Do we give consumers too much credit?

[Jeff Kershner]

Ever since the "internet" has had a profound effect on consumers vehicle shopping behavior, we often say "consumers today are so educated" or "internet shoppers are armed with so much information" or "today's shopper knows more than the sales person" (of course that's their own fault).

While the access to vehicle to data, pricing and specs has exceeded way past what consumers could readily find 20 years ago - I still find that there continues to be surprising amount of consumers that are really no more educated than before. Or maybe they're more educated, but as Joe has graphed out and shared with us time and time again, the average consumer eventually becomes numb and "over educated".

It may seem that I'm rambling here with no point but I wanted to share one of MANY MANY emails we receive here on DealerRefresh from our Contact Us form every week.

My point being, after reading so many of these week after week, I'll continue to believe that consumers are no more educated about the car business and buying a car than what they were years ago.

Here is an email I received earlier this week from out Contact Us form.

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Hi!

I'm assisting my father's used car dealership, we've recently filed a claim on a title fraud but there's little we can do about it because we don't have title insurance.

I have a few questions about Vehicle Title Insurance and why a big dealership like AutoTrader.com doesn't offer it.

Any answers that you can give me will assist our business tremendously!
Thank you,

Cassie

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Again, this is just of many emails we receive each week. For shots and giggles, I'll try and remember to post the good ones as come in.

Would you agree?

How educated do you believe the average consumer is today in relation to purchasing their next vehicle?

 

[ddavis]

Jeff, Who says, "consumers today are so educated" or "internet shoppers are armed with so much information"? Under what situation to they say it? It is typical Gen X (excuse) mentality. I'm not to blame. It's not my fault.

When I started selling cars, a customer could walk up to the Monroney Label and multiply the MSRP by 18% and be very close to our markup.

After he had secured the loan guarantees, to keep Chrysler afloat, Lee Iacooca said, "the future of Chrysler will be determined at point of sale".

Coming up in the business, we had what I call "fifty percenters". These were the elite salespeople that would close over half of the customers they up'd. Please understand that many of their customers were repeat and referrals. I'm not some old guy that is looking back with just fond memories. I still know some of these people and they get the same results, today. We lost a bunch of them for the easy money in the mortgage business. The herd has definitely thinned out. I'm not seeing Sales Managers that have the skills to train more.

Look at some statistics. 87% of salespeople, that enter our business, are gone within a year. That was true 30 years ago and I'm sure it is true, today. Thirty years ago, customers shopped 5 to 6 stores. Today, that is down to 1.8. The average salesperson sells 20% of their customers. These are not shoppers, they are buyers. Dealerships can not afford this kind of turnover and poor closing ratios.

 

[john.quinn]

Jeff, Who says, "consumers today are so educated" or "internet shoppers are armed with so much information"? Under what situation to they say it? It is typical Gen X (excuse) mentality. I'm not to blame. It's not my fault.

When I started selling cars, a customer could walk up to the Monroney Label and multiply the MSRP by 18% and be very close to our markup.

After he had secured the loan guarantees, to keep Chrysler afloat, Lee Iacooca said, "the future of Chrysler will be determined at point of sale".

Coming up in the business, we had what I call "fifty percenters". These were the elite salespeople that would close over half of the customers they up'd. Please understand that many of their customers were repeat and referrals. I'm not some old guy that is looking back with just fond memories. I still know some of these people and they get the same results, today. We lost a bunch of them for the easy money in the mortgage business. The herd has definitely thinned out. I'm not seeing Sales Managers that have the skills to train more.

Look at some statistics. 87% of salespeople, that enter our business, are gone within a year. That was true 30 years ago and I'm sure it is true, today. Thirty years ago, customers shopped 5 to 6 stores. Today, that is down to 1.8. The average salesperson sells 20% of their customers. These are not shoppers, they are buyers. Dealerships can not afford this kind of turnover and poor closing ratios.

Holy Captain Irrelevant Batman!

WTF does this rambling nonsense have to do with the question?? (Who changed Doug's meds????)

Are consumers more educated than they were 10 years ago, before most (not all) of the readers of this forum were in the business? Not much.

Are they more educated than they were 15 years and longer ago? My Good God yes! And that's a good thing!

Anybody in the business 1996 and prior can remember a conversation with some mook who thought that there was $10,000 mark-up in a $14,000 unit. Or that their $2000 rat was worth $2000 more than what they paid for it 2000 years ago.

Are they more educated? Certainly! Is that a bad thing? No! At least to the educated: always better to conduct a more intelligent conversation. (Something about which Doug would know precious little

 

[Salesman84]

On a salesperson level, I honestly love educated customers. Uneducated customers are mostly hell unless they are laydowns. And on the dealer level, I'm sure they can develop a business plan that works with the new type of consumer. Most already have obviously. Even the fact that dealers are getting mostly secret, volume based, and investment/participation based money is a sign of that.

Doing half floor and half internet, I see both types.

#1. On the internet, I love the educated customer. It's either a deal or it isn't, and I just have to use my skills to get him to do business with us. Is the dealership going to make a killing? The salesmanager set the pricing, go ask him. But thats an easy and fun deal for me.

#2. A walk-in, yet spent some time on the internet customer is honestly the holy grail (yet I can BET dealers often lose this guy by having the floor filled with many below average salespeople, and TRAINED in a preinternet mindset). This customer thinks he knows enough, and feels safe in doing business as long as the numbers match what he thinks he read online. Its a matter of making them feel comfortable and you can get a fair deal out of them, because there are too many variables for them to maximize all at once.

