Are You Positioned to Outsmart the Disruptors?

I think we can all agree that the level of disruption to our traditional dealership process of “I have new cars and you are ready to upgrade so let’s do a traditional car deal” has shifted dramatically in the last two years. I don’t need to tell you that your customers now expect different ways to buy, sell, or trade for vehicles – and there are disruptors out there finding ways to meet those expectations.   

So, how do you make sure your dealership doesn’t fall behind? First, you need to understand what the disruptors are doing right and what customers are looking for. Then, we can look at what your dealership can do to compete or better yet, out flank these competitors. 

What the Disruptor knows: Customers are savvier than ever with more data at their fingertips 

It seems like overnight we hit the digital age and consumers have access to more data than ever. Today, they walk into your dealership and have a pretty good sense of where vehicles should be priced, what is too high, and what is too low. The days of the dealer having all the information are over. 

In fact, if you do not assume that consumers have checked multiple online tools to value their vehicle (KBB Instant Cash Offer, Carvana, CarMax, Vroom, your own dealership trade-in value widget on your website) then your sales team is likely to blow the trade discussion right from the start. 

How the dealership will win:  Deliver a personalized, human experience. 

We have always said this is a people business, yet the disruptors are throwing numbers around with very little personal engagement. Cox Automotive’s consumer research says customers want some level of personal chemistry. They would prefer to do business with a traditional dealer as long as we can deliver the same digital experience (full transparency) AND we can add a personal touch to help the process along. 

What the Disruptor knows: The customer is no longer guaranteed to sell their car AND buy a car from you. 

In fact, based on consumer research by Cox Automotive’s Car Buyer Journey Study just last year said 69% of consumers indicate they want to sell their vehicle for cash (no replacement vehicle) but once they reach the dealership 55% buy another vehicle BUT 45% do not! 

The action of consumer acquisition and the subsequent vehicle sale are now considered two separate and distinct actions and customers prefer this approach, more transparency. No shell games with value for their trade and price of the car they’re purchasing. 

We were all brought up and likely promoted in the car business because we could sell.  Now we have to focus these selling skills on selling the price we will pay for their vehicle.  When we move right into, “What are you going to replace it with?” we depart from what the disruptors are being successful with.   

How the dealership will win:   Measure, train and compensate sales teams on selling AND acquiring cars. 

I get it, trading a car is typically a two-car deal.  Typically, there is the sale of the vehicle a consumer trades for, and the trade-in becomes a vehicle we resell or wholesale.  Yet, as dealers we tend to focus on measuring retail sales performance only.  We love to track appointments, appointments shown, demos and sales percentages relentlessly.  How about tracking our salesperson's ability to present appraisal values and successfully purchase the trade-in (called look to book in vAuto)?  Not only track it but pay on it.  

A cultural shift is necessary and since we are all creatures of our pay plans, let’s start reinforcing the behavior we expect to address a changing marketplace.  Let’s start using vehicle acquisition as a customer retention strategy.  You are under attack by the disruptors that want to take your customers out of their driveways before you have the opportunity to move them into another vehicle that your dealership sells and more importantly, services. 

What the disruptor knows:  More customers want an easy no-touch digital offer. 

The consumer knows with Carvana, it is a 100% digital offer – they don’t have to leave the couch. Not to mention, the disruptors buy EVERYTHING. No longer can we afford to have our salespeople say if you’re not happy with our offer for your trade, try taking it by CarMax and maybe they will give you more.  Then, come back and we will get you into the car you’re looking at. 

How the dealership will win: Presenting a sight-unseen appraisal (that makes sense) 

Keep in mind, even Carvana sends an associate with the flatbed driver to inspect the vehicle and drive it around the block.  Value the vehicle similar to the process they performed online.  Do you think customers are putting all the damage on their vehicle before getting an online value?  The safest way to create transparency is to validate your offer with a third-party value.  Something they can validate or likely have already surfed the net for.  Kelley Blue Book (KBB) “excellent condition” comes to mind here. More on this idea in my next blog.

To truly take on the disruptors, dealerships need to overhaul their thinking on trade-ins, appraisals and customer interaction. It’s a mindset shift that can take your dealership from traditional to relevant.