The battle is over. The customer now controls the car-buying process, and it is up to the dealer to support, advise and encourage the customer along the way to the sale. Dealer actions that seek to control the process — such as hiding information — simply don’t work anymore.
Dealers must come to terms with three key realities of today’s digital ecosystem:
- Consumers have instant access to the world’s information
- Speed is key
- The wisdom of crowds is accessible by all
The first principle of today’s digital ecosystem is the accessibility of information. Google-empowered consumers have access to all the data they need to make a purchase decision. Often, consumers are better armed than dealers. This simple fact cuts the legs out from under the traditional view of how cars should be sold. Under the traditional view, the key is to hide information until the customer is in the dealer’s clutches. In the worst forms of this approach, the up is bagged, tagged and dragged through a Fargo-style sales process, “controlled” by the dealer at every step. Most dealers have progressed beyond these extremes, but remnants of the traditional approach linger. For instance, only 38% of dealers share the price when first requested, according to JD Power. 25% of dealers will never share the price until the customer is on the lot.
The problem is that such an approach no longer works. The Internet customer will keep the dealer at arm’s length until the dealer has won her trust. To win that trust, she expects transparency. If a customer requests the price, the successful dealer understands that the customer has shared her request with multiple dealers — he’s now on trial — and to do anything other than send a price quote response will imperil the deal and frustrate the customer.
Further, the successful dealer understands that it’s not enough to just respond with a price quote. The second principle of today’s digital ecosystem is the power of speed. When a customer requests information from a dealer, she wants it quickly. Speed of price quote response has been shown to correlate highly to increased sales, especially when achieved within 10 minutes.
Yet 25% of all leads don’t get answered at all, according to Cobalt, and the average response time on those that do is over five hours. Following up with a phone call within an hour is also key, but only 25% of all leads receive any call at all.
Lack of transparency and poor, slow response to Internet requests comprise twin threats to a dealer. It’s not just the lost deal: such practices can cost the dealer his reputation. Which brings us to the third key principle of today’s digital ecosystem: dealers must respect the power of the Wisdom of Crowds.
Consider the danger of the frustrated customer. She has powerful tools at her disposal to publicly vent that frustration, to the dealer’s great harm. In the Internet’s public square, ratings and reviews travel to every corner of the dealer’s market, propelled by Facebook and Twitter, Yahoo and thousands of other sites. Through the Wisdom of Crowds a disaffected customer (and especially many disaffected customers) can profoundly impact a dealer’s business by essentially counter-advertising: alerting other prospective customers to the dealer’s poor business practices.
This new digital reality has fundamentally changed the game. In this brave new world, dealer business success rides on a well-built reputation, which in turn rides on the favorable impression of past and current customers, which in turn rides on the dealer’s ability to support and facilitate the customer’s car-buying process with transparency, promptness, fair pricing and good service. In a very real sense, each deal is much more than just a deal. Yes, a car was either purchased or not. But under either scenario, a second dynamic is in play. Was the customer satisfied with the experience or not? On that, the dealer’s reputation—and his business future—hang.