A millennial car buyer surfs the web while sitting on his couch, finds the car he wants, finds the low price he wants, reads reviews of the online retailer, completes the purchase, and accepts delivery at his home. An online auto operation sells the unit, makes a “little” profit and moves on to the next customer.
Everybody wins in this scenario, right? Wrong.
Race to the Bottom
Look, I understand the appeal of easy online purchases. For many people, going to a dealership is like going to the dentist. They hate making an appointment, they hate driving there, and they hate waiting around. They don’t want to go, but when they have a toothache, they can’t get to the dentist fast enough.
In my opinion, the used-car business will suffer long-term damage if consumers favor a buying model that eliminates brick-and-mortar operations and just focuses on online purchases.
First of all, I see a lot of negative reviews from customers who got poor service during the delivery. Let’s face it, the person dropping off the vehicle is often a relative, friend or the most inexperienced and lowest-paid employee. They are unequipped to do a walkaround and make sure the customer is informed about all the vehicle’s features.
The customer may initially feel like they got a bargain, but what happens when they need service, need a loaner, or have a question? What is the value of a warranty if there is no brick-and-mortar business to back it up?
In this race to sell used cars at the lowest price, we’re rewarding customers for putting blinders on, doing as little effort as possible, and facing disappointment when they expect or need more than they got. They’re sacrificing long-term value for short-term savings.
In this environment of the constant “price grind,” only the large-volume dealers will survive. When mega-online companies keep dropping prices, they’re putting us all in a blind tunnel and ramrodding the future of the industry. They’re putting vehicles – the second-most important purchase that consumers will ever make – on the same level as a used CD or appliance you can buy on Amazon.
It was one thing when $20K cars are worth $10K when you drive them off the lot. Now we have $80K-$100K trucks and SUVs that will depreciate rapidly. What happens to the economy when the buyers are losing 50% out of the gate?
Building Relationships and Loyalty
While used-auto sales are currently experiencing a slight increase, numbers on a spreadsheet don’t tell the whole story. They don’t tell what will happen to the future of the industry if we diminish or eliminate the human equation.
The online-only method of selling cars is burning customer loyalty to the ground. Buyers are getting a hollow, empty deal that may be propped up by online reviews but don’t have the value of customer loyalty built upon service and trust. And, you’re basically throwing F&I, parts and service under the bus.
When I ran a dealership, I required all my sales staff to do a dealership walk with the customer and introduce them to our parts department and service department. In fact, I reprimanded salespeople who didn’t do that. There is no such equivalent for online-only purchases.
Let me tell you a story about how I get great service from the shop I bought my boat from a few years ago. Before I asked the salesperson to quote me a price on the boat I wanted, I told him what kind of customer I would be. I told him they, and only they, would service my boat if I bought from them. Now, they greet me by name and move me to the front of the line when I text them to let them know I’m bringing in the boat to get it summarized or for other repairs. That’s the type of relationship-based loyalty and service I’m talkin’ about.
What Dealerships Do Right
My message to all dealers, big and small, is that this is not a lost cause. We know that 94% of car buyers research online before making an auto purchase. What we’ve got to do is give them a great experience all around.
Start with your website. Take and post great photos. Write an awesome description that is honest and accurate, but that excites potential buyers. I recommend that these write-ups/descriptions be done by the salesperson who took the car in, or more experienced sales managers. Price the vehicle competitively to move it (there are all kinds of aging strategies for this).
All of this is great, but keep in mind, your number one objective is to get the customer to your dealership. That’s where you will shake their hand, develop the relationship, get them the car they want, or source them one from another dealership or service you’re affiliated with. It’s the human element that is critical. Relationships are your biggest asset, and you lose it when there is no customer interaction – no face to face.
Marketing experts tell us millennials value experiences over possessions. Make the dealership experience a positive and fun one. Be more engaging and inviting. Heck, you can even go old school and offer prizes and incentives. To help speed things up, give them the option to fill out their financial paperwork online.
Millennials are also more trusting of personal referrals than corporate messages. Give a millennial customer a great experience and their friends will more than likely trust their word over a paid advertisement.
Another thing that dealerships do right is manage the relationship after the sale. A great CRM tool will help you establish follow-up routines at specific intervals to keep in touch with the customer. But you can’t just push out generic messages. Personalize it and reintroduce that human connection every chance you get. Put some personality in your social media and remind your followers that your dealership isn’t just a building – it’s a group of great employees who live and work in the community. Remind customers they support the area by shopping locally.
All of these things help stimulate the culture of personalization and service. Online buyers don’t have a chance to like, trust, and respect whom they are dealing with. They experience more buyer’s remorse as well and are harder to deal with in times of car trouble. Dealerships can win back customers by treating them like individuals and not anonymous online buyers. That’s the key to building relationships that will help sustain the industry in good financial times and bad.