Photo: Jorg Mühlenberg, Munich
To get a lemon car is people’s major concern when buying a used vehicle: Has it been abused, improperly maintained or poorly repaired? Ironically, the brand name of the popular French manufacturer Citroën means lemon. Moreover, the founder’s grandfather actually had been a greengrocer who sold citrus fruit, a profession which people don’t associate with automobile craftsmanship.
Professional used car business rather depends on excellent customer management. Thereby we understand organising exchange relationships often being supported by IT-Systems. Channels through which the exchange takes place may be the staff, the vendor, and the website or call centre. Whether the exchange is successful depends largely on whether the expectations of used car customers are met. Due to the internet, these expectations are cur-rently undergoing a dramatic change.
New technology creates new customers.
The traditional dealership is dead. For decades, we have been observing a tremendous de-crease in the number of dealerships. The reason is that the dealership has lost sovereignty over its information and will lose sovereignty over its sales because people are perfectly well informed by the internet. More and more car manufacturers are piloting online sales.
The overall reason for this decline is that exchange relationships do not happen in a dealership any more, but in the internet. Consumers do not look for dialogue with the dealer but with “people like you and me” on Facebook or Motortalk. Customers trust online reviews more than car dealers. Given the importance of word-of-mouth in the internet we have to recognize that today used car business is primarily digital.
The internet turns the sales funnel into an interactive one. In opposition to the classic sales funnel model the buyer is not passive. In this new sales funnel model the buyer interacts with the seller as well as with various different buyers and sellers. Interaction means communica-tion, e.g. liking a brand, posting a message, sharing a link, uploading a picture or participating in an event. During the conversation, the receiver can become a sender and vice versa. The main characteristic of the interactive sales funnel is that it reflects a dialogue.
Online interaction strongly influences purchase decision.
Today in nearly every step of the decision making process the internet plays a role: When looking for a used car, the internet is the first entry point for research. When researching in the internet one out of three buyers gets inspiration for additional brands. When comparing alternatives, 24% of buyers consider online reviews to be most helpful. And given that people get perfectly informed via Social Media, the dealership doesn’t play an important role any-more as a source of information. Today people pay dealerships significantly fewer visits than in previous years.
Therefore, the golden window of opportunity to influence the consumer’s decision becomes smaller and smaller. And even after purchase, 75% of used car buyers share their experi-ences online. By doing this, they inspire other consumers who are currently in the considera-tion phase.
In former days, the purchase process was based on a one-way communication. One had to position the product, select the media and realize a campaign. It was like bowling and the objective was to realize a clear shot.
Today, the purchase process is dominated by consumers interacting via social media. There is a dialogue between consumers a company can’t control. Dealers can’t influence this dia-logue and therefore the purchase decision anymore. Today, it’s like playing Pinball. The ob-jective is to keep the ball in the game.
So salesmen have to be better informed, they have to observe carefully and react quicker!
Services of Online Portals exceed Brick-and-Mortar.
As purchasing behaviour is influenced by Social Media the consumers’ expectations towards service processes are influenced by online portals such as Autoscout24 and Mobile.de.
Overall, these portals are more convenient to those who are time conscious and looking for transparency. This is true for most digital customers.
However, one major weakness of brick-and mortar-dealers so far is the loyalty of the cus-tomers after purchase. Here, it would be wise to keep the contact to the customer in order to prepare the next purchase and especially the service.
An example of how a dealership perfectly compensates its weaknesses is www.lueg.de/Mercedes-Gebrauchtwagen/0_406.html. Via the internet site prospects can easily get in contact with the used car offers. There is a contact button and the prospect will quickly be called back. Moreover, contact via all important social media platforms is pos-sible. Need analysis is realized by the salesman or by the configurator. If the customer has saved a configuration the salesman can get this information for his further interaction with the prospect. Comparison of offers is very convenient because all cars are displayed with all rel-evant price information in a standardized way. He can immediately get an offer how to fi-nance his car. Of course, the prospect can ask for a test drive which will also be confirmed immediately via this internet site or by e-email. In order to reduce the risk of buying a lemon car this dealer of course guarantees a certified quality of his vehicles and extra warranties.
Dealers can win customers by picking-up on their digital habits when they are in-tune with the way the prospects collect information, i.e. in a digital way. In this sense, the Munich AUDI Used Car Centre already realises many innovative services such as 3D car configurator, vir-tual test drive stations, provision of interactive car information via touch screens plus addi-tional information on the iPhone by QR-code and a digital shopping assistant (see www.audi-gwplus-zentrum-muenchen.de/ ).
Today’s used car business is not sustainable.
Consumers can imagine many alternatives to the dealer when purchasing a vehicle. 42% are ready to purchase directly from the manufacturer. Or they would buy used cars at independ-ent online vendors, for example Amazon or even at a retail store like Metro or Sears. Only 21 % insist on buying at a dealership.
The reason is that customers’ expectations are influenced by other branches. Mobile.de is appreciated for its transparent stock, which is a service the automobile industry can’t provide. At Nike, customers are well known people: Due to a customer card or smart device such as the Nike+gadget for runners which is related to an iPhone every NIKE-outlet is perfectly in-formed about the needs of its clients. Hilton Hotel regularly validates the status of its clients and has specific offerings corresponding to their purchasing behaviour. Lufthansa is known for the reward system, and especially for intra reward trading. You can spend bonus miles at a multitude of cooperation partners. Nespresso is known for its Brand experience. Nivea is known for perfect customer interaction. If you call them, contact by e-mail or Social Media you would get a response within 20 minutes.
Most of these services are not available in the used car business although their products are more expensive by far. Therefore, why should a customer accept a worse service?
The levers for a successful used car business are standardization, customer management and Multichannel Management. The prerequisite is that one layer bridges all OEM business areas such as new car and used car sales, aftersales, financial service and fleet business. At the POS, this layer is connecting dealer, contact centre and website.
This could be realized in a technical sense by a common retail CRM containing the entire customer contact history via all touch points on retail and OEM-level.
How to realise excellent used car business?
- Improve customer experience across all touch points.
- Rationalize customer management through seamless processes.
- Create service bundles with captive bank, retail and aftersales.
- Optimize certified used car programs
- Create transparency of inventory and pricing.
In a nutshell: The ultimate goal is to leverage customer engagement by seamless processes. For example, in the U.S. AutoNation succeeded to cover the whole product life cycle reach-ing from new car purchase to used car aftersales service. By realising the above mentioned changes automotive companies will tap the full potential of the used car business.