Article

Dealership Disrupt

Technology disruptions are reshaping the buying experience and forcing dealers to rethink their sales processes.

January 2015, Auto Dealer Today - Feature

by Zach Kempf

Photo via istock.com
Photo via istock.com

Auto dealers are not immune to the disruptive technology trends and social media onslaught of the last decade. You face the same challenges as your fellow business owners in any number of industries and, like them, you must adapt to the digital marketplace or risk becoming showroom road kill.

Three major technology-driven disruptions are impacting the modern auto retail operation: the introduction of competitive business models, an informed, mobile-connected car-buying public and new sales processes that rely on social selling skills. Ironically, technology innovation is both the cause of and solution for these changes.

The New Models
No areas are as ripe for technology transformation as the traditional dealership model: a proven sales process and the customer relationship management (CRM) tools that drive it. New business models introduced by TrueCar, Tesla and car-sharing services are putting pressure on dealers.

Scott Painter was only able to sustain TrueCar by reaching a détente with dealers and respinning the value add from dealer invoice to savings off MSRP. At Tesla, Elon Musk is pursuing a direct-to-consumer approach that has dealer associations pushing states like Michigan to prevent the electric-vehicle manufacturer from bypassing the franchise model. Car-sharing services add fuel to the fire by providing many of the benefits of ownership without a sale or lease.

Having spent years pounding the pavement of car lots myself, I know that the marriage between dealers and technology has not always been a happy one. My dealership went through several “heavy” CRMs and everyone had difficulty learning how to use the software in a way that helped them sell more vehicles or better serve customers. If technology neither enhances nor improves the buying experience, then why deploy it?

I believe dealerships need to focus their efforts around the “connected customer experience,” a term coined in a 2012 report from Deloitte, a global professional services firm. The combination of mobile and social media marketing creates an opportunity for manufacturers and dealerships to jointly create a connected ecosystem wrapped around each car buyer’s personal experience to drive sales growth.

Gone are the days when car shoppers were willing to spend an entire weekend going from dealership to dealership. New-vehicle shoppers now spend an average of 13.75 total hours looking for a new car — and about 73% of that time is spent online. More than 70% of new-car buyers and 60% of used-car buyers will visit no more than two dealerships before purchasing. Empowered by the Web, they show up armed with useful knowledge on brands, features, styles, available inventory, consumer report satisfaction ratings and, often, TrueCar pricing.

Brief Visits
For Internet-savvy car buyers, the purpose of the dealership visit is to test-drive the vehicle and secure the best possible deal. The sales professional is reduced to a transaction negotiator for an almost commoditized product. Old-school, face time-based selling skills have been displaced by online sales engagement preferences.

Your sales team must be willing reach potential customers earlier and far beyond the showroom floor. They also must alter their engagement styles to achieve that elusive connected customer relationship. They have to venture out to the mobile- and social media-connected watering holes where their potential buyers gather. They must create a community of interest and online buzz about their brands and the lifestyles associated with them that pulls customers in for a closer look.

Once engaged, they have to combine social selling skills with intuitive CRM tools focused on the buying experience. They must focus on creating relevant content, activities and experiences that can differentiate your dealership from the competition. As the “Internet of Things” increasingly invades the vehicle offerings, further integrating the digital product into customers’ daily connected lives, dealers who train their sales force to be technically competent will give themselves an edge in a changing market.

Meanwhile, don’t be afraid to question every part of your process and every piece of technology you utilize — and be sure to include your managers and staff in that discussion. You may be surprised by the ideas that will flow forth, and your business will benefit from an improved sales process and a better overall customer experience.

Zach Klempf is the CEO of A1 Software Group, makers of the Selly Automotive sales platform. [email protected]

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