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By Jeff Williams on 9th October 2021 Dealerships, Management Workshop, News Absolute Results, Customer Service, Dealerships

DID 2020 mark the beginning of a decade of disruption for the retail auto industry?

Last year, the global pandemic began with waves of dealership lockdowns and factory shutdowns, disrupting virtually every aspect of automotive retail.

This year it’s the inventory crisis, caused largely by the microchip shortage; also a result of the pandemic, but magnified by natural disasters, supply chain challenges, and competing demand from consumer electronics.

As 2022 approaches, many automakers are now actively shifting a significant portion of their product distribution system to the build-to-order model. This is a substantial change, especially in North America, where dealers are used to selling either from large volumes stock purchased months in advance, or from banks of overproduction allocated to them by OEMs.

Around the world, several OEMs have begun to shift their dealer network to an agency model. In some regions, this has been catastrophic for sales, and in others it has been a success for both the dealer and the OEM.

Many global OEMs have also created some form of hybrid retailing model where they either sell direct to consumer or they control the first contact with the customer.

Jeff Williams

In some cases, this means that the factory takes the vehicle reservation and collects the deposit, and dealers earn the right to sell the reserved vehicles. In other cases, new brands with distinct retail standards have been created by OEMs in partnership with existing dealers. Examples of these are Genesis, Polestar, Cupra (VW Group), and now Hummer.

There’s also a virtual tsunami of new electric vehicles (EVs) set to arrive in the next five years. Yes, dozens of new hybrid models have been arriving in the market for years, but soon the majority of new products will be powered solely by EV technology.

According to a recent study, 100 new EV models will debut in the market by 2024. Brands like Audi and Genesis have announced that every new model they launch from 2025 onward will be EV or powered by alternative fuel.

EVs will be the most significant disruptor as they upset every component of the automotive ecosystem from design and manufacturing, right through to marketing, distribution and after-sales.

The user technology built into EVs has the potential to be even more disruptive than the products themselves: it could change how people recreate, communicate, shop, and work, especially as the autonomous driving technology built into EVs integrates into the daily lives of consumers.

While disruption can be challenging, it brings tremendous opportunity for dealers who are prepared to adapt as the market changes.

This is especially true if dealers can see the disruption coming and prepare by looking inward—analyzing their current systems and processes—and then adapting to where they see new market opportunities.

In many ways, the disruptive effect that the explosion of the internet has had on the retail auto industry over the past two decades has been a warm up act for dealers.

Over the past 20 years, the balance of power of information has gradually shifted from the dealer to the consumer.

Dealers who have embraced the educated consumer by openly sharing information and innovating to serve them both online and offline are leading the market today. These dealers are winning market share and retaining more customers through their online sales experience, often even concluding the deal online.

But the next disruptions won’t be so easy to navigate, and this time dealers won’t have two decades to adapt. It could be—as it was with the pandemic last year—that they only have a few weeks or months.

But what is the one constant in the middle of all this disruption? It’s the need for a quality customer experience. Period.

Purchasing a new vehicle is a complex transaction. It’s also a very emotional and personal transaction.

As automotive technology accelerates, consumers will need guides to help them to make sense of the many available options, to decide which technological features they need or want, and to navigate the many other little decisions that lead up to purchasing a vehicle.

This is where the role of a trained sales professional or automotive guide is so valuable. Yes, this professional must be trained in product knowledge, but they must be a master in the soft skills of human interaction, and their sole agenda must be to help customers to select the right vehicle.

The automotive guide will be essential to a quality experience for the customer of the future. Even established automotive brands will have a difficult time surviving without retailers who can consistently deliver quality customer experiences.

For years, OEMs and dealers have known that Product Experience (PX) can’t be divorced from Customer Experience (CX), but today—as OEMs bet the future of their company on the next generation of EV products—the stakes are higher.

OEMs have pledged tens of billions of dollars towards developing EVs. Companies have merged to combine their strengths, and they’ve negotiated with governments about which factories to convert from producing internal combustion engines (ICE) to EV and battery production. Global OEMs are even joining companies like Amazon by investing in upstart competitive EV companies, like Rivian.

Dealers will always need to hit sales targets to keep the OEM happy, but it’s likely that in the years to come, dealers who can demonstrate customer experience excellence will become indispensable to their OEM partners. Dealer CX must meet or elevate PX—or the dealer will ultimately be a liability to OEM and its product promise.

