Rapid Pace of Consumer Change Signals Major Shift in Automotive Buying Process
OTTAWA & PARIS--April 25, 2006--| Vehicle Dealers Fail to Keep Pace as Balance of Power Shifts, According to a New Study From the Car Internet Research Program and Capgemini |
The increasing use of the Internet has given automotive consumers an edge in the vehicle buying process, making them less dependent on dealers. This has resulted in a significant shift in the balance of power as dealers fail to keep pace with the changing consumer dynamics. Automotive companies must gain a better empirical understanding of consumer behavior in order to improve the customer/dealer relationship and in the process drive increased sales and strengthen brand and dealer loyalty.
These are among the findings from a new report focusing on the customer/dealer relationship, published by the Car Internet Research Program (CIRP)(1) and Capgemini. The qualitative study, titled "Inside the Customer/Dealer Relationship," examines the shift of power and the influence of the Internet on the vehicle buying process inside dealerships.
The research found that automotive companies must adopt a new model in order to keep pace with consumers. "Consumer change has accelerated rapidly, due to consumers' increasingly sophisticated buying behavior and the availability of information on the Internet, which is helping to delay their moment of entry into the dealership," said Dr. Christian Navarre, Director of the Car Internet Research Program. "It's critical that the dealer role changes to adapt to this new world. Companies must move away from the traditional asymmetrical customer/dealer relationship so often characterized by negative preconceptions and stereotypes on the part of both parties. The key is to move toward a more balanced relationship where there is transparency of information and mutual trust, thereby improving sales and beginning to build customer loyalty. "
The research, consisting of observations and interviews with consumers and dealers, was undertaken in both North America (U.S., Canada) and Europe (France, UK) at car dealerships representing 12 North American, European and Asian mid-market brands.
Improved customer intelligence was found to be a critical success factor in responding to the changing dynamics of the customer/dealer relationship. Since customer intelligence, and in fact customer behavior, evolves, it's critical that automotive companies always keep their finger on the pulse. Best practices include sales training seminars that incorporate intelligence about customer research tactics, as well as careful and constant observation of consumer behavior through the entire vehicle buying process.
In addition, automotive companies must capture customer intelligence coming from new tools like web forums as well as the information traditionally gathered in the showroom. This valuable insight should be used to constantly refine products and services in a continuous improvement process.
"Customers' search for information during the vehicle buying process has become increasingly diverse and complex, making it more difficult for automotive companies to predict their behavior," said Nick Gill, Global Automotive Leader for Capgemini. "It is essential that dealers and manufacturers learn to understand the consumer's universe, the tools at their disposal, and the state of mind they are in when deciding to buy a car in a dealership."
Do's and Don'ts in the Showroom
The research found that what happens inside the dealer showroom is critical to ensuring a positive outcome. We identified three key stages of a customer's visit:
-- Stage 1: entering the dealership and initial interaction with on-site personnel (receptionist, salespeople)
-- Stage 2: interaction with a salesperson over a particular vehicle (request for information, examining the car, potential test drive)
-- Stage 3: negotiation in the salesperson's office (vehicle availability, extra options, delivery, terms of payment)
Throughout these stages, the customer/salesperson relationship is put to the test. In general, certain practices should be maintained regardless of the customer's stage during the showroom visit. For example, we found that customers responded better to less aggressive behavior on the part of salespeople whether they had just entered the showroom or had been inside for a period of time. However, some practices were more critical to maintaining the relationship during a specific stage:
Bad practices Best practices
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Stage 1: -- Walk up to customers as -- Let the customer walk
entering the soon as they enter the around on their own for
dealership showroom. five to 10 minutes.
and initial -- Use standard tricks such -- Then walk straight up to
interaction as "happening to walk by" welcome the customer -
just as the customer possibly introduce oneself
enters. by name (but not
-- Ask too quickly how to necessarily) - and simply
help the customer. say "If you need me/if I
-- Insist, even when the can do anything for you I'm
customer answers "No thank over there at my desk"
you, just browsing." (indicating where that is).
-- Unless they have
questions, leave customers
alone.
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Stage 2 : -- If the customer -- If the customer
interaction expresses the desire to be expresses the desire to be
with a left alone: Stick to them left alone: Walk away after
salesperson and keep asking questions; having reminded them that
over a follow them around the you are available to help
particular showroom; don't respect the if needed. Come back 10 to
vehicle personal "bubble" they 15 minutes later (at least)
might try to establish to ask if everything is all
inside a vehicle. right.
-- If the customer accepts -- If the customer accepts
the presence of the the presence of the
salesperson: Block the salesperson: Open up the
space between the customer space between the customer
and the vehicle by standing and the vehicle, respect
in between, by showing the the customer's attempts to
vehicle off, by encouraging examine the vehicle.
the customer to have a Maintain an attitude of
seat. politeness, allowing the
customer to go first.
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Stage 3 : -- If the situation is -- If the situation is
negotiation tense: Show that one is tense: Do "the little
in the suspicious, in a defensive things" that reassure the
salesperson's mode, answer the customer's customer (suggest a cup of
office attacks. Use sales tricks coffee, adapt a soothing
such as pretending to make tone, in some cases take a
very special offers. seat next to the customer).
-- If the situation is Establish transparency, lay
easy-going: Adopt a cool cards on the table when the
attitude and behave as if negotiation starts.
customer and seller were -- If the situation is
"pals." easy-going: Keep some
distance without becoming
formal; do not mix up
statuses.
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About the Car Internet Research Program (CIRP)
The Car Internet Research Program (CIRP) is an industry, government and academic-sponsored automotive research program directed at understanding how new information and communication technology will impact the automobile industry. Administered through the University of Ottawa, CIRP is sponsored by a variety of industry stakeholders that include: Capgemini, Ontario Research Network for Electronic Commerce (ORNEC), PSA Peugeot Citroen, Renault SA and The University of Ottawa.
About Capgemini and the Collaborative Business Experience
Capgemini, one of the world's foremost providers of Consulting, Technology and Outsourcing services, has a unique way of working with its clients, called the Collaborative Business Experience. Backed by over three decades of industry and service experience, the Collaborative Business Experience is designed to help our clients achieve better, faster, more sustainable results through seamless access to our network of world-leading technology partners and collaboration-focused methods and tools. Through commitment to mutual success and the achievement of tangible value, we help businesses implement growth strategies, leverage technology, and thrive through the power of collaboration. Capgemini employs approximately 61,000 people worldwide and reported 2005 global revenues of 6,954 million euros. More information about our services, offices and research is available at www.capgemini.com.
(1)CIRP, an industry, government and academic-sponsored program, conducts independent research under the administration of the University of Ottawa's School of Management. CIRP is sponsored by: PSA Peugeot Citroen, Renault, Capgemini, Ontario Research Network for E-Commerce (ORNEC) and The University of Ottawa.
