In the late 1970s, I spent a few months working as a mechanic at a large car dealership. I didn't like the job much, but it came with an unexpected benefit – I got to observe sales professionals in action.
Like a National Geographic reporter on assignment in the Serengeti, I was learning about a new species. Back then, car sales had a well-established choreography: salespeople wore suits, polished their shoes to a high gloss and spent their days waiting for "Ups" – potential customers who walked into the showroom.
There were two kinds of Ups: The bad ones were tire kickers who never bought a car. The good ones were those with bulletproof credit ratings and the urge to buy – these Ups seemed to exude a chemical scent that attracted salespeople. Watching a good Up walk through the showroom doors was like watching a fattened seal taking a swim through the shark-feeding grounds off the Farallon Islands – the only question was which salesperson would get the Up first.
Today, that car sales model is dead in the water, pushed aside by a digital reality that has turned the tables on the old-school salesman.
"There has been a complete shift in power from the dealership to the buyer," says Tim Wilson, a Google executive who leads the company's automotive program in Canada. "Information is power, and the consumer now has it."
Internet research has upended car-buying. When I worked at a dealership, the vast majority of consumers depended on dealers for information about prospective purchases. By the time they bought a car, many had visited at least half a dozen dealerships in their quest for information.
According to research by Google, more than 75 per cent of all car buyers now use the Internet as their primary research tool, and a growing number visit only a single dealership before they buy.
Bruno Lucarelli, an auto industry consultant and former head of eBay Motors, says few dealers were prepared for the way the Internet would reshape their business. In 2004, when Lucarelli was an executive with Autotrader's online operation, he learned that 75 per cent of the car dealers in his area (New York and New Jersey) didn't have websites.
"They'd always done business the same way," Lucarelli says. "You brewed your coffee, opened the front door and waited for the customers to come in. Online hit them like a truck."
Dealers soon realized that the web was a seismic shift. Many of their customers came through the door armed with more knowledge than the salespeople in the showroom. Customers could recite specifications, knew what the dealer had paid for the car they were interested in and they knew what models competing dealers had in stock.
"All the information was out there on the Internet," Lucarelli says. "Anyone could be an expert."
The age of the Internet buyer has forced dealers to change the way they do business. The shark-attack style of sales is being pushed aside by an "experience" model aimed at making customers comfortable so that they'll choose to do business with your dealership. Manufacturers have pushed dealers to invest in major upgrades that include everything from new carpeting to on-site spas.
"Consumers will pay for the experience they want," Lucarelli says. "Companies like Abercrombie & Fitch have known this for a long time – kids like hanging around their stores. And Starbucks gives you free wireless so you'll stick around."
Wilson agrees with Lucarelli's assessment. "The web has changed the game," he says, adding that 50 per cent of customers Google surveyed in 2014 knew exactly what they wanted to buy before they walked into a showroom.
"Car dealers don't need salespeople now. They need facilitators that make the customer feel good about their experience. The dealer used to have all the pricing info in their secret little black books. Now it's available to anyone who wants to look."
Six things Google has learned about how we buy cars
- The car-buying journey has three phases: thinking, researching and buying. On average, the thinking phase takes 30 days. Researching takes 22 days. Buying, 18.
- The Internet is five times more likely to influence a car buyer than other forms of media.
- Using the Internet as a research source increased to 78 per cent in 2014, from 66 per cent in 2013. During this period, the use of dealers as an information source decreased to 56 per cent from 62 per cent.
- 35 per cent of car buyers surveyed in 2014 visited only one dealership before purchasing (the year before, this figure was 28 per cent).
- 50 per cent of car buyers said they knew what they wanted before entering a dealership.
- 33 per cent of car buyers fall into a “self-serve category” – they do all their own research.
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