What can you do?

What actions can a dealer take today to focus their sales team on radically improving customer experience and to put in place the building blocks of customer-centric processes that will help them thrive in the coming decade of disruption?

Here are five customer experience focus points to share with your Sales Team, along with some practical recommendations:

Don’t confuse customer service with customer experience

Customer service is defined as how you respond to a customer when they reach out to you with a request. Typically it’s a reactive engagement. It’s a linear progression of a single or a short series of interactions that lead up to a single transaction.

Customer experience is more holistic, comprehensive, and proactive, beginning before the customer even reaches out, and it reaches out beyond the transaction to include the customer’s ownership cycle in its entirety.

A simple way for dealers to begin adopting a customer experience approach is to reach out to customers before they expect them to be ready to renew their purchase.

Sales teams should be trained to make 15 goodwill calls a day to customers in the middle of their ownership cycle to ask how they’re enjoying their vehicle and to inquire about how their driving needs have changed since their purchase.

This conversation should focus on determining whether their current vehicle is still best for them. Often your customers will be grateful you’ve reached out and you may find that their needs have changed. This opens a new opportunity to renew their purchase.

Empower your team to go “to your customer.”

An appointment can no longer be solely defined as a planned customer visit to a showroom.

Now, any opportunity to connect with your customer and have a quality conversation that leads towards selecting and ultimately purchasing a new vehicle should be considered an appointment. Certainly, this can best be accomplished in your showroom, but an effective appointment can also be virtual, or in your customer’s office or home.

So, when your customer tells your sales team that they aren’t ready to make a showroom appointment, train them to say: “That’s not a problem. May I bring the vehicle to you?”

If your customer isn’t ready for that step, offer them a virtual appointment where they can browse inventory with the sales professional, they can exchange photos of the selected vehicles and their trade in, and they can establish the framework of a deal.

Change your language

Ten years ago, Absolute Results invented the “no-obligation options review appointment.” At the time, the approach was revolutionary. It helped customers feel at ease, and during our Appointment-Driven Events, we saw firsthand that this technique substantially grew the appointment and conversion rates.

Dealers should continue to use this strategy, but follow through on its promise by adopting a consultative approach to your showroom experience. Instead of telling your customer that you will “give them numbers,” tell them that you will provide a “best case scenario” so they can better make their decision.

When you present customers with payment options, don’t ask: “Which one fits your budget?” Instead, ask: “Which payment is more ideal?” Replace the question, “Would you like to buy the vehicle,” with, “how can I help you to own this new vehicle?”

Analyzing your internal language is just as important as how you talk to your customers. Instead of talking about what can be done to a customer, talk about what can be done for a customer. Have a zero-tolerance policy for predatory language or practices such as “stealing their trade.”

Give your customers options they didn’t know existed

When customers shopping online ask about a vehicle’s price or financing, you should provide them with that information and also help frame their decision by offering them prices and options on a couple of other vehicles.

This is a technique long mastered by top realtors, who show their client three homes: one that’s precisely at their budget, one that’s less expensive, and one that’s more expensive. This technique also helps the customer to “shop within your brand”. Send your customer links to your dealership’s online services, such as credit pre-approval and trade-valuation tools, and offer them a test drive, of course.

Prepare ridiculously for each customer appointment

When your Sales Team has the opportunity to engage with a customer for an appointment, whether it’s online or in person, help them to ridiculously prepare so they can ensure the product experience is truly memorable.

Transform the classic sales manager’s appointment confirmation call into a preparation call where you let the customer know that you are personally working with the sales team to prepare for their visit.

Ask about details like their colour preference, or the intended vehicle use, so you can make some recommendations. Affirm that the current market conditions make this a great time for your customer to make an appointment. Instruct your sales team to send photos or a video of the vehicle the customer is considering.

Take away

Practising these five Customer-Experience focus points will not only enhance the customer experience your dealership provides, but it will also inspire your team to think about other ways they can elevate how they serve your customers.

Customer experience should be a topic of conversation at each sales meeting. Your sales team should be encouraged to share stories of great customer experiences they’ve received from retailers in other industries.

Make it your goal that the customer experience that your sales team provides truly elevates the product experience your OEM partners have invested billions of dollars creating. When this happens you are truly preparing your sales team to thrive in this decade of disruption, and you will sell more cars today and tomorrow.

SUMMARY – DISRUPTIONS TODAY & TOMORROW…