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The Car Buying Dichotomy

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Andrew_Compton

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#1
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The three main goals for lead follow at most dealerships up are rather simple:
  1. Get them to the dealership.
  2. Get them to the dealership.
  3. Get them to the dealership.
Which is in conflict with consumer's goals which are:
  1. Get as much information as possible.
  2. As fast as possible.
  3. And stay out of the dealership as long as possible.
Every report I've read for the last 5 years (from J.D. Power, AutoTrader and Cars.com) all restate the obvious, 90% or more of vehicle buyers use the internet to research prior to purchase. Are there any dealers in America who have not realized this fact? Is any dealer under the impression buyers are waiting for the Sunday paper to starting looking for their next vehicle? However, what these reports fail to point out is, buyers still purchase at a dealerships, as opposed to online. Which leads dealers to focus on rules one..two and...three; get them to the dealership. Hence the conflict.

Is the Car Buying World Different Now?

It always feels safe to do what has always been done. In fact, its unlikely an Internet Manager or e-Commerce director will lose their position by doing what worked last year and the year before. But expectations that are too small are a waste. When those decisions were made, they were based on information we knew to be true at that time. How much has the landscape changed in the last 24 months?

Many dealer's will say, not enough to change our processes or technology. It's a position easy to defend by stating, "we're off to the best year we've ever had". Is this in fact proof dealers have optimized their processes and technology or simply enjoying a periodic fluctuation from pent-up demand due to improving economic conditions and loosing credit from lenders. Time will tell. But after I read this article in AutoNews about 3 guys who created an automotive start-up 30 months ago, and are now doing $70 million a month in vehicles sales, with a valuation of $1 billion, I believe this represents the size of the opportunity for those dealers that can figure it out. For startups that are "born digital" they are operate from different realities which makes it easier. In a sense dealership are suffering from the "Innovators Dilemma", because of their current success they miss out on a new wave of innovation.

Pulling the Rabbit Out of the Hat

One thing about about forecasting the future and the next wave of innovation is there are no right answers. What is possible is to follow trends and create probabilities. These trends stand out:
  • Millennial behavior indicates mobile is key to the car-buying process.
  • The Information Empowered Customer will take center stage.
  • Technology is influencing buyer behavior.
  • Car sales people will be a lonely bunch waiting outside for ups.
Dealers can acknowledge consumers have the power and remove the fear and anxiety from the car buying process; think Carvana and Beepi. Offering transparent buying is one step and is being leveraged by TrueCar. Focusing on the overall car buying experience is another. Dealers have an opportunity to create a multi-channel car buying process today using off the shelf technology. The question about the future of car buying is, will there will be more or less car buying done online in the future? For dealership and vendors that believes consumers will embrace online buying, then those dealerships and companies should develop an aggressive digital strategy to facilitate online buying for consumers. Creating alignment with changing trends is not simple, which is why so many people spend so much time defending past choices.

The question is, are consumers ready for a digital car buying experience?
 
#2
Andrew_Compton said:
The question is, are consumers ready for a digital car buying experience?
Click to expand...

Yes, they want to buy a car digitally, but not the way most folks think. Buying a car sight unseen is NOT what they're after (i.e. carvana & shop-click-drive). This is how I see our marketplace...

"If our websites are so great, where are all the shopping carts?"


Shoppers are very selfish, they want what ever is best for them. A car shopper's best car shopping experience allows them to bring their internet research into the dealership to make the best purchase decision possible.

IMO, in the USA, from the dealer's P.O.V., the future will be an evolution, not a revolution.
 
#3
JoePistell said:
Yes, they want to buy a car digitally, but not the way most folks think. Buying a car sight unseen is NOT what they're after (i.e. carvana & shop-click-drive). This is how I see our marketplace...

"If our websites are so great, where are all the shopping carts?"


Shoppers are very selfish, they want what ever is best for them. A car shopper's best car shopping experience allows them to bring their internet research into the dealership to make the best purchase decision possible.

