In this edition we explore the evolution in modern car dealership.
Not since the first automotive revolution from the horse to the car has there been so much disruption in the industry.
In our role in this industry as KPMG Motor Industry Services we are often asked our opinion on how things will change from the situation today.
These are big questions and it would take a brave person to profess to knowing all the answers.
But, even as we move forward each day in our dealerships, juggling demanding targets, revenue challenges and factory practices, the evolution of the industry towards that 20 years destination is actually already unfolding around us. Right now.
This article is about understanding the changes taking place in and around dealerships today, as dealers manage the ongoing business challenges they face, and suggesting how dealers might begin to progressively adjust to the ongoing evolution of this automotive new world order.
The three most important things that dealers need to realise are that:
At the core of the change is the most fundamental factor of all.
In the day-to-day activity within the showroom it may not have dawned on the sales teams they are no longer the gatekeepers of the knowledge which once helped dealers control the sale. That really is no longer the case.
I still don’t think that the industry has fully grasped that. Not all retailers are as aware as they might be of this basic shift in their sales role.
People always say that knowledge is valuable. Today, the dealer's clients have all that knowledge available to them independently of the car dealership, mostly via the internet.
This means dealers need to reinvent their role to regain their fundamental relevance to the car buying public.
Future retail – where we have come from and what can we expect
When we look at the history of car "drivership" around the world, it has been pretty simple; buy a car (in reality enter into a finance mechanism), assume ownership or near ownership (both financial and physically) and drive that single vehicle around until such time as its time for a change.
If needs or circumstances changed, we changed the car. But these were seen as medium term changes (additions to the family, change in job roles, change in financial situation).
But today there are more immediate desires (I need a ute for the weekend, wouldn’t it be nice to have a sports car for the weekend).
As consumer immediacy has changed; the challenges for brands and dealers have never been so great. This has led to the rise of mobility alternatives like Uber and GoGet. We have different generations of buyers with different attitudes, expectations and priorities to cater for, this has led to the creation of these new players who are already household names wanting to change the way we use and own vehicles.
Over the past 10 years, customer behaviour has changed which is now challenging some of the dealership norms we know and love.
Customers now bring even higher expectations to the purchase process.
Expectations now centre on personalisation and flexibility. Historically the dealer visit was the starting point of the purchase journey, with most of the experience and education occurring on the dealer journey.
These days it's easy to shop online. Customers can now access countless amounts information via digital and social media platforms – ranging from vehicle performance, cost of ownership, financing, servicing and aftersales experiences to resale values – so in many cases today the dealer visit occurs at the very end of their purchase journey.
Unless the sales team is experienced, it generally becomes a price-only discussion (with the dealer most often the loser).
Currently there is often a disconnect between the customer's purchase needs and the current dealership sales process (aka the dealer's needs). This gap is the point of disconnect and customer pain.
The good news is that buying a car almost always requires a face-to-face interaction with a sales consultant at a dealership. The quality of this interaction determines the winners and losers in today's market. The in-vehicle technology and experience is evolving rapidly, however in some ways the customer experience has not kept up. The customer life cycle follows a fairly standard progression – awareness, desire, choice, purchase, use, maintain and then upgrade.
During the 1970's – 1990's (Products) the dealer was the source of all information, the customer was reliant on the dealer explaining the basic product features of the vehicle.
Between 1990's and 2000's (Products + Service) more emphasis was being placed on explaining the vehicles "Features – Advantages – Benefits," and how this would benefit the customer. Customers anticipated more from the sales consultant, good service was expected, we tailored the vehicle to suit the customer's needs and wants – their lifestyle. In fact the vehicle choice was changing, the traditional truck-based SUV was gradually being replaced by the smaller crossover SUV.
Through the 2000's (Customer Centric) the industry became very customer centric, we made statements like – we are committed to customer satisfaction – we engage with the customer – we recognise the customer's needs.
Dealerships fitted out and updated their customer waiting lounges, installed big screen TV’s, offered refreshments and connected Wi-Fi.
The traditional sale process was being challenged as technology increased. Sales consultants were required to become more tech savvy with the introduction of hybrid vehicles, GPS devices, keyless start etc, being able to demonstrate these new features were expected.
Today (Relationship Centric) customers are being introduced to advances in technology that are improving their overall experience with the brand, as a result this is promoting greater customer loyalty. Training salespeople to understand customer's needs and responding accordingly, introducing new brand standards and ensuring the customer experience is at the heart of all we do.
Today the customer expects a completely seamless relationship through the ownership cycle. When they are talking to the dealership they are theoretically talking to one person. A lack of knowledge about the customer between the various departments is not acceptable. They anticipate the sales and service and staff all know exactly the same about the customer's wants, needs, desires and ownership experience.
For relationship-centric selling to be successful it must be owned by the dealership. There must be seamless collaboration between all departments; sales-to-service and service-to-sales. This is critical to improving customer retention.
It will also assist in employee retention. Motivation, commitment and passion from all in the dealership team will demonstrate to the customer your willingness to ensure you value the relationship.
All team members must feel empowered to take ownership of the customer journey.
The following is a quick test on how you stack up in the relationship centric stakes
Being Astute: Do you go through the day with your eyes open – really open? When you engage customers, do you notice details about them? Do we record these and ensure everyone knows this about the customer in the dealership. The customer will notice that you notice and that you are not just going through a process.
Being Inquisitive (become an influencer): Do you have the ability to ask insightful questions that will encourage conversation. Influence the conversation and you influence the relationship. Influence the relationship and you will influence the outcome you desire. This is a skill that can be learnt, but the core to it is having a genuine desire to know and understand the customer. The more interested you are in them the more likely you are to be an influencer.
Follow-through: We make commitments to the customer – this is a dealership promise. Do we deliver on all our promises? Do we follow-up 100 per cent of the time, and when follow-up is made do we follow-through? Follow-through is a process, it is a commitment towards the outcome. Follow-through is doing what you said you were going to do – to complete a task.
Customer follow-up is the one area you can either make or break your relationship with a customer. How do you follow-up:
Articles written by Brian Fellowes, KPMG Enterprise
If you'd like to find out more please feel free to contact KPMG’s Motor Industry Services team (PDF 298KB).
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