New dealership model threats & what to do about them

I was fortunate enough to present at Driving Sales President’s Club last month on the topic of New Dealership Model Threats. What I found fascinating about the experience was just how “in the know” all of the attendees were about the need for their dealerships to evolve. It was not a matter of why it was a matter of when. They understood that there are serious implications to staying idle and that while there are new dealership model threats all around them, the biggest threat of all is their own unwillingness or ability to change. Why?

For one, increasing competition is among us. From tech giants to OEMs, dealer franchise groups and now ridesharing networks — people with big pocket books are entering the space with new mobility options that can steal market share. Dealers will need to innovate to compete for a smaller set of car buyers, while also embracing these new offerings in their service centers.

Then there’s the real ‘here and now’ threat of shrinking margins. Increased price transparency on top of expensive real estate and inefficient sales processes makes it harder and harder to differentiate on price alone. To compete, dealers will need to innovate around both customer & employee experiences, bringing the modern conveniences that people have come to expect into their stores. Today’s customers want to buy cars the same way they buy everything else and millennials, in particular, are not afraid to take their business elsewhere to get it.

The reality is that any company in any industry these days needs to innovate and thrive, or ignore trends and die. Remember Blockbuster, Borders Books, and Kodak? Consolidation amongst car dealerships is imminent, and with many big and small commerce players like Amazon, Walmart, etc. entering the space, dealerships will have to move fast to stay relevant.

Now, it is not all doom & gloom by any stretch. In fact, if there is one thing I have learned from Roadster’s early days in the brokerage business — selling cars is hard! While many new and even large entrants into the space will have the latest modern technology solutions — technology by itself is not enough. There are so many facets of running a car dealership that these technology companies just don’t have the expertise to implement. From selecting the right physical location to managing inventory, lending, contracting and servicing — good dealerships have been built on years of experience fine-tuning operations to maximize the return. So ask yourself:

Is it easier to learn better process & tech or easier to learn how to be a car dealer?

Look no further than the demise of a company like Beepi to see how a lack of experience with the intricacies of the car business (e.g. missing core dealer DNA) can have a significant impact.

Where the real threat exists is from the companies whose origins are from the dealership world. Companies like Carmax, AutoNation, Carvana, etc who have a deep understanding of the operational components, and have the budgets to aggressively layer in technology that transforms the car buying process.

This is not saying that new entrants don’t also pose a threat. While franchise laws will require dealer involvement, retailers like Costco and Walmart (and one day Amazon) bring massive reach plus the ability to create a physical presence for kicking the tires that could have a material impact.

Luckily, there are solutions available today that don’t take an Auto Nation size budget to modernize your experience and enable you to compete with the biggest threat of all — the dealership next store. You can have everything that these new dealership models are winning on today if you focus your evolution plans in the following areas:

1. Modernize Your UX — If you look at companies like Amazon, Apple or Airbnb, you will see that simple and clean design is the standard these days. Don’t try to reinvent the wheel. The best user experiences are the ones that your customers are already familiar with.
2. Think End-to-End — The reality is that your customer experience is less linear and more like spaghetti. Some customers will start online and come in-store. Others may choose to come in-store and finish online. The most successful commerce solutions enable both the customer and the employee the flexibility to use the tools in any order they wish, wherever they are.
3. Be Transparent — Transparency today is table stakes. Customers are flocking to the internet and doing hours of research before they step into your store. Take advantage of this by showcasing everything you have to offer and getting them comfortable with their “due at signing” price to ensure a much better contracting & delivery experience.
4. Save Everyone Time — With technology and self-desking solutions, you can not only save your customer time but when done right, materially save your sales team hours per transaction, driving further efficiency into your operation.
5. Use Technology In-Store — Technology engenders trust. Car shoppers are used to doing research on their phone, so leveraging technology in-store to see inventory and run numbers instantly enables your sales agents to act more like a consultant or guide.
6. Empower Your Team — More than anything, empower your sales team. Think Apple store experience. Each sales agent, whether tenured or a new hire, should have the ability to walk a customer through the entire car buying process from start to finish.
7. Focus on NPS — Net promoter score measures the percentage of your customers who would recommend your dealership to a friend or family member. The happier customers are, the more likely they are to drive word of mouth, let alone generate additional CSI incentives for your dealership.

In the words of the late Steve jobs:

You have to start with customer experience and work your way back toward the Technology

Want to learn more? Request a copy of my full presentation on New Dealer Model Threats by emailing: insights@roadster.com

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Andy Moss is a successful serial entrepreneur with decades of experience and expertise in launching and running successful commerce and media start-ups, including ShopStyle, the leading fashion search engine, which was acquired by POPSUGAR; FabKids, an online children’s apparel company, which was acquired by JustFab; and Cairo, an online service for retail discounts. He is now the founder and CEO of Roadster, the leading provider of consumer driven Commerce Solutions for the modern dealership. To learn more, or request a demo, visit: roadster.com/express-storefront