Toward the end of February Joseph White of the Wall Street Journal posted the article ‘New Efforts to Shorten the Car-Buying Process.’ He talked about dealers’ efforts to streamline the selling experience by minimizing the ‘shopworn delaying tactic—and other haggling strategies that can drag out the car-buying process.’
Dealers have resisted these efforts in the past often citing issues of control. I want to challenge that assertion based on hard data and qualitative experience.
I pulled some numbers from our 360 Market Report and found that as the number of dealership people involved in the negotiation process increases, the level of satisfaction with the retail experience decreases. The survey of over 163,000 Americans found the following:
(Click the chart to enlarge.)
Customers are telling us they want to deal with as few people as possible in the negotiation process. And it shows in the retail experience satisfaction scores. 64.0% are completely satisfied when one person with pricing authority negotiates the deal vs. 20.7% when two or more with no pricing authority are involved.
This is backed up by qualitative findings as well. I used to moderate a lot of focus groups and customers would regularly express their dissatisfaction with the salesperson’s need to see the sales manager to do the deal. You would often hear:
“What are they really talking about?”
“I think they’re talking about last night’s game.”
“This is a waste of my time.”
“It’s insulting.”
The current interest back toward no haggle pricing strategies will address this to some extent. There will always be negotiation over the value of the trade.
So what?
This is important because as we have said before on The Ride, higher levels of satisfaction with the selling process result in higher closing rates that result in higher sales. It’s in the manufacturers’ and dealers’ best interest to seriously consider refining this part of the sales process.
Let me know what you think and what you’re doing as a manufacturer or dealer to makes changes in this area.
@christravell
PS. We are doing a series of Executive Breakfasts that you might find useful. Maritz’ Dr. Randy Brandt will be talking about “With All the Talk About Customer Experience…How Good is Your Score?” The session will discuss effective goal setting for your customer experience program. Here’s the info:
March 27th in Toronto, Canada http://bit.ly/16byWkg
April 3rd in Montvale, New Jersey http://bit.ly/13HNkBf
In addition to being a marathon runner, Randy is a pretty smart guy from our Marketing Sciences area who always adds insight. Hope to see you there.
….and successful dealers and dealerships, like Mchael Price of the Price Automotive Group in Delaware and Maryland, have understood the customer loyalty value of both easing and streamlining the purchase and financing process for years: http://www.customerthink.com/article/how_auto_dealer_group_builds_trust So, while the WSJ article, and your post, are interesting, they don’t represent anything particularly original or new in the industry – at least for the dealerships that are surviving and thriving. And, it’s actually the level of strategic advocacy behavior created by the sales, delivery, and owner service processes at the dealerships that drive downstream loyalty, rather than level of satisfaction, which tends to be a passive, reactive, rational, and benign transactional measure of performance.