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relationships

Lies The Digital Age Told You About Selling Cars [Chapter 2]: Are We Using Technology as a Crutch?

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| by David Metter, President of AutoHook powered by Urban Science

There is this perpetual echo of the word “disruption” in the car industry. What will be the next big disruption? What do we need to prepare for that will change everything we know about selling cars? The reality is disruption is largely incumbent upon technological advancements and the rate of societal adoption to these new, uncharted territories dominated by things like artificial intelligence and machine learning. These future “disruptors,” such as the rise of alternative online retail formats, subscription services or the transition from gas-powered vehicles to autonomous, connected cars are impossible for any one dealer or OEM to predict, let alone control.

Therefore, I’d like to propose a new approach. What if instead of the next big disruption we focused a little more on what we can control – the constants – the parts of the equation that aren’t powered by data or machines. What I mean by the constants is the people, or more specifically, the relationships that form when a customer goes to look at a car and has a positive interaction with a salesperson while doing so. The value of relationships when it comes to selling cars has been vastly undermined by the shiny new innovations of the digital age.

I think we’ve become so infatuated by the latest technology and the newest cutting-edge solutions to selling cars that we forgot about the fact that technology becomes useless without the people behind it who make it work. Relationships in the digital age still take precedence over technology and despite the advancements we have yet to see, technology in all its glory can’t replace social skills. All this talk about connectivity and connected devices yet I think we’re failing to connect the dots when it comes to knowing what will ultimately yield the highest ROI for dealerships, both in today’s world and in the future – knowing who your best salespeople are and how to keep them.

We as an industry need to stop using technology as a crutch. We’ve become so focused on the next big disruption in digital marketing that we’ve started to rely on the help of digital tools entirely, forgetting that cars are still bought and sold by actual people at actual dealerships. Deloitte’s 2018 Global Automotive Consumer Study reported car shoppers still rate physical interactions with a vehicle as critical to their buying decision – with over 8 out of 10 needing to see the vehicle in person before making a purchase decision. So, if this is the case, why are we spending the majority of our time and money on the minority of the buying public?

It’s all about striking a perfect balance between technology, the right data and the right people. It takes all three to get the job done. Technology is a powerful tool that can be leveraged to enhance or continue existing relationships, but it can’t create them in the first place. When it comes to the right data, we are extremely fortunate because our solutions are powered by the Urban Science® DataHub™, which allows us to be the first to know when a customer buys a car, what car they bought, where they bought and if they didn’t buy from you. And we get that sales data and the equally important defection data within days – not months.

In the same way that technology lacks value without good people, the right data can uncover things about your salespeople you otherwise never would have known. For example, you consistently see all these closed sales opportunities by let’s say, “John,” so naturally you think John is one of your best salespeople. But how many opportunities is John losing every month to one of your competitors? You’d never know without the right data. So it all goes hand-in-hand. The person selling the most cars may be losing more opportunities than he or she is closing, so your “best” salesperson can quickly become your worst salesperson when you can compare what they’re winning to what they’re losing at the same time.

Having that ability to layer sales and defection data on top of your CRM data is critical if you want to operate more efficiently. Without it would be like making decisions for your dealership based on a cost-benefit analysis but forgetting to include the cost part of the equation. It’s the only way to add enough dimension to your CRM data to make it truly actionable – instead of looking like Flat Stanley.

Having the right data combined with great technology can help your operations in a multitude of ways. It can suppress the leads in your CRM that have already purchased so your people can stop wasting time following up with them. It can pinpoint the ideal time and channel to re-engage your lapsed or dormant leads. Technology can help dealerships interrupt a customer while they’re shopping online and grab their attention just long enough to influence their decision-making process. It can also help ensure a customer chooses to visit your showroom instead of your competitors with things like test drive incentives.

The reality is technology will never be able to stop a customer from walking out of your dealership after a negative experience with one of your salespeople. Furthermore, when it comes to closing lead opportunities, your salespeople may already be at a disadvantage. A recent Automotive News dealer training webinar reported that as many as 98% of qualified leads fail to result in closed business. So instead of pouring all your focus into staying ahead of the next big disruption promising more and better leads, maybe we need to shift our focus back to the one thing capable of converting those leads into sales once they hit your showroom – your people.

Great employees are what gives meaning to the capabilities that stem from great technology. Your salespeople are the foundation needed to ensure data-powered solutions work in favor of your dealership. In a word, the future state of our industry’s digital landscape is unpredictable. But there are two things we do know. Change is constant and retaining great salespeople is still paramount. There’s not a lot we can do to control the rate of change, but fortunately for dealers, there’s a lot we can do to help our salespeople and to make sure we're holding on to the good ones.

 

Stay tuned for Lies the Digital Age Told You About Selling Cars, Chapter 3: Power to the [Sales] People to learn more about the importance of retaining your best salespeople and how to provide a better in-store experience.

