Car dealers are in trouble! Whether the threat is cars being sold from vending machines or simply ride-sharing apps on a phone, it becomes very easy to see that the nature of transportation is changing dramatically. Compound these current threats with the fact that subscription services and MASSIVE tech companies are likely to move into the space and it becomes clear that this is not your granddaddy’s car biz anymore!
In addition to the oncoming changes in the sales environment, dealers also have an issue with public sentiment. For many previous generations, a less than stellar purchase experience was viewed as a necessary evil. They are starting to want more. They expect not just a satisfactory experience but an exemplary one that anticipates their needs and saves them time. In a world where you can swipe right for everything from boogie boards to a boyfriend, they are uninterested in sitting through the presentations and dealer-centric demonstrations of days gone by.
Despair not, however, there is hope! Dealers must do only one thing to remain relevant amidst all these changes: They must think of the future without forgetting the past.
In a fight, one must be either quicker or stronger than your opponent. Whether franchise dealers are small, family-owned companies or larger publicly traded retailers, they still don’t have much of a hope of being Goliath compared to the multi-billion-dollar companies that are invading the space. The good news is the story ended well for David and it can for dealers too.
So how can dealers be quick to see around the corners of culture and technology?
First and foremost, they must listen to their customers.
They have a unique advantage of remaining face to face with their clients. Their clients are their families, friends, and neighbors. This physical and mental proximity to the consumers they service cannot be dismissed.
So, what are these customers saying? Convenience is key to the modern shopper. Dealers must see the future and embrace the fact that consumers aren’t attracted to their Taj Mahal-like facilities, but to the deals and people inside them. They want the ability to purchase and service on their own terms. Because of this, dealers should get comfortable with ideas like pick-up and delivery not just for purchases but for much of their service work as well.
Brian Benstock and Paragon Honda-Acura in Queens, NY recently began offering pick up and delivery in order to drive traffic into their 24-hour service facility. Over just 18 months, this increased their service repair orders by 32%. Benstock will tell you that the future of our business is in providing frictionless service to our clients and, because of this mindset, his business has grown while many dealers around him have folded.
How else is the culture of business changing? Increasingly, not only do consumers expect companies to be socially responsible, but they reward companies with whom they feel they share values. A new study by Cone Communications tells us that 86% of consumers will make personal sacrifices to do business with a company who makes a social impact on an issue that matters to them. Again, dealers have a distinct advantage centering around their proximity to their communities. If they can understand the issues that are important to these people, they can make an impact on those issues and sell a few more cars too.
For decades, dealers have been some of the most active contributors to their local communities, but many have lost this instinct in today’s world of shrinking margins. The reaction to this profit compression has, sometimes, been to eliminate seemingly unnecessary expense. It has, however, been the dealers who have doubled down on this concept that have seen gains. In fact, this community involvement and outreach has been one of the deepest moats protecting dealership business. National brands and conglomerates can not replicate the personal touch of a true family owned business serving the place where they live. It is in this way that dealers must remember the past as they look to the future.
But who will do all this? Just like many industries in America, some dealers are having an increasingly hard time connecting with new employees. Many lament that this new breed of worker doesn’t prioritize many things the same way they do. They say that they’re not loyal and are less materially driven. They’re right.
Workplace loyalty, both up and down the chain of command is not what it was just 15 years ago. In a recent worldwide workforce survey, Monster reports that 5 out of 6 employees admit to updating their resume in just the last 6 months. There are a variety of factors, from the recent recession to a population who are increasingly connected to their friends and families digitally and, as a result, location independent. The why doesn’t matter. What does matter is that employees are only staying at jobs that matter to them!
Dealers have a unique opportunity to see and speak to many of their employees almost every day. Just like dealers are face to face with their customers, they have the same advantage when it comes to the members of their team. While other companies might be bigger, dealers can be faster to mold and protect their corporate values and culture. Bersin/Deloitte recently completed a study that showed that 95% of prospective employees would be willing to take a pay cut to work in a place with a better workplace culture. That means that only 1 out of every 20 employees is more motivated by money than the environment you provide them.
One out of twenty!
Dealers must, again, look back to their successes of the past. Were their greatest victories because of margins and tools, or because they built great teams that cared about the success of the team as much as their own? Dealers must leverage their connection to their teams to positively impact the quality of their workplace environments. This means not just helping their employees enjoy the workplace but also putting them in positions aligned with their strengths and then giving them the tools they need to succeed.
This is a fight!
There are many forces that will seek to separate dealers from their customers and employees. Many of these disruptors will be bigger than the dealers they will be usurping. They must not be faster though. Dealers that win in this new environment will be quick to understand their customers and employees. They will know the conveniences that help customers buy; they will understand and contribute to the things their people care about, and they will personally cultivate winning teams through understanding the people who make them successful.
Some dealers will die but it won’t be because of these disrupting forces. It will be because they forgot the past or didn’t embrace the future.
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Experienced automotive professional and thought leader. Founder of EasyUpp Inc.