changing retail automotive culture and revamping the 40-year old sales process. I advocate specific trust-building skills and each has its own set of hurdles before one can practically apply it with a prospective customer. The sales people who attend my seminars applaud and welcome the skills, but claim that management will not allow them to practically apply the trust-building skills once they are back at the store. The reason is the trust-building skills fall outside the guidelines of their sales process. Sound impossible? I addressed sales team members representing over 150 different stores in every part of the USA and the response was absolutely identical in every part of the country. The sales managers attending my seminars tell me I’m addressing the wrong audience; I need to speak to their GM or DP! And most GM’s or DP’s I talk to expresses complete surprise that there is any type of trust issue that needs addressing!
I just concluded a 40+ city tour for a major Asian manufacturer and the 7 trust-building skills I address below were the centerpiece of a seminar whose attendees came from both the retail sales and service teams. The objections, roadblocks, and hurdles to applying the skills were consistent across the USA.
1. Talk Straight - impossible said the attendees. By definition, this skill requires telling "the whole truth and nothing but the truth." Even in the stores I visited that tried the hardest to adhere to “talking straight” there were huge gaps. The best stores still coached sales people to hold back information, even if the customer asked a direct question. “I don’t know” was considered straight talk even if the sales person knew the answer; in the retail automotive sales culture no answer to a question that has an answer is often considered talking straight.
2. Treat the customer fairly - impossible; the 40 year-old business model used by virtually all stores is based upon maximizing the profit on each "individual" transaction. Further, if a prospect inquires at a single store via the Internet, the telephone, or visits the store in person they will almost always receive 3 different price quotes for the same vehicle!
3. Create Transparency – very difficult to do because this runs counter to "the way it's always been done." This is particularly perplexing, because there really are no secrets left - the retail business is transparent via the Internet, but the retail automobile dealer's sales process hasn't changed to accommodate this reality.
4. Clarify Expectations - to the sales team this meant "get the commitment to buy today" from the prospective customer or face the wrath of management. Clarifying expectations is a two-way street, the sales teams embrace it, but the process too often prevents its transactional realization.
5. Extend Trust - this extremely powerful trust-building skill is the exact opposite of what every sales person is taught by trainers and managers alike from day one, - "buyers are liars." (The buyer thinks the sales person is a liar and the sales person is taught the buyer is a liar – these ingrained beliefs don’t exactly set the stage for a smooth or pleasant encounter. If you’ve ever wondered why the auto purchase process is so confrontational you now have at least part of the answer.
6. Listen First – this makes reasonable sense and at first glance would not seem to create any issues. Anyone over the age of 3 understands the importance of listening; whether you’re listening professionally or listening socially. However, the retail automotive sales culture while giving “lip service” to listening actually coaches the sales team members to first “suck" information out of the prospect prior to giving up any information or answers to their questions. Don’t believe it? Go find any incoming telephone call script authored by one of the industry experts/idiots and read it. And who hasn’t heard this type of management direction; “don’t listen to what the customer said, just go out there and say/do this!”
7. Keep Commitments – easy to agree with, until the sales process dictates otherwise. In fact the traditional sales process promotes not keeping commitments.
I had the pleasure of having over 1,000 attendees representing over 100 different new car dealerships from every part of the USA. I discovered that the thirst for a better way to sell cars, service, or parts is stronger than it has ever been, understandably. The retail automotive sales people, service consultants, and parts consultants want to do better. That’s the good news; the bad news is it’s the sales process that is holding the sales consultants back.
I’ve met tens of thousands of automotive sales people in the last 30 years; most are decent, hard-working, honest, smart, and personable human beings. Yet 300 million Americans dislike to talking with them. The conclusion I drew years ago and based on my last five months experience, I believe it more now than ever is this; it’s not the sales people Americans dislike; it is the sales process and mind-numbingly stupid things the sales people are taught to say to consumers by the industry experts/idiots.
Interestingly, those attending my seminars from the fixed ops side of the dealership embraced the seven (7) trust-building skills and exhibited no qualms about using them. Why? Because service is faced with fierce competition and there is no legal mandate that consumers have to use a franchised dealer’s service department their processes have had to evolve over the last 30 years; out of necessity. Fixed ops processes are light years ahead of the sales operation – the free market at work. New cars sales processes have hardly changed in spite of the entire world changing around them. Thirty (30) years ago sales people didn’t know the invoice cost on the vehicles they were selling, the bankers that financed them didn’t either; no consumer had any idea the amount of the invoice. Dealer hold-back money was a grand secret, “upside down” referred to a pineapple cake because finance customers had to put cash down and couldn’t finance for any longer than 36 months. People also had to have a history of having paid to get finance – imagine that. The factory pricing policy allowed for large margins, a BMW 3-series stickered for $13,500, trucks didn’t sticker at all, factory incentives were rare, cell phones hadn’t been invented, Kia, Hyundai, Lexus, Acura, and Infiniti weren’t around, but Oldsmobile, Sterling, Citroen, and Yugo were. And Nissan was still Datsun.
