Dealers, consumers drive digital car buying revolution
A friendly smile, firm handshake and cars on the lot are no longer enough for dealers to be successful.
New mobile apps, websites and other ways for customers to find information while purchasing a vehicle have revolutionized the car-buying process for consumers as well as dealers. They've led to better-educated consumers, more transparent dealers and a new way of buying cars.
"Consumers are visiting fewer and fewer dealers," said Jared Rowe, president of AutoTrader, an online site that aggregates listings for new and used cars. "A lot of these consumers come in with a very precise idea around what it is they want, and who they want to buy from."
Regardless of how old they are, car buyers are spending more time online instead of on dealer lots, and putting significantly more trust in third-party companies and websites, according to a recent study from AutoTrader and IHS Automotive.
In 2011, 71 percent of all buyers used the Internet to shop for cars, compared to 79 percent in 2014, AutoTrader found.
Buying a car the old way was a relatively straightforward process: Customers walked into dealerships, a sales person showed them around the lot, then customers tried to negotiate their best price. It's the way successful dealerships such as those of Metro Detroit's Snethkamp family operated for decades.
In some respects, the basics remain. "It's about taking care of your customers," said Mark Snethkamp Sr., whose grandfather started selling Chryslers in 1926. "That's what Grandpa taught me, and my dad drilled into my head, and that's what I'm trying to teach everyone here.
"Technology changes rapidly, but the game is still the same."
But buyers' habits have changed. Instead of walking blindly onto a dealer lot, they start researching vehicles on automaker websites and search trade-in values on sites like KBB.com. They look for pricing of new cars on sites such as Truecar.com and Edmunds.com. Eventually, they make their way into the dealership they've researched, knowing the exact car or truck on the lot that they want, and what they expect to pay.
The new process has caused dealerships such as Snethkamp Chrysler Dodge Jeep Ram in Redford Township to adapt, said Mark Snethkamp Jr., business manager at the dealership.
"It actually makes our job easier," said Snethkamp Jr., the fourth-generation Snethkamp to work in the family trade. The family has dealerships in Lansing and Highland Park, too.
"An informed customer already knows what cars are on the lot, and they already know what they're looking for … Technology's changed the form of communication, but not what the communication is."
Depending on the customer, he will use social media, text messaging and more traditional forms of communicating to sell cars and to follow up with customers — from a potential new-vehicle customer to helping with service for a repeat customer.
It's a process: "Without good customer service in the service department, you're not going to have people coming to buy cars from you," said Snethkamp Jr.
Key is communication
Communicating with customers as well as customers communicating with others in their own social circles about purchasing a vehicle is what created websites such as DealerRater.
The ratings and review website allows consumers to rate a dealer based on a five-star system. It also allows certified DealerRater dealers to attempt to rectify a bad rating or problem before it's posted, helping dealers maintain good ratings while keeping customers happy.
With nearly 2 million reviews, the website is a way to continue the conversation between dealers and consumers, says DealerRater CEO Gary Tucker.
"It becomes a real tool for dealers to not only build up this content to capture shoppers and increase sales, but strengthen their overall process," he said. "There's a great engagement that's occurring."
Tucker as well as AutoTrader's Rowe said if a dealer publicly handles a concern well in-person or online, it can be better than a regular positive review.
Reducing the friction
Laurence Dixon, National Automobile Dealers Association Used Car Guide senior analyst, said the evolution and data transparency has created efficiencies across the board.
"They can't get away from a consumer walking into their showroom with pricing on either their trade-in or the used vehicle they're looking to buy," he said. "That helps to reduce the friction."
Reducing that friction leads back to what dealers have done for the past century: sell cars and create relationships.
"It's about finding that car at that price from someone that matches me," Rowe said, adding dealer such as the Snethkamps are "there to really have that unique relationship" with customers.
"Our employees are family and our customers are as well," said Mark Snethkamp Sr., flanked by old photos of his father and grandfather working in dealerships. "That's the kind of feeling we like to portray to everyone who sets foot in this place or visits us by phone or online."
Online new-car shoppers
According to a 2014 survey and report by J.D. Power and Associates:
■New car buyers who use the Internet spend on average of nearly 14 hours shopping online before purchase.
■Those who spend the most time shopping on the Internet (12 hours or more) visit more dealers (3.3) to shop prior to purchase than those who spend either a moderate (5 to 11 hours) or minimal (1 to 4 hours) amount of time on the Internet (2.5 and 2.0 dealers, respectively).
■34 percent of new-car buyers who research online use a smartphone or tablet while shopping at a dealership, up from 29 percent in 2013. Vehicle pricing is the most frequently accessed content while at a dealership (61 percent), followed by model information (42 percent), searching inventory (40 percent and special offers/incentives (36 percent).