I hate Internet customers!

[Alex Snyder (blog)]

This will be a very different industry in 10 years.

 

[Jim Wagner]

Earl,

I feel your pain. But, whether you like it or not, most customers now use the internet first to shop for cars. Here's some interesting bullet points on the online auto industry:

-88% of shoppers shop online first (usually with a search engine)
-60% of online shoppers request a price quote (convert to a lead)
-55% of internet leads end up in a sale
-90% buy at another dealership and purchase another brand

So, we know that half of all leads purchased cars from another dealership. Why? Well some don't like your brand. You can't do anything about that. But, for the most part, dealers don't handle leads well:

-30% of leads are never contacted at all by the dealership
-customers want dealers to respond within 4 hours but it takes dealers an average of 5.4 hours to contact leads
-only 25% of shoppers felt dealers answered their questions
-only 19% of shoppers felt dealers tried to sell them on their brand

I'm making the point that differentiating yourself from this average pattern might make a difference for you. Take a look at how old the leads are that you're getting from your internet manager. Call the customers right away and answer their questions. Try to convert them to a used car in the brand they are looking for. Sell the benefits of your brand and your dealership so they don't defect. Will you sell all internet leads? No. Will you make huge commissions on informed customers? Not often. But working the leads in a way that sets you apart puts you in a position to make the best of the situation.

I wrote more about the study where this information comes from in my blog at TheSubprimeReport.com (click my name to take you to the blog). I'll be focusing on the implications of this study in the next couple weeks. I'm sure Jeff can add to the discussion as well, given his experience on this topic.

Best of luck,

Jim Wagner
TheSubprimeReport.com

 

[Brandon Hoffman]

Chad,

You make some good points. All I am really saying is that negotiating at a retail store is not the NORM and hense buyers don't feel obligated to do so. They quietly shop the best price and then buy where they are most comfortable. If the auto industry made it so it was unusual to negotiate (sort of like what Saturn does) then the industry could possibly turn around a bit.

 

[Jim Wagner]

Earl,

Does your store do subprime business? There's always an opportunity to make money there. It's the fastest growing segment of the industry.

Let me know if I can help in any way.

Best,

Jim W

 

[P Hayes]

The bottom line on sales with customers is the same in every facet of sales since the dawn of mankind. People want to FEEL like they got a good deal.

Everything you do in the car business, whether on the lot or on the phone or on the internet is based around this concept. Those that master the art of making the customer feel good continue to be successful. Those that refuse to embrace this strategy continue to struggle.

The reason people go out and buy a new car after 2 years of owning the one they got is because of the next best deal or option or whatever it may be. Manufacturers and Dealers entice customers with rebates and options and bluetooh and handsfree and push button start and 400 hp and continuously variable transmissions, etc. The list is endless.

All of these are designed to raise the Value of something. Since value is something perceived, there are many facets of this that control this feeling in people.

The thing that has always gotten in the way of this is fear. Customers are afraid. Afraid to make a decision, afraid to buy, afraid of not knowing. The internet has empowered the customer and made them feel more educated about what is going on. In the process of this, customers are also being educated about some of the shady tactics some dealers use. And in the absence of really knowing everything there is to know. the customers use stern tactics and statements on price and payments and holdback and whatever else they can throw out there to back you off. Now who's being sold?

The bottom line is, you still have to get along with the customer, you still need to find out what their needs are, their wants are, what their budget allows for, etc. That's why we are sales CONSULTANTS, not order takers. If you want it to be as easy as taking their order, working the drive through at McDonald's is where it's at.

The bottom line is everyone is different and as sales people we have to adaopt. Some customers are going to come at us harder and some are going to come at us easier. If they were all easy, everyone would be doing this. So get up, grab your a** and go sell your product, your dealerships and most importantly, sell yourself. That's what people really want anyway, someone to trust.

And don't forget....SWSWSWN

Some Will Some Won't So What ... NEXT!!!!

 

[Jon Groenig]

Jeff,

Is this a real post or something you put up for fun?(how could anyone with this view even know about your blog?) In my experience the internet customer is the easiest customer to deal with once you get them in the door, the fact that they came in means you have already broken down a lot of barriers.

