One of the most traumatic memories from my childhood traces back to a commercial I saw when watching the General Electric Theater. The mystique of the commercial sets the stage for a cautionary journey exploring digital retail.
The Kid’s Spacesuit Commercial
It was the 1950s, and my dad would never miss the GE Theater. It aired right after the Ed Sullivan Show every Sunday at 9:00 PM on CBS, hosted by Ronald Reagan. We had only one television in the house, with three network shows to choose from.
Little Jimmy Ziegler would stay up past his bedtime to watch with Dad. That’s when I saw it: “The Kid’s Spacesuit Commercial.” It was the coolest thing; it showed a kid flying around in this realistic spacesuit that your parents could order from the address on the screen. I immediately knew, “I gotta get me one of those.”
My dad tried patiently to explain that children couldn’t actually fly in the spacesuit and that it was just a commercial on TV. No matter what he said, I knew if I had that spacesuit, I could fly all over the neighborhood. I saw that kid flying right there on TV wearing that spacesuit. After all, they wouldn’t show it on television if it wasn’t true, right?
I kept it up for weeks. Nobody could convince me. My dad actually punished me because I was throwing a tantrum when he wouldn’t get me that really cool spacesuit. Even now that I am an adult, I still think he was wrong about that spacesuit.
The Allure & The Partner Close
Admit it: you’ve bought stuff from a vendor for your dealership that absolutely did not work, but you wanted to believe. Maybe some of the more experienced people on your staff said it wouldn’t work, but the vendor’s sales rep had all these graphs, photos, and the coolest Zoom presentation you’d ever seen.
But please consult with your employees who will be actually using these things before you buy, AND never buy in the heat of emotion unless you researched in advance.
The Partner Close: They told you that just one additional deal would pay for it. You had to believe it; they said your dealership was their ‘Partner.’ Everybody knows your ‘Partner’ would never lie to you, right?
It goes back to the GE Theater and the ‘Spacesuit Commercial,’ Ronald Reagan wouldn’t lie to us. Isn’t that right, Dad?
If there’s one thing I’ve told you that you need to believe, it’s, “No vendor is ever your ‘Partner.’” Please don’t fall for that.
Digital Retail’s Rise: Beyond the Pandemic Rush
It didn’t take Ronald Reagan to sell car dealers on ‘digital retail software;’ Carvana and Tesla had already proved that it worked. We were in the middle of a pandemic, and people were locked in their homes. They had no other choice.
The key words were: “They had no other choice.” Carvana and Tesla had several things working in their favor in addition to the pandemic lockdown. First, they played on the theme many vendors have used, villainizing car dealers and dealerships. They exaggerated the bad experience in their commercials to the point where Vroom actually ran a Super Bowl ad showing a car salesman torturing a customer with electric jumper cables. Tesla had the early EV adopters and enthusiasts as an additional benefit.
So, the manufacturers, who have a bad track record when it comes to retail sales of cars, had their execs go for the bright shiny object and mandated digital retail for their dealers. And when the pandemic lockdown was over, look what happened to Carvana and Vroom. Tesla began to dramatically cut prices and curtail production.
BUT the digital retail business was off to a running start with numerous new vendors popping up.
All of the traditional DMS and CRM companies came out with a version. Some old, outdated lead providers jumped in, too. The game was on.
The Automation Illusion: Managing Expectations
The reps told us it was just like Ron Popeil’s Ronco Rotisserie Oven, “You Just Set it and Forget It.” Customers were going to buy cars like candy bars, transacting totally online, and we’d be delivering the cars to their home or office. Digital retailing, online credit approval, e-contracting (in states that didn’t require ‘Wet-Ink’ contracts)… they said your customers would even buy all of the F&I products and protection options after they watched some short videos.
Damn, we’re entering the age of automated car sales. Our customers will fill out all of the forms and paperwork online, and we just sit back and collect the money, and we can fire half of our employees.
In case you haven’t figured it out yet, part of the attraction for dealers and public company executives was vendors whispering in their ears that you could get rid of some of your highest-paid employees for clerks and low-paid delivery drivers instead.
But to make ‘digital retail’ work, you had to adopt a no-haggle, one-price model, and your manufacturer rebates and incentives, as well as lender rates, had to be up-to-date, exact, and current.
Accommodating All
I will say that most of these digital retail tools were really good, to a point, and the dealers needed them— within limits. It wasn’t that the tools were no good; it was more that we were led to expect too much out of them. They wouldn’t do everything they claimed, but what they would do was amazing.
While not the end-all-be-all, you don’t want to miss out on business from those who do want to transact entirely online. I’ve advocated since the beginning that every dealer needs to invest in a digital retail solution because some people want to do everything online, e-contracting, and arranging home delivery, just like ordering a pizza. Even if it’s a small percentage, it would be a shame to miss that business.
We have to accommodate all modalities with which any and every customer wants to do business. Like Burger King, we’re all about “Have it Your Way.”
The ‘What If’ Syndrome
Don’t get so bogged down in the ‘What If Syndrome.’ I see so many people in our business who want to run through all of the negative ‘What If’ scenarios. It starts out when they say, “Well, Mr. Ziegler, what if the customer says this?” OR “What if they do this?” The answer is always the same, “If that happens, we’ll handle it.” We’ve trained for it and rehearsed it, and if any customer wants to color outside the lines, we’re prepared to handle it.
The Biggest Lie
The biggest lie you were told, which some vendors are still telling dealers, is that your F&I numbers will not suffer. The truth is that, without being proactively sold face-to-face by a professional F&I manager, customers’ natural inclination is to go for the cheapest payment with no protection options.