Lies The Digital Age Told You About Selling Cars [Chapter 1]

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| by David Metter, President of AutoHook powered by Urban Science

As part of Urban Science, it’s in our blood to question everything. Not only do we look outside the box to solve complex problems, but we then question each element that makes up the box, down to each individual line, 90-degree angle and the composition of positive and negative space that define the constraints of the box. Better yet, approaching a problem from a true scientific perspective means questioning why the box even exists in the first place. While the process can be painstaking, making observations through the unbiased lens of science can also lead to accidental discoveries.

Granted, for someone who started in the business as a car salesman and later managed dealerships, using scientific methods to make decisions in the showroom isn’t the first and most natural inclination for many of us. And when I say science, I mean actual science – not the junk out there that claims to be science (remember when everyone threw around the term “big data”), but the kind of science that has no skeptics, that sees trends within a data set that not only others don’t, but that no one’s even thought to look for before.

When we hear a number or statistic over and over again, especially one published by a known source, we believe it to be true because…why wouldn’t we? We all know not everything we read on the internet is true, but this example is perhaps the ideal case in point of one widely accepted “truth” the automotive industry has come to accept without any empirical evidence whatsoever.

Automotive leaders in search, analytics, digital advertising and consumer behavior have all published findings stating the number of dealerships customers visit before purchasing a vehicle is somewhere between 1.3 and 1.6 dealerships. This number has been kicked around at conferences for years. So naturally, we decided to challenge the claim that customers visit less than two dealerships before buying a car.

In May of 2018, AutoHook and Urban Science decided to conduct our own survey. We asked real consumers we know bought a car within the last year how many dealerships they visited prior to their purchase. Out of 2,748 responses, what we found is people are visiting more dealerships than we thought. According to the survey results, people on average visit at least 2.4 dealerships before buying a car.

Furthermore, 70% of customers surveyed visited two or more dealerships before purchasing. Almost half, 46% to be exact, said they visited three or more dealerships before purchasing, and 26% said they visited four or more dealerships. The unfortunate reality is that we’ve all been thoroughly brainwashed with the misconception that people only go to about one dealership before buying a car which we now know is not the case.

Regardless of whether customers visit two dealerships or five dealerships, the takeaway here is that everything we’ve been told about consumer buying behavior in the digital age is skewed. The truth is that today’s car shoppers go to at least 2 dealers before purchasing. What’s so significant about this finding is that it proves people have a choice and decisions are being made both on AND offline. The blindly accepted notion that the majority of car shoppers have already made up their mind on what to buy and where to buy before ever stepping foot in a dealership is completely false. In fact, in another study completed by AutoHook and Urban Science, 78% of over 66,000 respondents said they were still shopping multiple brands before visiting their first dealership.

The underlying message we’ve all come to believe is that customers are making buying decisions based largely if not solely on what they read online…which by the way conveniently plays to the ultimate gain of the big publishers, search and media companies. Maybe they are doing this so dealers and OEMs will continue to spend more and more money with said companies on their digital advertising, but we don’t have the science to back that up just yet.

Anyways, down here in the real world, cars are still bought and sold in physical showrooms and the process is still dependent upon a positive exchange between two living, breathing people. The only difference between today and 50 years ago is that customers walk in armed with information and salespeople need to provide a less painful buying experience. Other OEM-specific customer surveys AutoHook conducts on an ongoing basis show that when asked why they didn’t buy a car from a particular brand, the overwhelming majority of respondents selected “bad dealership experience” as their #1 reason for not purchasing.

So, if you think people are going to fewer dealers than they were ten years ago, it may be because the experience they expect to have when they’re at a dealership is a negative one. Not always – I know plenty of dealers who recognize the importance of their people and the in-store experience they provide, and I also know these dealers sell much more effectively as a result. This alone makes the argument that dealers need to focus more attention on hiring and retaining better salespeople who understand the value of relationships if they’re interested in repeat, loyal customers.

Another common misconception is that millennials are taking over the market and they buy everything online; therefore dealers need to move towards models where ~99% of their selling happens online, and their salespeople just need to walk the customer through the paperwork upon arrival. The first part of that statement is true in that Millennials are quickly overtaking the market as they now account for almost 30% of all new vehicles sold. By 2020, JD Power and Automotive News project they will account for 40% of all new vehicle sales.

What’s NOT true is the assumption that Millennials want to buy their cars online. In fact, it’s the exact opposite. The test drive experience is more important to the Millennial generation than ever before, so much so that they want to extend the test drive experience to get a solid feel for how a vehicle will fit into their everyday lifestyle. Millennials also spend more time on the buying process and are less brand-loyal than previous generations. As a result, we see more and more extended test drive programs popping up like Toyota’s Try Before You Buy program which allows customers to take home a vehicle of interest from anywhere between 24 hours to a full week.

Again, whether the total number of dealerships visited before a purchase is 2.4 or 3.4, the more important point is that people have choices and if they go to a dealer ready to buy and have a negative in-store experience I can confidently say based on data (and common sense) that they’re going to leave and buy from someone else.

I’m not saying everything we know about digital is dead, and I’m in no way trying to tell dealers to kill or even cut their digital ad spending. But what I am saying is we as an industry need to seriously reevaluate the amount of time, energy, and most importantly, money we spend on what we know is vital to selling cars and the ongoing growth and success of a dealership…good salespeople.