By Desiree Homer
Car buyers have been using the power of the web to become better shoppers and negotiators for a few years now. The pandemic may have forced another good portion of the market to online resources, as well. With all the information at their fingertips about rebates, trade-in values, and price points, the role of the salesperson at the dealership level has shifted. Savvy buyers are reaching out to their local dealerships with their minds made up about their vehicle selections and the numbers. Dealers are recognizing that in today’s market, knowledge is power, and transparency is the order of the day.
In another recent episode of the Dealer News Today podcast, Derek D sits town with titans Jade Terreberry, the director of dealer sales analytics for Cox Automotive, and Juan Flores, the senior director of product management with Kelley Blue Book. Transparency is the topic of conversation, and the experts suggest the more information dealers can provide, the less intimidating the transaction will be. It may mean restructuring how sales teams engage with car buyers and tapping into the necessary digital tools to better understand how to deliver what customers want. And in the end, it can be a win-win for both car buyers and dealer owners.
Reminiscing about Car Sales of Yesterday
Sales teams used to have to actually sell the car and the transaction. Twenty-plus years ago, people came to the dealership to learn about the various makes and models, new in-cabin tech, and the latest safety features. There was something magical about seeing a buyer’s eyes light up with excitement on the showroom floor. There was suspense during the initial walk-around and sampling in the seats. And there were test drives with 15-minute tutorials about how to use the new-fangled stereo system. Questions about a vehicle’s history would often elicit responses like, “a senior citizen owned this car and only drove around town” and “most of those miles are highway miles.” Then the negotiating started. Remember the four-square technique? Another hour or two would pass before finally getting someone into and out of the finance office. The entire process could last hours, and the car-buying public came to accept it.
But today, that new-car enthusiasm is sought online. And anyone with easy access to Wi-Fi can learn about the latest vehicle introductions, safety ratings, and warranty coverage. Consumers can search a vehicle’s history without leaving the couch, too. Even more accessible is pricing. From black book trade-in values to suggested retail pricing for CPO models, all the data is online and available to any interested car buyer. By the time someone reaches out to the dealership, they already have their intended purchase, price, and interest rates in mind. Salespeople are ushering transactions now and taking orders, rather than spending hours engaging in selling techniques.
Today’s Buyers Buy from Trustworthy Brands
With all of these details and data at their fingertips, car buyers today want an entirely different dealership experience than in years past. They will do business with dealers they trust, and that trust only comes with a certain degree of transparency. Jade Terreberry reminds us that it still “comes back to the consumer expectations.” And right now, they expect price transparency and robust vehicle information.
It’s no secret. Consumers can be intimidated by the car buying process. Old myths and horror stories of deals gone bad, terrible trade-ins, and lemon vehicles have tainted how much of the market sees our industry. How many times have you heard sayings that disparage someone by being like a “used car salesman?” The reality is, of course, the majority of the dealerships today operate honestly and don’t lend credit to those old ways. But to convince today’s consumers that your dealerships are ready to offer an honest, efficient, and positive experience, it takes – you guessed it, transparency.
Consumers today crave positive experiences. They want to be comfortable with the transaction and know they’re getting value. And while much of the consumer buying data suggests people prefer the online and virtual experiences, there are other studies showing a need for that salesperson connection. Forbes reported about a Roadster study that examined the in-person vehicle buying process. The results point to greater success and satisfaction when a salesperson stays involved in the process.
According to this particular survey, sales staff leave the customers for a total of 20 minutes during the process. Whether it’s to give the customer space to decide or check with a manager about sharpening the pencil on the deal, this time away can reduce customer satisfaction by up to 30%. What this may point to is a need for a hybrid interaction. Car buyers want the online resources to find and educate themselves on vehicle pricing and information. But they may also want that dealership connection, with a trustworthy salesperson who can stick with them through the efficient and comfortable transaction.
Transparency in Trades
You may not be able to do too much more about transparency with your new inventory since most automakers make most all of the new model and incentive information available. But you certainly have room to develop your own trade-in and appraisal strategy. Consumers will need to trust your process and believe you are offering a no-haggle, realistic trade value. And it’s this step in the transaction where some dealers make mistakes.
There are revenue opportunities with getting nice trades for great prices. And sometimes, dealers can be inconsistent with their trade valuations to leverage those opportunities. But it’s those inconsistencies that can do a disservice to the dealership and drive car buyers to the competition. Using some of the latest appraisal technologies and developing a consistent trade strategy can build trust with your market. Some apps even allow dealers to access third-party appraisers with access to a network of wholesale buyers. Having these kinds of tools in your arsenal can take the inconsistency out of your valuation process, leading consumers to build trust in your brand.
Kevin LeSage, the director of digital marketing for AutoTrader, talks to Derek D just how important marketing and digital tools are for dealers right now. Because consumers are looking online as a first step in the buyer’s journey, digital analytics and marketing are critical for dealers looking to funnel those prospects. And it goes beyond the stats behind vehicle listings online. Dealers should be developing customized marketing campaigns that communicate across all of their platforms to transform the sales experience at every step. Meaning, if an online browser wants financing options or trade-in valuations, he or she can be led from a vehicle listing directly to those data points. Targeting makes it “easier to take action on,” according to LeSage. And it promotes an overarching goal of transparency, too.
Transparency in Used Inventory
Dealers today have to get creative. Smaller margins mean there is a tremendous focus on improving ROI with the used inventory. It’s more important now for streamlined management of time, inventory, and wholesale strategies. But it’s also critical for dealers to develop these revenue streams with a transparent lens. Consumers demand value and want to know they’re not only getting a great deal on a pre-owned vehicle but also that they’re not being ‘taken for a ride.’
For example, providing vehicle history reports or taking the extra step to certify the pre-owned vehicles will signal to the customer you’re representing a solid ride. Introducing a fair market value price for the vehicle upfront will also send the message that you respect the customer’s need for a no-haggle experience. Offering a free oil change or two as part of the deal demonstrates your attention to the customer’s need for value. It also says you want this customer to come back to your dealership. Over time, steps to improve transparency throughout the process will only foster an environment of trust and loyalty among customers.
Dealers can close more deals and enjoy a steady stream of loyal car buyers with a transparent sales process. Setting up a consistent process for each stage of the vehicle sale lifecycle can also take the guesswork out appraisals and numbers. And the more transparent your dealership can strive to be, the more you’ll stand apart from your competitors.