Why Many Dealerships Are Setup to Fail: The Evolution of Customer Engagement

Dealerships have always been in a hyper- competitive situation. Today’s environment in sales has increased 10-fold as dealers have less new inventory and auction prices for used vehicles have increased pricing for the used vehicles over MSRP for the same vehicle new. Today’s market commands change in sales. Just look outside of our industry.

Retailers are making it easier for consumers to buy while dealerships have been slow to adopt technology that is beings successful in sales. Customers want that easy experience and, especially in today’s world, are not only demanding it but they are unwilling to do business with a company that doesn’t provide it.

COVID-19 has expedited the adoption of digital retailing technologies by consumers in half from an estimated 10 years to 4-5 years before total adoption. Hell, all generations want the same thing. Remember when your grandmother couldn’t take a picture or send a text message. She can now buy a car online if she wanted to and that ability only increases into a dealership’s future revenue led with Instagram, Tik Tok and other social platforms as the abilities of cell phones increase annually.

In a recent study of over 150 dealerships that included not only 5.4 million customers but also 230 million customer interactions, we found some eye-opening results. Let’s start with the 209 percent increase in opportunities that began online. Combined that with the customers that engaged a dealership before they actually came in and the in- store visits increase from 4 to 10 (250%) and that resulted in an increase in sales and gross profit – with more of the sales beginning outside of the dealership!

Dealerships have been courted by many different digital retailing solutions in the past that consumers want to begin a purchase before they get to the dealership!

If your sales team cannot have a full conversation with a customer immediately over the many different forms of communication that a consumer chooses to engage you with, it might be time to consider other career options! If your dealership is unwilling to share transparent pricing with a consumer on your website, then you should really reconsider that decision

It’s not a matter of when the majority of consumers demand it, it’s only a matter of when your dealership only hears crickets instead of consumers. And that time isn’t in a galaxy far away. It is one that’s coming soon. Dealerships don’t have to like it but they will have to deal with it.

What do we do about it?

Here are five areas dealerships can focus on to prepare for the inevitable reality that includes digital retailing and whatever comes afterwards as technology evolves and consumers adopt it.

1. Dropped Opportunities Your salespeople shouldn’t be the ones who make the decision to mark a lead as “lost.” Your dealership might have paid $25+ from that consumer that raised their Salespeople/BDC reps, in many cases, get overwhelmed with “to-dos” in the CRM that they tend to focus on the low-hanging fruit (new leads) without truly following up with older leads. Maybe they’ve called and emailed the customer 10 times with no engagement. Is that a reason for those hand- raisers to be thrown in the trash? You might as well take the money out of your wallet and burn it cause if you’re allowing that to happen, that’s exactly what you’re doing!I have found no dealer that believes that their salespeople or BDC are actually following up with every consumer that believe that they are. However, every day on average, your salespeople or BDC stop trying to engage with 21 customers which equates to 483 opportunities per month! To be fair, let’s say half of those leads were third-party that you paid $25/each for. That means you just trashed over $6,000. You might as well just throw it in the air, lay in it and make snow (money) angels before setting it on "re! These lost opportunities cost your dealership over $72,000 per month in gross pro"t and over $12,000 in marketing costs!

2. Engage the Hand-Raisers Sounds like common sense, right? On average, nine times every day, salespeople and BDC reps leave for the day with unanswered text messages and emails from consumers wanting to buy a Utilizing the technologies that we have today, management will be able to see these messages that nobody has responded to and allow them to take action! Don’t let salespeople or BDC reps leave for the day with hand-raisers that actually want to be engaged with.

3. Missed Calls Seriously, people! If a customer called in to the store for information and got stuck in an automated message circle, told to hold by the receptionist but never reached a live person, you should be That easily could have been a consumer who wanted to buy a $50,000 vehicle… that you have in stock… but eventually hung up out of frustration and called your competitor. I get that dealerships get busy and sometimes it is hard to get ahold of someone. THAT IS NO EXCUSE! The technology exists right now to tell you who these customers are! Your Management Team should be able to see these customers and get them called back BEFORE THEY LEAVE FOR THE DAY! Train your team that whomever returns the call owns that call. Train your people to stay on the line with the consumer until the consumer gets to a live person – whether that is service, parts, sales or "nance – not be put back on hold just to return to that annoying menu prompt while listening to the elevator music you chose for your “on hold” entertainment. I promise that Barry Manilow is not going to motivate a customer to sing along and wait.

4. Track Sales Calls In the PSXDigital study, “The Evolution of Customer Engagement,” sales calls have increased by an average of 215 I have yet to see any CRM that integrates all sales calls automatically into it. This is where the majority of your opportunities originate. How many of you really believe that your sales or BDC team (if they are taking incoming calls) actually log them? Our research resulted that only about 20 percent do. Why? One of two reasons. First, either your sales or BDC team isn’t trained to prompt customers for their information resulting in them not having anything to log or second, they’re just lazy. You know when most managers pay attention to sales calls? When there are two days left on the month and they are scrambling for those units they need! THAT’S when a desk manager is calling Johnny or Susie into their o$ce asking what happened to this person and to get them back in! STOP THAT! If you would do the deal on the last day of the month, you should be able to do it on the rest. If you were listening to missed or engagements that were not responded to by simply paying attention, you wouldn’t have to be scrambling at the end of the month! Reality is that those hand-raisers probably bought a car already. NADA says that 80 percent of consumers that wanted to buy a car left their house intending to drive a car home. The only di#erence between a lot full of customers and now is that your lot is online and your customers are sitting at the sales desk waiting.

5. Manager Engagement BEFORE the Deal Matters Our study on “Opportunity Leaks in Today’s Dealership” showed that a dealership can complete a transaction with a customer in person 40 percent of the time when they are at the dealership. What happened to the 60 percent that left without buying a car? Roughly half of them went down the street and bought a car from your competition!

The same study also showed that if management engaged a customer within 20 minutes of them arriving on the lot by something as simple as introducing themselves, greeting the customer, thanking them for coming in and offering assistance if they need it, 27 percent more of those customers buy right then! And you didn’t need to whip out the green Sharpie and draw a happy face and the words “Today Only” (because they know that’s BS so why do it.) By simply having a manager being polite and welcoming, a dealership has the potential to increase their sales by 37 units per month. What’s your combined average front & back end profit? Let’s say it’s $1,500. That would mean an additional $55,500 in profit!

These pieces of advice are what your dealership should be doing NOW. Don’t wait for “what’s next,” or “what’s coming.” Compare what you are doing to outside industry retailers. They are, at the very least, years ahead of the vehicle sales industry. Why do you think OEMs want direct-to-consumer sales? Why do you think that Tesla is so popular with consumers? Tesla might as well be Disney. Brand loyalty is everything. Ask yourself why GM subsidizes courses at the Disney Institute. Do you think it “might’ be because they have been building their brand and customer experience so right and for so long that consumers flock to just about anything Disney does? Hell, they could publish a book with blank pages with Mickey Mouse on the cover and it would shoot to the NY Times bestseller list!

Dealerships are approaching a hard fork in the road. It will be up to them which path they choose. Choose your own adventure.

I’d love feedback on what you see! Email me at larry@powersportsx.com.

(Originally published in the March/April edition of Dealer magazine)