There are big changes coming in the Automotive Retail Space......

Good afternoon Dealer Elite Members

Change is one of the only constants in the universe. The automotive world as you all know is overdue for this change as is a number of other retail environments. I was forwarded a very interesting article from a friend today that i think everyone in the automotive retail business should read. BMW who is one of the largest high end car companies in the world is taking the first steps in changing the way they sell and promote cars.

Here is the article:

http://adage.com/article/global-news/test-driving-bmw-s-concept-sto...

BMW, and others are starting the realize that retailers like Apple Computer and others are leading the pack in retail and they are trying to adapt some of the "best practices" from these retailers to change the buying process in the automotive industry. This is something that I know has be overdue in the automotive sector for many years.

Customers don't buy cars they buy an experience. The retailers who improve the customer experience and make it FUN and enjoyable to BUY or SERVICE their vehicle will not only command more business, but more revenue as well.

Customers are happy to pay more for a "GREAT EXPERIENCE", they won't however pay more for a car.

I will use this story that I heard years ago as an example of what will eventually happen in the automotive space. I was told this story in training years ago when I worked for Honda. The industry that is used is coffee, but it can be applied to any industry of course.

My Great Grandfather used to buy coffee beans, roast them, grind them and then brew his coffee. He had no loyalty to a specific brand of coffee, he would just buy the most affordable beans every few weeks.

My Grandfather was not like his dad, he would buy the beans already roasted and then grind them and make coffee. He was not loyal to any brand either, but he felt it made sense to pay more to save himself some time.

My Father would buy the beans already roasted and ground and then just brew the coffee. It was easier and faster and still affordable.

I just buy the coffee directly from the coffee shop for $1.50 a cup. I am busy and don't have time to roast, grind, or brew coffee anyways. I also buy Latte's for my wife for $5.00 a cup because it makes here happy and I enjoy the service at Starbucks anyway.

At the end of the story the trainer said the following thing which still sticks with me today.

"The person who changes the car buying process from it's current form into entertainment like Starbucks will be a very wealthy man or woman".

This is so true, coffee at Starbucks is all about the experience. They have turned coffee into a desert like experience and have been able to charge a higher price as well.

Stop just selling cars and start selling a top shelf car buying experience, or what I like to call Car Happiness. This is where the car business becomes fun and clients become happy customers. It is never about the money anyways.

I hope this helped you, please feel free to send me feedback and comments, I appreciate it!

Ian Nethercott

Performance Coach and Car Happiness Expert

Proactive Dealer Solutions

inethercott@bdcexperts.com

http://www.bdcexperts.com

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Comment by Richard D Canova on June 18, 2012 at 3:36pm: Very true! It is all about the experience and emotion. When presented correctly, money is irrelevant.

Comment by Mr. Natural on June 15, 2012 at 8:34am: What a great thread Ian, and look at your views. You're off the charts! This is just great stuff...I have had my but chewed for going in to close, and validating for the customer that indeed he might pay more (not always) with us, but isn't there more to it then just the price? Isn't there???

Watch my video here...Its not just the price any more. Here we go off in the apples for apples comparisons and no more lemons...WOW, I love this s*** stuff! I'm haven' a blast! Can you say "s***" here?

Off I go again.../// ▐ Θ Ω δ ∞ φ Standby, I gotta reboot my brain░░▒▒▒▓▓▓

We are gonna' be watchin' ya' from here Ian. Please keep up the great work.

g

Comment by Bernard Boule on June 15, 2012 at 7:30am: Lot's of good comments here but.

Joe Clementi said 'Apple computers sell for the same price everywhere'. That's true (perhaps) but they are Apple computers not Acer, Asus, Dell or HP.

I bought a MacBook Pro about 2 years ago because I had become convinced there was more value for the money. It cost twice what I would have paid for an Acer (I owned Acer machines for 8 years before) but I knew I could run my windows machines, 2 of them, and the Mac all on the one computer so I had, in effect, 3 new computers in 1. What a deal. Same with my new iPhone. I may be deceived or wrong but I believe I get better value from Apple for my money. It's all about perception. For the auto industry it's all about the public's perception. As I posted earlier The auto retail industry has to take steps to change public perception from one where people think of "Stealerships" to one where people think of "DEALerships"

Give it some thought. How can you all get people ti believe they are getting more for their money? Getting a good DEAL. Do that and you'll have solved the quandary.

Comment by Ian Nethercott on June 15, 2012 at 1:07am: Hello Joe,

I agree 100% that part of the problem is that change really has no happened in the car business for quite a while now. As you know slow is fast in the car business. But like it or not we can change the process and improve the experience and the industry or we can let companies Like Car Cost and True Car do it for us.

Part of the problem is the way salespeople are paid, but the real problem is the lack of Ethics and the correct process on the sales floor even today in some dealerships. The industry as as whole need to take a giant leap forward and change the way they interact with customers and provide that high level of service.

Negotiation is part of the game and may always be but unless customers value the service we provide and employers do as well there is no way to move the ball forward.

I know we can take this business to the next level and make a great living as well.

Lets all work together to make it happen.

Ian

Comment by Ian Nethercott on June 15, 2012 at 1:00am: Hello Craig,

Thanks for the great comment and I understand that car dealers need to be competitive, but I do believe and I have even see customers pay more for great service when the dealership is not affraid to provide great service and "fair" pricing.

Dealerships and salespeople are so afraid of "loosing" a deal to their competition they forget to give the customer great service, pricing and ask for the sale. I can't believe how many times a day I hear Managers, salespeople say it's all about price.

The only thing I will pay more for is a great product and great service.

If the dealer, manager and salesperson don't believe they have a great product and they provide great service why do they deserve more anyway.

Stop thinking price and start thinking great service, great attitude and help customers "Love" the process and price will not be the issue, too many customer will be.....

Have a great night!

Ian Nethercott

Comment by Craig Lockerd on June 12, 2012 at 11:34am: Love this statement...."Customers are happy to pay more for a "GREAT EXPERIENCE", they won't however pay more for a car."

Comment by Joe Clementi on June 11, 2012 at 10:58am: Excellent post. While I don't have the silver bullet to fix all the issues pertaining to our industry, I do have a few minor suggestions. First, we've been using the same format for paying our sales people since the 1960's. A commission percentage based on gross profit. If you review the gross profit margins as an average - they've stayed roughly the same since then. An average front-end gross profit is around $875 per retail copy. The funds however; have shifted from front-end gross profit to paying below the line incentives. In some instances, the manufacturers have actually decreased the margins from retail to invoice! They’ve already attempted to negatively impact the profit margins of the dealer body. The average income is around $30,000 per year or about $11.00 per hour according to recent studies. The purchase experience hasn't changed much since the 60's maybe even as late as the 1950's. Top-tier salespeople have moved up, went into consulting or left our industry. Why? Compensation plans have stagnated and grosses have remained the same. Simply put, the wages do not go as far as they used too.

The largest contributor to the negative experience is negotiating the purchase price. So, why not take that factor out of the equation? There are some states like Minnesota, which have a large population of their dealer body already using the one-price philosophy. Some of the publicly traded companies have undergone “testing phases” using the one-price program. Apple products are sold at the same retail price regardless of where you purchase their products. If there is to be a wholesale change in the way we retail our automobiles, it will have to come from our dealer body. This industry was built by creatively inspired entrepreneurs not by factory people with a single-minded focus.

Comment by Scott Klein on June 9, 2012 at 10:49am: So we've all agreed that wholesale changes (no pun intended) are needed. Any ideas on how that will look? What steps can be taken to transform the process.