Understanding the new consumer
Today’s automotive consumer is savvy, demanding, short on time, and armed with rafts of information. With digital retailing becoming more prominent in the industry, customers know more when they walk through the dealership door than ever before. They arrive with pre-determined expectations around not only the car, but style, performance, innovation, safety, reliability, and of course, an attractive price.
This is the ‘price of entry’ for automakers and retailers today. If you don’t meet all or at least most of the consumers’ expectations, you’re simply not in the game. But the truth is most automakers do, and if you’re hanging your hat on these alone, it may be costing you.
New Consumer Concerns
There are additional consumer behaviour changes afoot that have broader and more serious implications. We are facing an ageing population with health concerns, a worrisome workforce, and the highest level of personal debt in our country’s history.
People are living longer, but it costs more to stay healthy. An increasing number cannot afford to retire at the traditional age of 65 and are working well into their 70’s, which means their automotive needs are extended. Unemployment is on the rise, and while some are still finding jobs, they are often for less pay than they previously earned, and sometimes on a temporary or contract basis.
Consumers lack confidence in larger purchases
Consumers have heightened fear and hesitation around larger purchases such as vehicles for three main reasons:
- Job security
- The current state of the economy
- The personal debt they have accumulated
- Their age and health-related concerns
You can learn more about Canadian automotive consumer patterns from our recent market research infographic. We call these concerns ‘latent’ fears, which are defined as ‘present but not visible.’ Contrast these latent fears with what you may hear on the sales floor when customers do come through the door – “we need to think about it,” “I need to speak with my husband/wife before I can make a decision,” “we need to crunch the numbers,” or “I need to shop around before a make a final decision.” These ‘vague’ responses make it difficult to understand the real or underlying reasons for non-commitment.
What does this all mean for retail automotive? To be successful in this new environment, it’s critical to hone your listening skills to understand customers more intimately. This increases buyer comfort and confidence by making the transaction more about the person versus the car. Take a consultative and authentic approach and make the customer feel as though you’re there to support them through their fears and hesitations; in other words, let them know that you have their back, and you’re creating a social contract of sorts. Incentives are less meaningful to today’s consumers; confidence and assurance are the key drivers.
- What are your principles and values?
- What do you stand for?
- Would you buy a car from you?
How are dealerships adapting?
People are also keeping their vehicles longer and shifting their focus to the more practical or economical options or buying a pre-owned equivalent. Buyers also require more flexible financing options because we are now officially a cash-flow versus a net-worth society and are ill-equipped for an interruption in income.
The less is more approach
Dealers are simplifying and streamlining their operations, leveraging the many tools available around inventory control, customer relationship management, and more. Still, they are also re-thinking their sales experience and product offerings to resonate with the ‘new’ consumer.
For example, business offices are de-cluttering and scaling down their offerings, so the products available are easier to understand for them and the consumer. Warranty is always their number one priority, and that won’t change. Business managers are getting more strategic about what other products they offer their customers, often preferring proven, high-quality, reasonably-priced, and easy-to-explain products like WALKAWAY Total Loss Protection™ (GAP coverage), WALKAWAY Finance Protection™ (vehicle-return coverage), and Excess Wear and Tear protection.
What are the next steps?
Some things to ask yourself going forward:
Your people: How do you staff your dealership? How well does your team relate to your clientele? Do you have the right mix of professionals?
Your facility: Is your dealership aesthetically appealing? Does it welcome people? Would you feel comfortable in your waiting area? Do you have the technology in place for digital turnover?
Your training: How well does your sales team know your products? Do they need help with interpersonal communication or relationship-building skills? Do they have the proper tools in place for digital or remote training?
Your culture: Have you thought about your ideal culture? If so, how does it compare to reality? Is it progressive or reactive? Does it focus on people, product or pay plans? Do you have a culture that attracts quality people?
Your differentiation: What sets you apart from the competition? How are you different than the dealer down the street? What can you provide the customer that others cannot?
Your product offerings: When was the last time you reviewed your business office process and product offerings? Are they still relevant? Have they provided legitimate value? Would you buy them? What do your customers have to say about the products you offer? Have you received any customer feedback or reviews?
Building a successful, authentic brand and customer experience in today’s automotive industry takes considerable conviction, time, and work. However, it will only happen if the common denominator is serving before selling. You must put the customer first.
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