Just about everything about the retail automobile business has changed save for one item – the retail automotive sales process today differs imperceptibly from the way it was 30 years ago. The consumer’s complaints about the automotive purchase process are the same now as they were then. It defies every business principle known to mankind; a business which refuses to change but still survives, even flourishes (if the economy is humming and the banks are buying anyone breathing). It would be a case-study worthy of the Harvard Business School if the answers as to why it has survived weren’t so simple.
However, it should be no surprise; this is a sales process, when the telephone threatened to impose upon the way it worked, merely developed scripts for sales people to use that neutralized any chance the consumer had of using the phone as an effective shopping tool. And it was easy; every dealership cooperated by purchasing their training and scripts from the same Bozo training companies (of course these companies were labeled “industry leaders” and they still sell the same scripts and NADA still features them!) so the consumer couldn’t get information from any store. Then the Bozo training company screams through every media available at the time “See, according to our survey, consumers will call 7 different stores shopping your price; you’d better hire us, will make sure your sales team is prepared!” Well, the consumer might call 7 stores, but they weren’t shopping price, they were just trying to find someone who would answer their quest for information! The leading telephone training companies all adopted the mantra; “if you provide the caller the information they seek, they will have no reason to visit your store.” And dealer’s bought it. Of course the flip side of that mantra was this; “if you deny your caller the information they desire; block and evade their questions; answer their questions with questions; suck all the information out of them you can, and generally treat them as rudely as you know how – they will beat a path to your door?” By the way, now these former telephone experts have become Internet experts. What a business.
The auto industry is one of the few retail business left on earth that uses a business model built on a management-centric platform. The rest of the world discovered that building a sales process around the person with the money (customer) was a profitable endeavor. It’s known as customer-centric selling. The dated sales model is the primary threat to profitability and the leading candidate to drive the new car business into “commodity hell.” People wonder if automotive sales consultant job is in jeopardy of going the way of the blacksmith. If the business model and the sales process don’t change, yes; how can a sales consultant sell in a customer-centric manner when the sales desk, occupied by a sales manager, is the center of his sales universe? Answer; it’s not possible. The automotive sales process is the only retail sales model left on the planet that causes high levels of anxiety and misery for both those doing the selling (sales people) and those doing the buying (consumers)!
The retail auto industry applies a “hub-and-spoke” sales model, with the desk being the center of the sales process. The major problem with this model is the ‘desk’ adds little to no value for customers. In fact, if you listen to the consumer, they will tell you that the only value a ‘desk’ manager provides is the lowest price. The consumer understands it is the ‘manager’ they must get to in order to get the lowest price. So in essence, the ‘desk’ manager adds no value and they reduce the dealer’s gross profit by their very existence. The desk's “goal” is to optimize gross profit with every customer transaction, an outdated model considering the knowledge level of today's highly informed consumer and evidenced by today’s plunging gross profit figures.
Due to significant market changes, the hub-and-spoke system is and has been inefficient and expensive for years. There isn’t enough gross profit, commissionable gross profit anyway, to compensate sales consultants fairly after management has taken its share. It’s simple mathematics.
So, how can this dated, tired and worn out sales process continue to survive? Why hasn’t the Harvard Business School created a case study? Not even the advent of the Internet and handheld mobile device (which have practically made the telephone itself obsolete) has created a perceived need for a change in the traditional sales process. The answer is simple and twofold in nature. First, new car sales are protected from competition by law. By law, franchise law, new vehicles can only be purchased from new car dealers. The new car dealer has no competition. Second, the automobile is arguably the most popular product in the history of mankind. Anyone living in the USA either needs or wants an automobile; most need one to survive professionally and socially. Couple those two facts and the dealer doesn’t need to change a thing; sales people are starving, gross profits are dwindling, but fixed ops still pays the bills.
During the past year much has been written about the ills of the automotive industry. But no one writes about the “Neanderthal-like” sales process employed by the majority of dealerships (management centric as opposed to customer centric) or the 30 year-old sales strategies and tactics taught to sales teams. No one writes about how most consumers are much better prepared to buy a vehicle that the sales teams are prepared to sell them. What’s written is all about how tough the dealership business is these days and the blame is aimed at, take your pick, the factories, finance companies, unions, foreigners, Internet, government, and on, and on, ad infinitum. Many people I’ve talked to even have the misguided belief that it’s the fault of the sales people.
One question; why don't people find it odd that the most used vehicles are sold by individuals, not car dealers? Isn't it odd that the public would rather buy an expensive product from a seller with no legal restraints to stop them from lying, making false claims, or any legal obligation to warrant the product? There is no easy legal recourse against this type of seller. Yet the public willingly takes these potentially expensive risks rather than go to a car dealer where they have legal protection and recourse. Go figure; lack of trust maybe?
There is a better way. There is a less offensive way. There is a less expensive way. There is a more profitable way. But it’s not the WAY it’s always been done. If you want to stick with “tradition” and “magic wands” visit the former helicopter mechanic’s site or the “bejeweled” one’s site. They can give a good dose of how it worked in the early ’80’s and why nothing has really changed.