 

[Chris (blog)]

We're the #1 volume Nissan dealer in Western New York, and when it comes to price I just tell people to shop their head off, then bring me their best offer and I will beat it. Consumer Reports prints a suggested profit to consumers along the line of 4-8% above true cost (invoice minus hold back, destination - which is added back)... how many show this to your customers? If they trust CR for reliability tests, then they will trust their recommendations for profit?

Part of the problem as I see it, is that most people do not know that 1 in 4 jobs in America are tied to the auto industry, and cannot see the importance as whole in relation to the big picture.

To most, they take their cars and gasoline for granted yet it's the most important tool freedom loving people have in their life box.

However, most people know that Union Autoworkers earn $26 an hour ($60,000 a year) average, plus benefits that bring the company's total cost per worker to a staggering $65 an hour.

So when it comes to trying to save a buck they don't consider you will make $50 on the deal, because all they see is the huge earnings at the plant.

Personally I agree with the no haggle, the price that is on the sticker is what you pay school of thought. Some major dealers are doing that in 2008... more should follow - the leader.

 

[Joe Pistell]

Here's a parallell universe to chew on.

2 ad managers selling local TV ad space come into my office for a huge 6 figure haggling session.

One in Market A, the other 40 mins. away in Marketplace B.

Market A is filled with competition and excess quality inventory.
Market B is actually depressed, but the competition is weak, there is only one powerhouse in the area.

Sales Manager A cuts his already discounted rate deeper after 2 hours of haggling and leaves extremely pissed.

We already know we cant haggle Sales Manager B and we sign the order.

ITS ALL ABOUT THE BALANCE BETWEEN SUPPLY AND DEMAND. Just try and haggle for a discounted 4 star hotel room in NYC on Dec 31st.

 

[Jeff Larsen (blog)]

Brandon: I completely agree with your comment, and good summary Alex.

Has the Internet ruined the car business?

No, blame the manufacturers and dealership owners that have not adjusted or want to adjust for the paradigm shift on how to market and sell to those consumers, and how us as industry professionals that sell those vehicles get paid.

If Im selling a Chevy Impala to an internet shopper, and there is a Chevy dealer 5 miles to my east, 5 miles to my west, and 20 miles to the north... how the heck am I going to sell this vehicle with any profit when they sent the quote to all of us? Then, great luck on having the exact color and options in stock, so now I start on a dealer locate and trade.

Why? Because the Internet Consumer is vehicle specific and why shouldn't they be if they're spending $25,000?

OMG... It never ends. 8 hours later after taking the lead, contact, search, financing, and delivery I made an entire $100 mini. Great, after taxes, I can go fill my car up with gas.

Give me all the phone scripts and email templates in the business, but what it comes down to is that first customer contact, building the trust, then what really matters: PRICING. "You're a great guy Jeff, but XYZ Motors can get the same car and sell it to me $300 cheaper." All this AFTER I had comittments to purchase at pricing quoted initially. UGH!!

Alex wrote: It will be a different industry in 10 years. I believe that as well. But who is going to step-up, recognize, and adjust for the paradigm shift- the manufacturers or dealership owners?

 

[John Kimel]

First of all, the internet is here to stay, and we might as well get used to it. It's kind of like being a New York Giants fan and knowing your stuck with Eli Manning as your Quarterback. You don't like it, but you know there's nothing that can be done about it.

Our challenge is to adapt and change our sales methods and techniques to take advantage of well informed customers. Personally, I love dealing with customers who come in to the showroom with clipboards and magazine articles. Many of them know more about my cars than I do! In the old days you had to spend a lot of time explaining to potential customers why they should buy your car as opposed to someone else's. Now they come in actually pre-disposed to buying your car. It's just a matter of price.

The modern sales person is going to realize that building value in himself and the dealership could make the difference. People WILL pay a little more for a car if they are given a reason to do so.
The same applies to internet customers. Of course they're all going to send you an email asking for your "best price." Wouldn't you? But that doesn't prevent you from giving them more reasons to buy from your dealership. Personally, I'd rather deal with informed and motivated buyers than wishy washy tire kickers.