Dealers need to reconsider their concept of what makes a showroom, or be overtaken by disruptors, according to Google Strategy Manager Automotive, David Tully.
With so much of the traditional retail world being overtaken by online disruptors, Mr Tully says dealerships must give customers a reason to visit them, or they won’t.
Google conducted research with customers who were buying a car this year in Australia. Comments included the feeling of not being overly welcome, that the bright lights and glitz inside dealerships felt contrived and contrasted with a ‘drab’ exterior, and that if a customer did not seem serious about buying a car, sales people were not interested in them, which was described as a ‘degrading’ feeling.
“We have sales people who are there to hit sales targets, but we’ve got customers who maybe aren’t ready to buy yet. So what do you do? These are the challenges we need to solve if we want to close that gap and create great experiences for our customers,” Mr Tully said.
“There’s big, big, things coming down the track. We know today customers have to come into the dealership to buy a car; we can’t always assume that’s going to be the case. We can’t always assume that mightn’t change, that it will always protect us from more competition.”
Mr Tully pointed to the significant increase in the number of start-ups that had reached billion-dollar valuations in the years 2014 to 2016 as an example of what disruptors are trying to do to the retail automotive industry.
“Every one of these guys is trying to disrupt the industry that they’re going into. They’re trying to think, ‘Is there a better way of doing things?’ There isn’t really an automotive company up there yet, but we know there are lots of them out there trying to get on this list. The best defence against this is we get there first, we ask ourselves, ‘Is there a better way of doing things?’”
Mr Tully pointed out that in the US, the market valuation of the top online retailers like Amazon is now greater than the top traditional retailers, and is growing faster.
“Because of that trend, they (traditional retailers like Walmart and Target) have been forced to ask themselves this question, every single day: ‘Why would anyone come into my store?’ because for them today it’s not a given anymore; customers don’t have to come into their stores – you can buy anything they’re selling, online,” he said.
“And I think that question is becoming critical in the automotive space. Today everyone has to come in, but we have to assume there will be a time when they maybe don’t have to come in any more; we can’t make them come in. Think about clothing retailers: there was a long time when traditional retailers said, ‘nobody’s going to buy clothes online; you need to touch them, you need to feel them, you need to try them on’. That was the case for quite a while, and then online retailers said, ‘I’ll just let customers give it back for free if they don’t like it’. Certainly today, I have no problem buying all my clothes online, because it’s so easy.
“When you think about automotive, it’s very easy to see how that might translate across. I could buy a car, someone brings it to my door, I test drive it for a week, if I don’t like it somebody comes and picks it up and gives it back. As a customer that would be a great experience, but why would I have to go into a dealership in that world? So we need to shift to, ‘how do we make customers want to come in, to choose to come in?’ Because we are offering them something that they can’t get online. That’s the shift I think you need to move to.”
Mr Tully gave the example of US retailer, Nordstrom, a company founded in 1901 that had adapted to allow its customers to order online. The company keeps a record of all the customer’s enquiries and transactions, with the twin benefit that the customer does not feel like they are starting fresh every time they visited the store, and giving sales people information to better have a conversation around what the customer is actually interested in.
Meanwhile, Nike realised people could buy its products online and created an ‘experience’ that made them want to visit its stores, such as a basketball court and a soccer pitch in its new store in New York.
“Think about the experience you could create around the cars, how much you could bring them to life. But are we doing that today? For me, when I take a test drive it’s a really important thing, but it’s not really an amazing experience if I’m stuck in traffic in the city,” Mr Tully said.
“Why do Dealers need to evolve? The simple reason is because their customers have evolved. What they expect from our businesses has evolved. Australians are more demanding than ever. Store visits are dropping but sales are increasing. I think it’s clear with the internet and mobiles and all this information that our customers have evolved, their expectations are higher than ever.
“The challenge for Dealers is that when somebody walks in our door, they’re not comparing us to just the next Dealer; they’re comparing us to the best (retail) experience they’ve ever had. That means it’s getting harder and harder to meet our customers’ expectations, to get them excited and emotional about the cars and about our business.”
Google has canvassed many Dealers and found issues including:
- How do you engage the customers if some are active and some are passive?
- How do you make it easy for customers to find the right model when we’ve a huge number of variants and features and options?
- How can a sales person bring complex features to life? “That’s getting very complicated sometimes to be able to talk to these things easily in a dealership.”
- How do we keep people in the dealership for longer? Because we know if they’re in there longer they’re more likely to convert.
“I’ve gone into dealerships where as soon as you put your foot in the door, a sales person is on you, asking questions: ‘How are you?’ and ‘What do you need?’ I’ve gone into other dealerships where it’s just silence. I’m looking at the car, I’m opening the boot, I’m getting in the car – and there’s just nobody. I don’t know what it takes to get somebody to come talk to me,” Mr Tully said.
“I don’t know which one is right or wrong because different customers have different styles. But I think the reason we’re seeing these types of challenges is that we know our customers have evolved, we know they’ve done all their research, they know what they want when they come in. We know that cars have evolved and they’re getting very complicated, but the dealerships haven’t significantly evolved. They haven’t really changed that model in a number of years. So we’re starting to see this gap between what our customers expect and the experience they’re getting in our dealerships.
“It’s not a bad experience; it’s just not an amazing experience.”
The good news is that 96 per cent of car buyers still go into a physical dealership to buy a car, and that is not changing any time soon. The dealership that can create an amazing experience for their customers will generate more sales, more gross per sale and more repeat visits.