By Eric Giroux, Director of Product, DealerSocket
I did it. I pulled the trigger. I bought a foam mattress that arrived at my front door, compressed in a box, from a company I had never heard of.
I didn’t know anyone who owned one. I had never touched (let alone, laid on) one before. Prior to purchasing, I didn’t talk to a salesperson to convince me of its superior features. I just got online and bought it.
Months later, I couldn’t be happier. So overjoyed, in fact, it’s gotten weird. Every time someone comes over to my house, I awkwardly invite them to lie on my bed so they can experience the intensely unique comfort as I ask them to guess how much I paid for my mattress. Then, I belabor my enthusiasm by carrying on about how easy it was to buy, how I never get hot at night anymore, how my wife’s “morning back pain” is gone… and how I could return it for free even after 100 days of sleeping on it (but never would).
“Cool story, bro. What does this have to do with the automotive industry?”
First off: easy on the attitude, reader. Secondly: here comes the segue…
A mattress purchase is quite similar to a vehicle purchase. How? All of the following are true for both a mattress and a vehicle:
- It’s expensive.
- You will likely own it for years.
- It’s personal. What is great for one person may not be for another.
Any product that meets the above criteria is one that you want to make sure you’re going to love before deciding to buy it. Thus, it makes sense that you would want to see, feel, smell… experience the product prior to purchase.
So, in order to allow for this (assumed-to-be imperative) experiential purchase process, what do traditional mattress manufacturers do? They either:
A. Spend loads of money setting up distribution centers, and/or:
B. Sell their mattresses at wholesale to local retailers.
Both A and B inflate the mattress retail price (yes, that’s an inflatable mattress pun) to offset the overhead and generate (additional) profit for the local retailer. So, at the end of it all, the consumer is paying more for the ability to “test drive” the mattress at a retailer than they are paying for the actual mattress.
But then… disruption.
Ads for mattress “startups” began popping up on Facebook and Instagram feeds everywhere. Just a few years later, these startups are getting purchased by major mattress manufacturers left and right. Direct-to-consumer mattress companies are generating more profit, selling products at lower costs, and creating raving fanbases (*raises hand* myself included).
Traditional mattress manufacturers were once living the dream but now face a rude awakening to the nightmare that is: evolve or die. (Count ‘em THREE sleep puns in that last sentence. Try to keep up.)
So, how did the new kids do it? How did direct-to-consumer mattress retailers overcome the assumed-necessary experiential purchase process to get millions of sleepers to place trust in a mattress to the degree that they were comfortable purchasing online, sight-unseen?
I’ve identified three things that all successful* direct-to-consumer mattress manufacturers do that can (and should) also be done by any progressive and future-proofed automotive dealership. (*Successful= booked 170 million in revenue in their first 5 years and then got purchased by Serta)
- They explain why their non-traditional buying process is advantageous for the consumer.
- They offer a 100% money-back guarantee.
- They show you 150,000 (seriously) customer reviews.
Let’s break it down. *record scratch — pause — beat drop*
Here it is – your “easy as 1-2-3″ guide to getting your customers to buy cars from you online.
STEP ONE: Explain the Advantages of Your Buying Process. No, this doesn’t mean, “We’re family-owned and operated and have been serving your local community for over 40 years!” And no, it also doesn’t mean, “We’re the #1 rated whatever dealer in whatever state for the past whatever years!” And it definitely doesn’t mean, “Now you’ve got a friend in the car business!”
Of course, value statements like these serve great purpose… but those don’t help your customers build preference towards an online/digital buying process.
The new-age dealership value statement will be something along the lines of, “Look, buying a car from us is a unique and different experience. Although it may seem unfamiliar now, it is only through our efficient buying process that you gain several distinct advantages.”
Remember, the point is to objectively illustrate the comparative advantages of a next-generation (online) buying process… not offer some subjective, cheesy value statement about how you’re a dealer people can trust.
Let’s look at our example of the modernized mattress retailer. They told me (in a 90-second video) how I can save a bunch of money by purchasing online, direct from the manufacturer. This made sense to me. By “cutting out the middle man,” I was able to save money while the manufacturer enjoyed a fair profit. The proof was in the price. My mattress was half the cost of any I could buy in a store.
Now, this “save money by cutting out the middle man” strategy doesn’t really work for franchise car dealerships because… well… franchise car dealerships kind of are the middle man (between the manufacturer and the end-consumer). But there are several additional benefits that are equally enticing and will similarly (and objectively) make sense to customers.
Here are some examples of value statements enabled by next-generation buying processes (note that most of these examples assume the dealership is utilizing digital retailing software… and when I say “digital retailing software,” I mean software that enables vehicle transactions to happen/begin online and/or digitally in-store):
- We’ll deliver the vehicle to you for a test drive!
- Get an exact price, including taxes and fees without ever stepping foot in a store!
- Eliminate paperwork and hours of waiting at the dealership by structuring your deal online at home!
- No haggling necessary! Our vehicles are all priced fairly at our lowest possible price.
- (Annnnd… segue to my next point) We offer a seven-day every-penny-back guarantee! No risk in buying your vehicle online! If you don’t love it, we’ll come get it, no charge.
But, before I use that money-back-guarantee bullet point to segue into step two, I want to note that dealerships of the future will be able to — like next-generation mattress manufacturers — articulate achievement of cost savings that will benefit (be passed on to) their customers.
How?
