If there’s one thing dealers could do to improve customer satisfaction in the coming year, it might well be this: Change your answer to the “What’s the price of the car?” question that customers always ask.
Most salespeople I’ve seen habitually answer this question with one their own: “What’s a good time for you to come into the showroom?”
Unfortunately, this common response is out of step with the expectations of today’s car buyers. They can get a price for virtually any other product they want to purchase with little or no effort. In most instances, they don’t even have to ask; the price is right at their clicking fingertips.
Not so in the car business, and that reality is, I believe, one of the principal reasons that buyers remain distrustful of dealerships and wish there was a better, easier way to buy new and used vehicles.
Most Buyers Don’t Set Appointments
Consider these findings from recent Autotrader and DrivingSales.com surveys on buyer expectations:
- 60 percent of customers just show up at the dealership. They don’t tend to call, chat or e-mail the store before they visit. Analysts offer a lot of reasons for this, but I believe it’s because buyers at some level consider the pre-visit engagement with dealers to be an unproductive hassle. They believe that if they ask a question, they probably won’t get a good answer unless they come into the showroom.
Many also skate on initial contact because they know how persistent dealership sales teams can be once they’ve got someone’s contact information. They don’t want to be bothered; they’re just interested in a car.
- That means 40 percent of buyers do contact the dealership first. In most cases, the buyers simply want to know if the vehicle they’ve found online is available and “What’s the price of the car?” As noted earlier, most dealers now use this question as the basis to try to set an appointment, not necessarily to provide an accurate and direct answer.
Let’s think about the bigger picture for a moment. Given the size of the investment that dealers make in advertising and merchandising their store and vehicles online, it is reasonable to wonder why only 40 percent of potential buyers actually use the applications, forms and other online calls to action on dealership websites. It seems there is a disconnect between dealers and their buyers and a sizable investment inefficiency for dealers – problems that improved transparency would no doubt help solve.
- 56 percent of buyers want to start making a deal online. They don’t necessarily want to complete a deal online; in fact, 84 percent of buyers would prefer to wrap up their purchase at the dealership.
I’m actually surprised that the proportion of buyers who want to work car deals at home isn’t higher. After all, this represents buyers who have concluded they’d prefer to avoid some of the hassles they associate with visiting a vehicle showroom. The statistic also reflects an expectation that is shaped by people’s other online retail experiences, where “click to buy” options are commonplace.
Dealer Ramps Up Transparency
These findings lead me to back to the idea that dealers have an opportunity to increase buyer satisfaction and trust, if they just rethink what their salespeople say as soon as a prospect asks, “What’s the price of the car?”
In early 2015, one Chevrolet dealership I know of in the Northeast tackled this opportunity. The staff began implementing greater transparency in new and used vehicle-pricing. In new cars, every listing now shows discounts, rebates and a price that’s competitive for the local market. Every new car has its own complement of custom photos and a description. In fact, the dealer says, “We pretty much started merchandising and pricing new cars the way we’ve been doing it in used cars.”
Next, the dealer tore up the scripts his staff long had been using to handle customers who contact the dealership. “We realized that we really weren’t answering the customers’ questions,” the dealer says. “We were like everyone else. We wanted the name, phone number and appointment.”
The dealership also made a decision to squarely answer the “What’s the price of the car?” question. Now, when a customer contacts the dealership or shows up in the showroom, the BDC and sales teams refer to the price posted online. If a buyer asks for an even better price, the dealer’s people have an answer. “We’ve factored a $300 discount into all of our pricing,” he says. “We used to get managers involved for any discounts. Now, we give the discount up front, when customers ask.”
Interestingly, this dealer says customers who contact the dealership are more likely to set and keep appointments. And, if they ask for and get the $300 discount, the vast majority are done negotiating. “We’ll get an occasional customer who’s persistent,” he says, “but they back off when we remind them of our competitive prices and easier process.”
Adapting To People Who Work In Advance
Dealerships also can address the “What’s the price of the car?” question by incorporating technology and tools intended to satisfy the 56 percent of buyers who want to work out initial deal terms from home.
The tools let customers effectively do their own “first pencil” with vehicle price, financing and trade-in terms (using dealer-set parameters).
Here’s how one Honda dealer in the Midwest explains his decision to enter the early stages of e-commerce:
“We’re really trying to make our purchase process transparent, efficient and seamless,” he says. “You make us an initial offer online. You deal with a product specialist, then you talk to a sales manager, and you’re done. My whole deal behind this is, you get what you give. It’s like Burger King – the customer’s calling the shots. Customers aren’t used to that, and it gives us an opportunity.”
Stop Grasping For Contact Info
It’s important for the online tools to work most effectively, this Honda dealer says, that dealerships let go of their desire to immediately capture customer information. “You could say we leave the gate open now,” he says. “We used to require a name, e-mail or phone number for credit information, a price or trade-in value. Now, it’s all right there, and customers appreciate it.”
One of my e-commerce colleagues, Mike Burgiss of MakeMyDeal, calls this approach “connected commerce.” It’s especially appealing, he says, for the 45 percent of buyers who prefer to be anonymous while they settle on deal terms. (Not coincidentally, these buyers are part of the 60-some percent that avoid direct contact with the dealership, because they don’t like the “give to get” process that dealers currently require online.)
Some dealers may challenge the idea that offering a clear answer to the “What’s the price of the vehicle?” question makes sense for their businesses. Their resistance, I think, stems from the traditional belief that giving customers a price and straightforward answers to their other questions just provides ammunition that they’ll use at another dealership.
Don’t Anguish Over Changes
The dealers I’ve discussed in this article would beg to differ. Yes, they worried that front-end grosses might suffer as their teams increased transparency for buyers and became more forthright about answering questions.
However, those worries proved to be unfounded. I especially liked how the Midwest Honda dealer sums it up:
“The experience lends itself to gross. We all pay more when things are convenient. As dealers, we make things more convenient when we recognize that sales really need to be a service to win today’s customers.”