#3. The laydown walkin.

Numbers 1 and 2 are GREAT customers for me. Can a deal get ANY EASIER? #3 is nice of course.


The problems in my opinion start from the UNeducated customers that want a deal.
Uneducated #1. The internet customer that put a lead in, but did not do any research. He simply put a lead in because he is too ashamed to try his middle of nowhere offers out in person. Hes actually using the internet sales person as his education. But somehow these damn people are hostile, and not very logical, or loyal EVEN when you did offer the best price because to him its just a learning game. Hes going to take what everyone taught him and try one more time all over again anyway.

Uneducated #2: The uneducated walkin with numbers made up completely randomly from a story his uncle told him about buying a car 15 years ago. Doesnt believe anything really you say. Hell, I've printed things off the internet for these people and they dont trust that either. I'm not sure what they trust. Ive won a few of these and lost a few. I love getting this guy on Sunday when he pulled his bit on someone else Saturday.


Honestly, who wouldn't like the educated customer more??? Even uneducated walkin guy GETS educated in your store and THEN has a chance of being a real customer on his second go around somewhere or with you.

PS. In a post about giving customers too much credit, why is the example email from a very confused sounding car dealers family member?

 

[ddavis]

Holy Captain Irrelevant Batman!

WTF does this rambling nonsense have to do with the question?? (Who changed Doug's meds????)

Are consumers more educated than they were 10 years ago, before most (not all) of the readers of this forum were in the business? Not much.

Are they more educated than they were 15 years and longer ago? My Good God yes! And that's a good thing!

Anybody in the business 1996 and prior can remember a conversation with some mook who thought that there was $10,000 mark-up in a $14,000 unit. Or that their $2000 rat was worth $2000 more than what they paid for it 2000 years ago.

Are they more educated? Certainly! Is that a bad thing? No! At least to the educated: always better to conduct a more intelligent conversation. (Something about which Doug would know precious little

John,

I tried to keep the big words to a minimum. Having a lot of information doesn't constitute education. This whole line of thought comes from weak salespeople and desk managers. If we know that customers only visit 1.8 dealerships, how can an average closing ratio of 20% be acceptable? That figure (20%) dates back 20 years. The only idiots that you can tolerate on the showroom floor are the ones there to buy a car. Are you good enough to close them or are you going to make excuses for your inadequacy. How is the therapy going?

 

[yagoparamo]

John,

I tried to keep the big words to a minimum. Having a lot of information doesn't constitute education. This whole line of thought comes from weak salespeople and desk managers. If we know that customers only visit 1.8 dealerships, how can an average closing ratio of 20% be acceptable? That figure (20%) dates back 20 years. The only idiots that you can tolerate on the showroom floor are the ones there to buy a car. Are you good enough to close them or are you going to make excuses for your inadequacy. How is the therapy going?

That is it. Customers have MORE information than before but that doesn't mean that they are better able to chose a vehicle, that their finances are in better shape, or that they can negotiate deals.

There is the technical information about the vehicles which I think has been universally positive: MPG, towing capacity, reviews and reports about models, etc. Then there is the subjective information about how dealers make money, how dealers try to trick customers, how to negotiate a deal, what is MSRP and other pricing schemes. All those have been just a conglomerate of data that hasn't done much for the average consumer.

 

[Kelly Wilson]

Anybody in the business 1996 and prior can remember a conversation with some mook who thought that there was $10,000 mark-up in a $14,000 unit. Or that their $2000 rat was worth $2000 more than what they paid for it 2000 years ago.

I had a guy, who was hired by my car insurance comp for hail estimates, tell me (as he had no idea I worked for a dealer-just that I drive a Dodge) the he "has a friend who has a friend that works for Chrysler - and he knows there are 7 invoices & that a dealer really only pays $19,000 for a newViper"

I think education is relative. In customers, and the public, I personally see more in the miss-over-educated categories than in the rationally educated group.

 

[ddavis]

I had a guy, who was hired by my car insurance comp for hail estimates, tell me (as he had no idea I worked for a dealer-just that I drive a Dodge) the he "has a friend who has a friend that works for Chrysler - and he knows there are 7 invoices & that a dealer really only pays $19,000 for a newViper"

I think education is relative. In customers, and the public, I personally see more in the miss-over-educated categories than in the rationally educated group.

Kelly,

John just needs to work out some issues. They don't believe that he is a danger to himself or others. I didn't realize that the number of invoices had gone to seven.

 

[yagoparamo]

I had a guy, who was hired by my car insurance comp for hail estimates, tell me (as he had no idea I worked for a dealer-just that I drive a Dodge) the he "has a friend who has a friend that works for Chrysler - and he knows there are 7 invoices & that a dealer really only pays $19,000 for a newViper"

I think education is relative. In customers, and the public, I personally see more in the miss-over-educated categories than in the rationally educated group.

@$19,000 I may buy one... or two. You know, one with stripes and one without stripes.

 

[joe.pistell]

DR blog topic, 2years ago: Evil Dealers and the Slaughter of the Innocents

"...I listen to the calls, the emails, the dialogue on the floor and at the desks.The consumer expects and wants a NEGOTIATED discount to purchase a vehicle. Many (but not all) shoppers are out for blood and will “bend the truth” (aka lie cheat and steal) to improve their position."