The second biggest lie is that online customers will watch the videos and magically buy the service contracts, GAP and maintenance agreements, and all of the other products because they watched the videos.
Excuse me, this is really deceptive because the vendors know that relatively nobody watches the videos. They have the stats and know the truth, and that’s not what they’re telling the dealers. How do I know this? I know this because I’ve spoken with hundreds of dealers and even some of the best digital retail vendors who were truthful with me (of course they’re not all lying to the dealers).
Navigating the Digital Retail Landscape
Like I said, I highly recommend you get a digital retail vendor and train your employees. All I’m saying in this article is don’t expect more of it than it is, AND … investigate … investigate … and investigate before you buy.
Most of you already have a digital retail tool. Now, all of you dealers and GMs need to go to your employees who actually use the applications and ask questions: Does it work how we need it to? And have you heard of a better application?
Send your employees to the conventions and Digital Dealer Conferences and look at what’s out there. It’s time to shop and see if there’s a better application than what you’re using.
Be Open to Change
Get out of this mentality where you are afraid it would be too much trouble to switch vendors. I see so many dealers sticking old, outdated, ineffective applications in every department because they are anticipating how disruptive it would be to change. Well, that’s short-term thinking. Are you losing business, and is your competition winning because your people have inferior tools?
I’ve heard of vendors telling dealers that they have dealerships whose numbers dramatically increased using their app. Of course, what they neglected to mention is that the dealerships they’re quoting had really crappy numbers to start with. What they’re actually saying is that we had a crappy dealer who is less crappy using our tool.
Okay Ziegler, you’ve bashed the digital retail vendors mercilessly; we’ve gotten the message. But you still said we need it, so how do you suggest we use it?
Glad you asked. First of all, shop carefully and forget about what the manufacturer recommends unless it’s a hard mandate. There’s no amount of co-op participation that will compensate for the losses you’ll suffer with a bad tool.
When the customer is on your website, and they’re making a decision, what we call the ‘Zero Moment,’ if they leave, chances are they go to another online source of information, probably your competitor.
Remember, customers are reluctant to fill out forms and disclose information online. I was recently reading an article written by a vendor, and she referred several times to forms the customer would fill out as if that was a good thing. The more you pay attention, you’ll discover how little some of these vendors and manufacturers really know about what customers will actually do in real-world situations.
What we have found out, in reality, is that customers will fill out some of the preliminary information on the website using a digital retail app, but most are opposed and will still want to finalize the deal at the showroom. Most of them will stop short of ‘Transacting the Deal.’
Making the Deal in the Showroom
You need to have an app that identifies them when they do show up, and whoever greets them is trained to ask the right questions, so we don’t have to start over again with information they’ve already provided online. You’ll find that many of them don’t call or make an appointment; they just show up.
What you’ll need is a digital retail application that can seamlessly take up where they left off while they were on the website. If they selected a vehicle, that doesn’t actually mean that’s the one they want.
Remember I said this; “Most customers do not buy the car they came in to buy.” This is a mistake that digital retail can amplify because your people want to automate everything.
It might be ‘Old School,’ but ‘Think Switch.’ There’s more profit in the car you help them select than the one they originally chose online without guidance. You should have a new one, a preowned one, and perhaps a certified unit (if they still exist) ready to show them, especially if they actually made an appointment and you have time.
In other words, have other units in mind because customers need options they may not have considered while they were online. We’re the experts. Truthfully, ‘Affordability’ is a major factor they may have overlooked in the excitement of selection.
All of the vendors and manufacturers are telling you that you should be getting the customers in and out of the dealership in less than 45 minutes. Let me ask you this: When did making a $60,000 decision get to be a high-pressure race? We are so proud of having a low-pressure process, but we want the people to hurry up and get in and out while a stopwatch is running?
If I’m right, (I’m Ziegler, of course I am) you should be able to work the deal in the showroom, taking up where they left off online. Your digital tool needs to be an excellent ‘Desking Tool’ when they’re in the showroom. A desking and deal-working tool that your people can actually use. Hopefully it uploads to your DMS.
AND, if the digital tool you select is rigid and can’t be customized to your processes and your culture, then pass on it and look at something else. Don’t be so fast that you don’t look at what your current DMS and CRM providers are offering.
Even though most of them are terrible, there are a couple of them that might actually fit your needs. It’s a lot less expensive if it’s a vendor you’re already paying for, but don’t let that be your guiding motive.
Also, I am not particularly a fan of manufacturer ‘private label’ digital tools because I think they all want the data and to control your process. I strongly suggest you go with an independent company if you have a choice, preferably customizable to your processes and culture.
Live Videos Sell: Engage Customers at That Zero Moment
One way to drive sales is through live engagement tools that offer the ability to have conversations at that ‘Zero Moment.’
Several of the new DMS and CRM providers are offering Live Video Chat.
There are other vendors that are integrating this too. My take is that new companies with processes built in from the beginning are superior to old companies that added third parties to fill in the gaps of what they couldn’t do.
Understand the Limitations, Assess, & Choose Wisely
My advice is to approach selecting solutions with curiously and skepticism. Digital retail tools can be beneficial, but it’s important to understand the pitfalls, what to look for, and what to avoid. Choose wisely and assess the vendor’s credibility. It’s easy to get lured in by the mystique of new capabilities, but not everything is feasible. What’s sold isn’t necessarily what you’ll get. After all, I’m still wondering if that spacesuit really could fly; maybe Dad was right, but I’m still not sure.