The progressive dealer will use an integrated digital retailing experience to offer the same streamlined and transparent buying process for customers, whether they are purchasing a vehicle online or in-store. Enhanced vehicle merchandising capabilities, F&I/aftermarket product self-selection, digitized forms, and more will reduce dealership overhead, staffing, and transaction costs by creating operational efficiencies.
As these efficiencies and reduced overhead become industry standard, the resultant cost savings will be passed on to consumers in order to remain competitive in the market. It’s called Nash equilibrium. You probably remember the early-2000’s movie they made about it, A Beautiful Mind, starring Russell Crowe. (But, PRO TIP: Wikipedia does a better job of explaining equilibrium theory than Ron Howard does.)
Before our industry reaches said equilibrium (I’d say we’re about 10-15 years away), the dealership that commits to these efficient digital processes, realizes the enhanced profit margin, reduces prices for their customers, and advertises how their customers save money using digital buying processes…wins.
*dramatic and audible inhale following that run-on sentence*
STEP TWO: Offer a Money-Back Guarantee. This one is simple. People may have a change of heart. They may not like their purchase as much as they thought they would. It might not “fit” or their partner may hate it. Whatever it is, anyone who buys anything online wants peace-of-mind to know that there is no risk or commitment. They want to be able to bet on the blackjack hand, see their cards, and then be able to take their money off the table if they don’t see the two face cards they were hoping for.
However, the money-back guarantee does something else besides simply offer peace-of-mind and a relaxed buying environment: it signals to the customer that you, the dealer, have faith (and are willing to bet your own money) that they will be satisfied with their purchase. Think of the reverse situation: if someone were to ask, “If I don’t like it, will you allow me to return it?” and you said, “Nope. You’re stuck with it!” What does that say to the customer? It says, “I’m almost certain you’re going to be dissatisfied with your purchase! So much so, that I will accept no liability if you are! Anyway, sign here!”
Ew. No thanks.
So… money-back guarantees:
- Allow customers to overcome the natural trepidations of spending money on something they’ve never touched with their own hands, and…
- Signal to the customer that you are honest about the vehicle’s condition and you’re confident that your customer will be satisfied.
STEP THREE: Build Buyer Confidence with Testimonials and Interviews. Yeah, yeah… I know that you know to get reviews. Of course, you want that 5-star rating when people Google you or find you on Facebook or Yelp. And, yes, this current strategy of yours to “get a bunch of 5-star ratings across multiple platforms” is good for getting you considered.
But the real magic — the magic that will take a customer from consideration to conversion/purchase — is when you weave those customer stories into your overall pitch/proposition. So, building on our aforementioned sample value statement, it evolves into:
“…it is only through our efficient buying process that you gain several distinct advantages like: [insert your objectively true customer-centric advantages]. In fact, we are so confident that you will be satisfied with your vehicle and buying experience, that we’ll refund 100% of your purchase if you change your mind for any reason. But don’t take our word for it, listen to the testimony of thousands of customers who rave about our transparent, simple, and risk-free purchase process.”
This doesn’t mean take a picture of people at vehicle delivery and then post it to Facebook. It means sit down with customers and film a three-minute interview where you ask them:
- How did you find us?
- Did you have any reservations about buying your vehicle online?
- What made you decide to pull the trigger?
- What would you tell someone who is weighing the decision to buy a car from a traditional dealership versus a next-generation dealership like ours?
Finally — and this oversight is the mistake that dealerships often make — you need to put your reviews in high-visibility areas on your website where customers need the most convincing (inventory pages). Gut check: Does your dealership website have your customer reviews listed on Vehicle Details Pages? How about on Search Results Pages? This is where your prospective buyers are spending most of their time on your website (and where they make their micro-decisions about if and what they’re going to buy). On these pages, you should make it overtly obvious that — if they decide to buy — it will be simple, risk-free, and that tons of other people just like them are happier now as a result of doing business with you.
What did my mattress in a box teach me about the future of the automotive industry? It taught me that people WILL buy large/expensive products sight-unseen… even products that we once thought had to be experienced prior to purchase. It taught me that in order for people to take that “purchase plunge” on items like mattresses or cars, they must be convinced of three things:
- That buying it online or digitally will offer them a comparative advantage relative to buying it “traditionally”
- That there is no risk in taking that plunge and that the retailer is willing to bet on their product’s quality with a money-back guarantee
- That anyone who has made that plunge before now advocates for the product (and the process of purchasing it)
In 10-15 years, you will be hard-pressed to find a successful dealership not using software to power the purchase experience for their customers. Today, there is an opportunity for dealerships and manufacturers to take a shortcut ahead of the market and recognize above-average returns by leveraging digital retailing software to reduce transactional overhead while increasing operational efficiencies. As you take strides toward becoming a dealership of the future, learn from industries who are quickly advancing down this path.
Truthfully, there is no better way to learn about this path than to walk down it yourself. How? Go buy a Why not? You’ll save time and money, you’re going to love it like millions of others, and, hey… what’s the risk? If you don’t like it, you can just return it for all your money back.
How do you say no to that? You can’t. And neither will your customers when you make these digital retailing best practices an integral part of your culture and online presence.
Learn more practical lessons from rapid retail transformations outside of automotive retail during Eric Giroux’s session at Digital Dealer 27 Conference & Expo (Aug. 19-21, Las Vegas, NV).
About the Author
Eric Giroux is a product director and entrepreneur with nearly 10 years of experience in the digital automotive space, beginning with two years serving as a digital marketing director for a 12-store dealership group. Prior to his segue into automotive software development, Giroux owned and sold digital publications amassing total readership in the millions.