- A study by Autotrader revealed that customer satisfaction is highest within the first 90 minutes at the dealership. After that, satisfaction starts declining, and at 2.5 hours into the process, dips below the average satisfaction score and continues its steady decline as time in store increases.
- Selling cars is a relationship business. Customers buy cars from people, not computers. But by moving some of the sales process online, you can connect to more high-intent leads.
- When consumers are given the opportunity to learn about F&I products on their own time, and primarily through online resources, 63% of consumers say they are much more likely to purchase F&I products.
Whether it’s shopping online for a vehicle or interacting with dealership sales personnel, shoppers are demanding a better experience and are bypassing dealers who don’t deliver it, evidenced by the fact that they consider fewer dealers today than they were 10 or even 2 years ago. More than half of all car buyers experienced frustration during the car-buying process, largely due to the amount of time it took to negotiate the purchase price and complete the sales process.1
Even more telling, a study by Autotrader revealed that customer satisfaction is highest within the first 90 minutes at the dealership.2 After that, satisfaction starts declining, and at 2.5 hours into the process, dips below the average satisfaction score and continues its steady decline as time in store increases. Inefficiencies in people, process and technology contribute to the time it takes to complete the three primary processes: sales, vehicle appraisal, and finance and insurance (F&I).3
TOO MUCH TIME
The sales process took an average 53 minutes to complete – more than half of the desired 90-minute cycle, with price negotiation comprising a large chunk of time in the car buying process.3
The average time to complete appraisals was 43 minutes — nearly half of the total desired customer cycle time of 90 minutes, also making it a significant time sucker.3
The F&I process took even longer. At 61 minutes, it represented two-thirds of the ideal customer cycle time. The duration of the F&I process was exacerbated by lengthy paperwork. Moreover, customers were often unaware of the F&I aftermarket pitch, which, was the longest step in the F&I process.3
Additionally, a lack of transparency during customer interactions with sales and F&I personnel may result in distrust and customer dissatisfaction.
The non-linear and complex car-buying process is rife with potential deal-breaking decision points. Dealerships often rely on a wide variety of disparate systems to run their business (e.g., CRM, inventory management, credit, appraisals, finance, titling, etc.). Making all these systems function efficiently together is often difficult and requires duplication of tasks that increase a customer’s time in the store and can negatively impact their experience.
How to Streamline Your Processes
In general, none of this should really be news to you. Now, there’s real data behind it. If you aren’t already working toward speeding up the sales process, this should be a real wake-up call. Here are four ways to facilitate transactions more efficiently.
1. Use a contextual pricing strategy. Contextual pricing is a reference price point or range which consumers can use to evaluate market prices. It’s especially useful to consumers who want to understand the price of a big-ticket item. Moreover, it lets you provide context to the customer around how you arrived at a price to help build confidence and trust.
There are many third-party vehicle valuation tools that consistently and closely monitor real-time pricing and reflect both wholesale and retail transactions to provide a 360-degree view of the market. Links to vehicle options, warranties, vehicle history reports (e.g., AutoCheck®, CARFAX®), customer and industry reviews and ratings as well as trusted, third-party pricing guides, let customers see details that affect a vehicle’s value so they can better understand how a vehicle earned its price point, and how current market prices compare with your asking price.
Of course, this is a two-way street: It helps you ensure that your prices are fair and competitive, and can also help customers feel confident that they are getting a good deal while minimizing complex and time-consuming negotiations. The result is a more transparent sales process that can increase customer satisfaction.
2. Use trade-in tools. People want validation that they are making good decisions, and this is especially true in the trade-in process. Trade-in tools are an excellent way to manage customer expectations for conversations around the 4-square, minimizing the time-consuming and often contentious portion of the car-buying process. Many dealerships initially incorporated a trade-in tool into their operations as a means of lead generation and inventory acquisition. However, dealers have discovered the trade-in tool is even effective for reducing wholesale and inventory-related risk, enhancing the customer’s dealership experience and facilitating transactional conversations. Since most consumers prefer to do their shopping activities online, trade-in tools increase customer satisfaction by letting them do their trade-in valuation online, which also serves as a bridge between the online and offline car-shopping experience.
