Fixing A Lemon – The Car Buying Experience

by Colin Shaw on July 15, 2013
Fixing a Lemon - The Car Buying Experience

Fixing a Lemon – The Car Buying Experience

“If only we could get the dealers to do what we ask them to do then the world would be OK”.

This is a common comment we receive when we have been asked to help a company improve their Customer Experience where they sell their product and services through a third party. Whether it’s insurance, hospitals, or automakers, they all have the same complaint: they (the third party representatives) don’t sell our service the way we think it should be sold.

Let’s take the car buying experience as an example. I chose this because the image that these companies portray on TV, through their clever ad agencies, and the actual experience of a dealership is like ‘chalk and cheese’. In my view the car buying experience is old fashioned, broken and no longer fit for purpose and it seems that I am not alone. Cisco did a survey where they asked about 1500 car consumers from 18 to 50+, from 10 different countries, how they felt about shopping for a car online. Here’s what they learned:

  • A whopping 83% responded that they would prefer to research a car online.
  • Of this 83% only 37% trusted manufacturer’s websites, while another 47% preferred third party websites.
  • Another 55% said they would be comfortable using a virtual interaction to close the deal.
  • 64% of the respondents said they would prefer an automated dealership to service their cars.

What this survey says is that the car business is about to make a big change because car consumers are driving it. That also means that if change to the customer experience is what is needed, then those that change will be in the fast lane accelerating toward success. Those that don’t will stall out on the hard shoulder.

Customers agree that the Car Buying Experience is a Lemon

Chances are unless you manage a car lot or work at one, you probably never gave much thought to how a car lot is set up to do business. Here is a simplified explanation. Manufacturers sell franchises to an owner or owners of a dealership. The manufacturer develops a lifestyle for their brand through marketing and advertising and has specific standards that the dealer must adhere to in order to sell their brand. The dealer will order inventory from the manufacturer and pays for them on delivery. Then, the dealer needs to move the cars to customers through its sales staff to make a profit.

Now it’s here in the last sentence, where the whole process gets out of alignment. Customers do not enjoy the car buying experience. Few people, besides die-hard negotiators, enjoy the process of agreeing on a price. Most people report discomfort with the hard sell many car dealers employ to move inventory. My wife Lorraine rightly gets very offended when salespeople speak to me about the car SHE is buying as if the female brain cannot cope with such decisions.

Just picture the image of a car salesperson and you will quickly understand how car salesmen come second from bottom of the most trusted professionals.

This same lack of enjoyment is found in service departments of car dealers. The service department is one of the most profitable components of the car dealer business model. It is also a critical component of the customer experience, since many customers ultimately service their cars where they bought them. Unfortunately, there are several dissatisfied customers with the service they are provided. Women in particular, complain of service managers who quote high prices and push services that are neither scheduled nor necessary.

As a father, I don’t like hearing when people take advantage of my little girl. Recently my youngest daughter took her car in for a service after obtaining a quote on the telephone. When she arrived and sensibly checked on the price it had doubled. When asked why he baffled her with jargon. Quite simply he was trying to con her as she is young and female and seen as easy prey, all in order to achieve their targets.

Making the change you want

What is the solution? It is very simple. Ask yourself what would happen if the car salespeople were paid based on a score of 100% customer satisfaction? Or, if as part of the dealer franchise agreement they must sustain a 90% customer satisfaction level to keep the franchise rights? Do you think they would improve their customer experience? Of course they would. This is not rocket science. If a dealer’s only incentive is to move the car off the lot, then that’s what a good dealer will do. But if you change the definition of success to include providing a good customer experience while they are moving the cars off the lot, then that’s what a good dealer will do. The issue really at play here is that senior executives both in the dealership AND in the car manufacturers do not really believe that improving the Customer Experience would be able to make more money than their current experience otherwise they would change. Now I hear you say, ‘but they have a written franchise agreement’. Well, it’s simple. Change it. Yes I agree it will take time, yes I agree you will lose franchisers, but don’t tell me you ‘can’t change it’, you can. The issue is simple both sets of executives don’t want to make the change enough as they don’t really believe it’s the right move. But this change is both possible and profitable. Let’s look at an example in the Used Car dealerships.

Changing the Used Car Experience

In the business of used cars, it generally doesn’t get much better experience-wise for customers, male or female. From hiding flood damage and not disclosing accident information, to selling cars that should probably be farmed for parts, used car lots can hardly be held up as a shining example of designing a customer experience that dazzles consumers. Except that there is a used car experience that breaks down all the negative stereotypes that a used car lot generally conjures for us.

Four million cars strong and growing, CarMax is thriving in a time when growth for other auto dealers is difficult to achieve. What’s their secret? Putting customer experience at the forefront of their business plan.

The used car retailer makes a habit of regular feedback from their customers. They listened to what they had to say and changed the way they do business. They learned that car shoppers want:

  • An experience free from the usual hassles of buying, selling, or trading in a used car
  • A no-haggle, low price policy, listed up front with no negotiations needed
  • A vast inventory of only the best quality used cars
  • Allowing customers the option to sell a car to the lot with no obligation to purchase
  • A friendly customer service experience with absolutely no pressure to buy

Then CarMax gave it to them. The future of used car buying was born from a concept so simple it’s almost embarrassing.

So hopefully you will see that selling through third parties is not a problem as long as you define the experience you are trying to deliver and then incentivize at a sufficiently high level to make people pay attention. The car buying experience will change, it is just a question of which manufacturer will change it first.

Colin Shaw is founder & CEO of Beyond Philosophy, one of the world’s first organizations devoted to customer experience. Colin is an international author of four best-selling books & recognized Business Influencer by LinkedIn. Beyond Philosophy provide consulting, specialised research & training from offices in Atlanta, Georgia and London, England.

Follow Colin Shaw on Twitter:
@ColinShaw_CX
Share this post:
Colin ShawFixing A Lemon – The Car Buying Experience