IMO, in the USA, from the dealer's P.O.V., the future will be an evolution, not a revolution.
Click to expand...


Joe,

I really like your line "the future will be an evolution, not a revolution." And I agree with you, obviously this is not a "Black Swan" event, that lies outside the realm of expectations, (some people are talking about it and others are doing it). I also agree with you that people want whatever is best for them....and I'd go a step further and say people are predictable....and people follow the path of least resistance. Which is really just saying people want a good experience. I'm a believer the evolution is happening now, and at faster rate than observable. Either way, it's an exciting time to be in the automotive industry and watch this evolve.
 
#5
Joe,

You can see why I've hesitated to post in the past...my thoughts can get a little jumpy... I was speaking about the online environment people typically follow the path of least resistance (and I know you know this but I did a poor job explaining). For example majority people only look at page one of Google, they don't take the time to look deeper. Or an online credit form used for lead capture, a dealer that can get the necessary information with 10 fields will capture more leads than the dealer who's credit app has 27 fields. Its not necessary lazy, it's avoiding friction, or the path of least resistance.

The "good experience" for the POV of the shopper includes in regards to the digital experience involves: trust, transparency and convenience. And I think I'd throw in personalize. I realize these are cliche', but if you look at startups in the auto space, they build their value prop around.."Hassle Free" or "No Hidden Fee" or some other spin exploiting a negative perception of the dealer. As an example the company I mentioned with a $1 billion valuation, promotes, simple, reliable and fair car buying. They are promoting an experience, (real or not) that they have a better way for consumers to purchase vehicles. And having a run rate of $70 million a month in just 30 months should get dealer's and vendors attention.
 
#6
To answer the question posed; No, most aren't ready for an online "buying experience" - meaning full completion of the entire transaction online. But consumers do seem to hate the "just get em in" attitude many dealers have. And you are certainly correct that dealers are eager to force their selling process on consumers that find dealers' "Road to the Sale" process at odds with their own buying process.

Today's customer doesn't have time for a journey - the sale is about the destination, no road necessary. So my advice is, just answer their questions and clear obstacles that stand between them and making a purchase. If you can complete SOME of the buying process in advance, they will reward you.

The lesson is, it doesn't have to be one way or the other. Not 100% done in the showroom or 100% done online - allow the customer to take some control.

 
#7
Ed, great reply and funny video. Completing some of the buying process in advance and be rewarded is a strong point. It makes wonder what if any KPI's pertaining to how much was "pre-completed" prior to the showroom visit dealers would want to measure.
 
#9
Andrew_Compton said:
Another innovator going down the path of online car buying. http://www.alleywatch.com/2015/07/t...ying-a-used-car-easier-than-ordering-an-uber/
Click to expand...


"Vroom is changing everything you’ve come to know about the car buying experience, by making the test drive obsolete and solving the hassle of visiting a car dealership. It allows customers to buy, sell and finance the highest quality pre-owned cars right from their couches, with free delivery to anywhere in the country and a 7-day money back guarantee."

Fail, Fail, Win.

Fail #1). "making the test drive obsolete"
35,000 hours in this biz and no where has a car shopper ever said "this test drive thing is such a pain in the ass..." It's as stupid as saying "we're changing the real estate business, we're solving the hassles of seeing the house before you buy it".

Fail #2). "solving the hassle of visiting a car dealership"
If car shoppers don't want to visit the dealership:
A). Where are all the shopping carts?
B). Why did ebaymotors fail to win big?
C). Why is 'Shop-Click-Drive' not blowing up our space?​
The evidence is everywhere you look, shoppers WANT to visit dealerships.

WIN. "7-day money back guarantee"
All shoppers want this. Smart dealers use this promise in their UVP (aka why-buy message). I call this a 'risk-transfer' where the dealer assumes the unknowns.

Just sayin' :oops:
 
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