These standardized tools not only evaluate the monetary trade-in value of a vehicle, but also its history (based on the consumer’s input), condition and desirability in the marketplace. They augment a Used Car Manager’s effectiveness and help avoid emotional management behaviors (“golden gut”). When used as an appraisal tool, they allow your dealership to provide the customer with a reality check on the true condition of their car and self-discover an appraisal that takes into account local market data.
3. Start the process online. Selling cars is a relationship business. Customers buy cars from people, not computers. But by moving some of the sales process online, you can connect to more high-intent leads. They’ll come to your store to buy if you help them make more decisions earlier in the process. Helping the customer get prepared online is one of the smartest things you can do to jump-start the relationship.
Almost everyone is shopping on your — and your competitors’ — Vehicle Detail Pages (VDPs) before they decide where to buy. So how are they deciding where to go if they don’t talk to you first? Online chat, a valuable tool that allows shoppers to ask general questions, was never intended for deal structuring, and customers are often leery of sharing contact info over chat for fear of being inundated with follow-up emails and phone calls.
Internet lead forms aren’t very effective, either, and very few consumers actually fill out the online form. Online payment calculators can make matters even worse; they give your prospects inaccurate information and may wrongly skew their assumptions before they come to your store.
Establishing an online retailing process allows you to build a relationship with buyers before they decide where to buy. You can create clarity and set expectations before someone sets foot into your showroom, and there are now third-party solutions that offer tools to create an environment online to begin structuring a deal.
Through online retailing, you help the customer understand how they can buy the car first. The anonymity of the Internet makes prospects more comfortable divulging their true situation to you. They are more willing to open up and tell you their budget, their expectations for trade-in, their credit status and the monthly payments desired. You can counter back, educate them on feasibility and steer them toward a realistic deal.
The customer has the convenience of understanding the deal in the privacy of his or her own home. They don’t feel as pressured; they don’t feel like an adversary. Even better, no terms discussed online are binding. It’s a pre-qualification activity, a way to manage expectations and shorten the lengthy in store buying process such that customers are truly satisfied when the keys are handed over.
A great place to put your online retailing process to work is on the VDP with a call to action to start the deal with you online.
4. Let customers learn about F&I online. Blowing two-thirds of your sales cycle on the F&I process is not going to leave a customer satisfied. Negotiating and applying for credit are two aspects of the car-buying experience that are particular sources of anxiety for consumers. They feel vulnerable about F&I products and commonly have the perception that these products and services are just another way for the dealership to make money through unessential add-ons to the vehicle purchase.
Despite their general anxiety around F&I, according to the 2015 Online Retail F&I Study, an overwhelming majority — 72% — of shoppers are interested in learning more about F&I products and services because they feel like these products may have real value. They simply don’t want to experience an information “download” at the dealership and feel pressured to make a hasty decision. Instead, the study found that consumers prefer to first learn about F&I products on their own time, and primarily through online resources. Given the opportunity to do so, 63% of consumers say they are much more likely to purchase F&I products, according to the same study. The majority of consumers also report greater satisfaction with the entire experience and are more likely to stay a customer and refer the dealer to others.4
Dealers who adopt these processes can see higher levels of engagement and improved closing ratios. Why? It’s because you’ve made the leap to serve buyers in the manner they prefer. Less time equals increased customer satisfaction – and more time for you to sell more cars.
1. Source: 2015 Automotive Buyer Influence Study, IHS Automotive
2. Source: Autotrader Customer Sourcing Studies, March 2014
3. Source: 2015 Cox Automotive Time Study
4. Source: 2015 Digital F&I Experience Study