Question on Digital Retailing.. Could displaying payments on your website scare off customers?

[mikesayre]

There's plenty of financing estimates in other industries as well. I'm shopping for houses, and both the Zillow and Trulia app ask about my credit score so that I can get an estimated monthly payment from every house I look at. It's estimated, and houses have plenty of other factors that go into payment options, but it gives me an estimate and a comparable number that I can at least attempt to plan around myself.

I would imagine that thought process is very evident given the increasing importance of the internet.

Glad you brought up real estate, it's a high value item, and I think it might be a similar philosophy.
Just a simple search on rentals in a zip code with a payment range on zillow.
There it is, I'll go look at places to rent now.
Yeah payments flux a tad, I'll deal with it.
Need to make sure it's what I want.
Now I'll spend how much time online shopping, browsing content?

Please Choose an Option Below:
+1) 2 hours
+2) 6 hours
+3) 12 hours
+4) Enough to pick a few nice deals to visit nearby.

That's a lot of time at any option, with many layers of valuable interaction to be educated on the market with the content.
Leasing vehicles would be interesting here as far as the display and filtering options below.

 

[Tarry Shebesta]

Good question Mike.

There are actually many issues with the current DR offerings but let's focus on the payment piece. First some context. I speak from an online dealer & lender's perspective and a pioneer on the subject (see my LinkedIn profile).

Second, this primarily equates to new vehicles.

OK. The key issue with showing generic payments is "Webrooming" (look it up).

Dealers are shooting themselves in the foot with incorrect monthly payment quoting. The two main culprits are (among others):

1) OEM MAP restrictions = higher payments
2) Allowing customers to self-credit = wrong rates

The only way to show accurate payments is to know who the customer is. This allows you to use the real price of the vehicle and the customer's real credit to calculate real "penny-perfect" payments. In response to Mike's question.

YES! Dealers are losing potential sales to Webrooming!

 

[mikesayre]

The only way to show accurate payments is to know who the customer is. This allows you to use the real price of the vehicle and the customer's real credit to calculate real "penny-perfect" payments. In response to Mike's question.

YES! Dealers are losing potential sales to Webrooming!

Glad you brought up Webrooming, I think it's is the ground zero of where the fear of payments on the website originates with some dealers.
Having real personalized payments and a variety of options for the shopper to configure themselves, might help with the shopper honing onto a single payment to shop among other dealers, right?
Also, if the shopper chose to communicate with the dealership online about payments, the same online website payment tool would be used by the BDC or salespeople to walk shoppers through a general understanding of calculations & configurations.
A friction-less transition from the Webroom to the Showroom.
It would be nice to see some data on dealers using DR tools like this currently, I know they're out there.



Link: https://www.techopedia.com/definition/31036/webrooming

It would be nice to see some data on dealers using DR tools with a solid process like this currently, I know they're out there.

 

[Tarry Shebesta]

Glad you brought up Webrooming, I think it's is the ground zero of where the fear of payments on the website originates with some dealers.
Having real personalized payments and a variety of options for the shopper to configure themselves, might help with the shopper honing onto a single payment to shop among other dealers, right?
Also, if the shopper chose to communicate with the dealership online about payments, the same online website payment tool would be used by the BDC or salespeople to walk shoppers through a general understanding of calculations & configurations.
A friction-less transition from the Webroom to the Showroom.

Great link on Webrooming Mike.

The answer to the first part of your question/statement is YES, IF you have the customer's information so the payments can be calculated correctly. We need to use real pricing (non OEM MAP) and real credit. This model minimizes Webrooming, as you know who they are and can begin am immediate conversation with them.

Secondly, YES, we actually have many dealers who use the tool on the showroom or BDC to walk the customer thru the process so everyone is on the same page. Again, the payments have to be accurate (real pricing/real credit) in order for this to work.

On a side note:
Remember back in the 90s when "Invoice Pricing" reports were being sold by Edmunds and others. The information was never accurate and it made dealers look bad. This is similar to what is happening with the current state of Digital Retailing.

 

[Alex Snyder]

I casted a “yes” vote because I am watching it happen. People do run away when they realize they cannot afford the car they set out to buy.

Here are some other questions to ask:

• Do people realize they can buy more car?
• Do people realize leasing makes more sense?
• Do people flip to used cars?

The answer to all of the above is YES. People move all around when they have options. The real question is:

What happens when you’re the guy not giving options?

 

[Chris Cachor]

From my experience with GM's Shop.Click.Drive program - it definitely scared me off. One of the reasons was the handful of dealers I sampled chose unrealistic interest rates and many times incentives were not calculated in properly. So something that realistically would be a $605/pmt was $800. To make matters worse, then people are presented with tax (which on a new vehicle can approach over $4k) plus other fees.

They hit the eject button and exit the market.

People forget sometimes it takes some convincing by other people to spend large sums of money. Especially when it's more than they're prepared for.

 

[Tarry Shebesta]

I casted a “yes” vote because I am watching it happen. People do run away when they realize they cannot afford the car they set out to buy.

Here are some other questions to ask:

• Do people realize they can buy more car?
• Do people realize leasing makes more sense?
• Do people flip to used cars?

The answer to all of the above is YES. People move all around when they have options. The real question is:

What happens when you’re the guy not giving options?

If you give "real" options then shoppers are willing to give you their info. We tested this with LeaseCompare.com back in '08. Prior to '08 we let shoppers self credit (which is rarely correct and caused other issues not related to Webrooming) to see instant finance/lease payments, money factors and residual values. In '08 we started asking for their info to give them pre-qualified payments (using a soft pull credit bureau).

The result: We instantly began to get more leads! We see the same thing when we install DriveItNow payment buttons on dealer websites with the "Get Pre-qualified Instantly" CTA.

 

[Alex Snyder]

From my experience with GM's Shop.Click.Drive program - it definitely scared me off. One of the reasons was the handful of dealers I sampled chose unrealistic interest rates and many times incentives were not calculated in properly. So something that realistically would be a $605/pmt was $800. To make matters worse, then people are presented with tax (which on a new vehicle can approach over $4k) plus other fees.

They hit the eject button and exit the market.

People forget sometimes it takes some convincing by other people to spend large sums of money. Especially when it's more than they're prepared for.

I am seeing this in a lot of the OEM-mandated programs right now. In one market I saw a Hyundai dealer showing $70 a month higher payments than the other Hyundai dealer down the road using the same tool.

OEM programs rarely are bought into by the people at the store who NEED to be driving them to succeed.

 

[Tarry Shebesta]

I am seeing this in a lot of the OEM-mandated programs right now. In one market I saw a Hyundai dealer showing $70 a month higher payments than the other Hyundai dealer down the road using the same tool.

OEM programs rarely are bought into by the people at the store who NEED to be driving them to succeed.

Why would an OEM right now mandate any DR tool when EVERYONE knows current DR solutions have a ways to go before we are actually transacting online. This type of mentality actually hurts innovation.

Never mind .... we know the answer and it has nothing to do with using the best product(s) in the industry. Amazing.

 

[mikesayre]

I am seeing this in a lot of the OEM-mandated programs right now. In one market I saw a Hyundai dealer showing $70 a month higher payments than the other Hyundai dealer down the road using the same tool.

OEM programs rarely are bought into by the people at the store who NEED to be driving them to succeed.

That's true, and many times the lack of buy-in is deeper if it's a OEM forced venture, so having someone oversee it is lost in short time.
If payment accuracy is an issue or can vary by that much it hurt's the brand too.
I think cases and stories like this are what scares dealers off about displaying payments.