New Year, New Buyer Insights

Recently McKinsey & Company came out with an extensive study called Innovating Automotive Retail. In reviewing McKinsey’s findings, we thought we would share our take on what they mean for our audience.

We continue to hear about how the buying experience is migrating online.

85% of customers still use the dealer touch points. 1 in 4 customers also reports dissatisfaction with the dealer experience in the car buying process.[1] This raises key questions for dealerships who want to remain competitive.

If customers aren’t satisfied, what can we do to change that? Are we truly focusing on what our customers come to the dealership for? Are we doing all we can to make buying a positive process?

Is it easy for them to “experience” the vehicle? Are the cars in the showroom unlocked? Is there someone there to assist at all times without being pushy?

These points may seem simple and straightforward, but apparently many dealerships are missing the mark. Buyers don’t come in just to test drive. They come in for product knowledge, feature knowledge and financing.

The research shows digital truly is here to stay. The rise of tablets and smartphones means more buyers are using digital channels to make decisions.

The average number of customer visits to dealers, before buying a vehicle, has dropped from up to 5 to just 1 for some brands in some geographies. This makes managing all customer touch points more important than ever!

According to Google, customers are experiencing 24 touch points during their purchase journey in addition to actually visiting the dealership. These include:

  • Print
  • Direct mail
  • Television
  • OEM and dealer web sites
  • Social media
  • Search
  • Car buying sites

 

Clearly, many consumers today want the ease of browsing vehicles at their leisure, but to what end? Judging from the recent McKinsey survey of around 1,000 car buyers in the U.S., the vast majority of new-car purchases are already influenced by online sources, but actual online sales are extremely rare.

Buying an automobile requires more thought and over 80% of customers take test-drives during the car buying process, underscoring the continuing strategic importance of dealers.[2] Research indicates that this will likely change over the medium term in the U.S. Two key factors underlie this prediction.

First, roughly one in three U.S. customers does not just research online, but would already seriously consider buying his next car online. For online shoppers, the pri­mary motives are:

  • Convenience, such as saving time by avoiding the physical trip to the dealership.
  • The expectation of lower prices when buying online.
  • Avoiding certain unpleasant elements of the sales experience at many dealerships, such as “haggling over the price.”

Second, a multitude of players are already experimenting with online sales in the U.S. market. They appear to fall into four categories.

  • OEMs – such as GM – that provide their dealerships with an online sales capability (“Shop-Click-Drive”).
  • Dealer groups that follow a similar approach (e.g., AutoNation’s “Shop-Choose-Drive”).
  • Established online brands, such as Amazon, which is piloting the sale of the Versa in cooperation with Nissan.
  • Independent third-party platforms, such as CarDirect.

While a dominant model or player has yet to emerge, OEMs and dealer groups will need to build their online sales channels going forward in order to address the needs and preferences of this growing segment of the market.

One-to-one marketing may have been a ‘concept’ last year but this year it is a necessity. Check out our blog for more about segmentation and one-to-one marketing, or schedule a demo and let us show you how Client Command® can guarantee sales for your dealership.

[1] McKinsey’s 2013 Retail Innovation Consumer Survey

 

[2] McKinsey’s 2013 Retail Innovation Consumer Survey