weekends
No wonder car buyers are migrating to the web if they get
treated like this! Why, as an industry bemoaning margins and
declining sales, do we make it so difficult for customers to buy
cars?
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Markets are changing: customers are becoming more discerning,
2008 forecast volumes are lower than the last two years’, and the
full impact of the credit crunch is still not totally understood,
yet some dealers still think they are doing you a favour by selling
you a car.
Here is a salutary tale. A young lawyer wants to buy his
wife of six months a low-mileage used car – £9,000-£10,000 –
perhaps a couple of years old. Having a good idea what they want
the couple visited the same franchised dealer on four consecutive
Saturdays to view it.
“We will get the model you want so you can test drive it next
week,” they were told. “We don’t have a used one in stock. We can
get what you want refurbished from the manufacturer. This is the
price – no negotiation – and we need a £500 deposit from you before
we will get it. That’s our policy.” And, as an afterthought: “No,
we can’t do anything without the deposit and the price is
fixed.”
This is great if you are the dealer. Take the £500 deposit
and bank it. Get the car in maybe next week or the week after you
have the deposit.
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By GlobalDataThe couple was then told: “No, we can’t guarantee to have the
car here that we have just offered you. But we will request it.” As
a dealer, if you have the deposit, and given this attitude, you
could probably create a “sale by hassle” simply by being difficult
over the deposit.
Shot in the foot
And the customer in the longer term? Let’s assume that the
lawyer and his wife change that car every three years and move to a
new one. Over the next forty years, let’s estimate that the couple
will purchase a dozen cars at an average of, say, £16,000-£18,000
over that period – that’s £200,000 in new car sales. Those cars
will require service and other opportunities – say £400 a year over
the period – which comes to another £16,000.
If we assume further that our young example couple go on to tell
all their friends about the terrible service they received at this
dealer group’s hands, and that their friends pay attention and take
their own business elsewhere, we are probably talking half a
million pounds of cashflow over a lifetime that this particular
dealer group has managed to ensure it will most definitely not
receive.
As the old industry adage says, it costs four times as
much to find a new customer as to retain an existing one. It seems
that in this case, ticking boxes to follow internal procedures
seems to have taken precedence over client relationships.
Dealers, manufacturers, finance houses spend millions on
sales training – but when do they – do you – look at your systems
to see whether they are designed for your convenience rather than
the customer’s?
Flight to the net
Such treatment as that noted above could be one reason why
retailing is migrating to the internet. Why subject yourself as a
would-be buyer to waste four Saturday afternoons and the indignity
of indifference when you can buy on the internet? Conventional
wisdom claims that paying a deposit when you can’t see the seller
or product is a big turnoff. True, but demanding a deposit before
the dealer makes the effort to show a used car worth £9,000 is
little better. As customers grow more accustomed to buying items –
even big-ticket purchases – ‘sight unseen’ over the internet, car
retailers whose sales practices leave customers feeling aggrieved
had better look sharp and get their houses in order, if they want
to fight off the threat from the net.
The lawyer in question, my son, has given me a weekly
blow-by-blow account of this saga – he was incandescent with fury.
I have the group managing director’s business card on my desk. I
was very tempted to pass on his mobile number to my son. But why
should I make the managing director of a quoted company unhappy on
a Saturday afternoon, when his salesmen can do that for me?
Professor Peter Cooke, KPMG Professor of Automotive
Management, University of Buckingham
