The customers have spoken, and they’ve had enough of car dealerships.
They’re spending less time talking to salespeople at car lots and more time researching cars online, taking virtual test drives and emailing or texting dealers to find the perfect vehicle. Customers might still visit a dealership or two for a test drive, but they also might just buy the car sight unseen and have it delivered, according to dealers and industry executives who gathered recently for the Tampa International Auto Show.
Car buyers visited an average of 5 dealerships before buying a car in 2013, but now that number is down to 1.6, Google Account Executive Derek Humphrey told the auto show crowd. “They walk in already knowing what they want,” he said. And that means that dealers and manufacturers need to find ways to appeal to customers online.
It’s about time they figured that out.
We hate shopping for cars BUT dealerships don’t really get it!
As I’ve written before, the entire process of buying a car at a dealership is horrible. Research by Cisco of 1500 car consumers found that 83 percent would rather research a car online, and 55 percent would feel comfortable closing the deal virtually.
My own experience buying a new car included a salesperson who wouldn’t tell me what the car cost, a test drive that started in a muddy, puddle-filled back lot, and another salesperson who refused to give me a written quote on a luxury SUV and then complained when I gave him a lackluster review.
So now – finally — dealerships are waking up to the fact that people hate doing business with them and would rather research a car while sitting comfortably on the couch. But is a shift in focus to the internet enough to improve the customer’s experience?
I’d say no, unless there’s also a shift in mindset.
The car buyer’s experience would improve overnight if car companies began to reward dealerships and salespeople for providing exceptional levels of customer satisfaction, instead of focusing solely on selling more cars. But that doesn’t seem to be happening yet.
Instead, car dealers say they are dedicating salespeople to responding to internet inquiries, and negotiating entire deals via text. This is a step in the right direction, but it’s still the same old car dealership with opaque pricing and negotiating tactics, confusing financing options and a host of add-on fees. So no matter how much the dealerships improve their websites and email responses, if the transaction ends in a tense and confusing interaction at the dealership, customers will leave with a negative impression overall.
That’s because a customer’s experience is largely emotional, and (as I explain in my recent book), the customer’s memory of the experience is the greatest factor in building long-term value for a brand. While the auto industry as a whole doesn’t seem to get this, a few startup companies do.
Startups are Leading the Way
Tesla Motors sells its cars directly to consumers, eliminating dealerships altogether. Its showrooms are designed to give consumers the feel of the car and the brand, not to sell cars. When you buy a Tesla, it’s delivered to your door. And when software is updated, it happens automatically overnight. Tesla’s $35,000 Model 3 sedan won’t be ready for almost a year and over 400,000 people have plunked down $1000 to reserve one.
Used car retailer CarMax has succeeded with brick and mortar locations by offering quality used cars with no haggling over price. Carvana now aims to do the same thing online, allowing customers to take virtual tours and arrange trade-ins and financing online. You can have the car delivered or pick it up at a Carvana vending machine! The rapidly expanding company also offers a seven-day money back guarantee, with no questions asked.
Disrupters like Tesla and Carvana understand what we hate about car shopping and are succeeding by providing a more positive experience. (Plus, the self-driving Tesla is just cool.) If car dealerships don’t make customer experience a priority, they may be left in the dust.
Have you done all or part of your car shopping online recently? Share your experience below.