Are Car Dealers Next To Be Disrupted by Amazon?

Why was it so hard for car dealers to understand when we said the car had to fit two bikes?

Why was it so hard for car dealers to understand when we said the car had to fit two bikes?

The last time I bought a car we had a very specific requirement. The vehicle had to be big enough that we could fit two bicycles inside.

We’d destroyed too many bikes by forgetting they were on the rooftop carrier, and my husband’s bike was too expensive to leave out for thieves overnight.

We started at the Toyota dealership because we’d been happy with our Camry.

First, it took a lot of effort to get a sales rep’s attention. They were too busy chatting with each other.

We had one of the bikes with us, and explained that we had to be able to fit two into the back. He started showing us cars with seats that didn’t even fold down!

I had to be the one to tell him that from looking around the lot I thought a Rav4 might work (but it would be close).

“Maybe,” he replied.

“Can we try it?” I asked.

“Oh.” He sighed. “I’ll have to go back in and find the key.”

Twenty minutes later he finally came back. The bike was a bit too long. He offered no suggestions for alternative cars that might work.

Needless to say, we did not by a car from that dealership (and I presume he’s no longer employed there, but that dealership has lost our business forever).

Car Dealers: Give Me A Reason to Come to You!

Today is Part 2 of my conversation with Bruce Kirkland, Dealer Principal of Lexus of Edmonton West. If you missed Part 1, you’ll find it at http://frankreactions.com/109. In that one we discussed:

  • How starting a dealership when he had zero experience in that industry proved to be a real benefit (though it was tough at the beginning).
  • The huge importance of culture training, and his 3 Pillars of success.
  • How they’ve survived – even thrived – in a recession.
  • And  unique things his dealership does to keep customers incredibly loyal.

In today’s interview, we discuss:

The risk of disruption of car dealers by Amazon

Would you buy a car on Amazon? I bet a lot of people would!

Amazon is SO close to selling cars! They just need to flip a switch, and the auto industry will be overturned. They’ve already tested it in Italy.

Hop on over to Amazon Vehicles and you’ll see that they are ready to take on the car dealers.

For now they’re still lobbying for rules to be changed to let Amazon sell cars in North America, but, as we’ve seen from Uber, when an industry is ready for disruption, lawmakers aren’t going to be able to stall it for long.

So car dealers, like retailers before them, have to offer outstanding customer experiences if they want a hope of competing.

In Part 1 we heard about how Lexus of Edmonton has made its environment special, with touches like a grand piano played by local college students in the showroom, a well educated door greeter, a dealership dog, and on-site massage chairs. As Kirkland puts it,

That said, he’s not technology resistant.

The dealership is doing a test of staff using iPads, for example, and he’s already thinking about how he’ll defend against Amazon by, for instance, ultimately being able to bring a car to someone’s home and sell it to them on the spot — no need for the customer to go to the car dealer.

Great staff are key to great customer experiences

That’s no shock to anyone who’s worked in customer experience for a while or been a follower of this blog. Without happy staff, you won’t have happy customers.

I was surprised when Kirkland told me that he insists on hiring educated staff, with at least a degree or college diploma. It’s not so much about what they learned in school, but about their willingness to learn.

To be lifelong learners.

To recognize that the world is changing so quickly, only the adaptable and creative thinkers will survive.

Rethinking Commission-Based Sales Staff

Hiring and retaining staff like that has meant changing the way staff are paid, massively decreasing (or potentially even eliminating) the commission-based sales model used by most car dealers.

As he explains in the interview, not many parents will be thrilled to hear that the kid they spent a fortune putting through university is going to become a car salesman. Changing the pay structure so their kid at least get a decent base salary helps lower that resistance.

And, of course, basing income on sales commissions creates a conflict of interest for the sales rep. They won’t be acting in the best interests of the customer, because the sales rep’s goal is to maximize their own income, not to find what’s best for the customer.

The owner of a car dealership should care about the long-term interest of the customer, because eventually you want them to come buy another car from you, and you want them to make referrals. Owners have a reason to see the bigger picture.

But how many commissioned sales staff will be around long enough to benefit from that? In 2015 the average tenure of a car salesperson in the US was 2.4 years, about half the median job tenure for all other non-farm jobs. And it’s still dropping.

Become Less Feature-Focused & More People-Focused

Not surprising that it is dropping if their compensation models haven’t changed, because their role in the sales process has definitely changed.

Now most of the research and buying decision is made by the customer long before they enter the dealership. So when the customer comes in they want a sales rep who:

  • asks the right questions to determine their real needs, and whether the car they came in thinking about is actually the best for them,
  • has strong enough people skills to judge whether the customer just wants to get in and out quickly or would rather have a long chat,
  • is trustworthy and won’t waste their time with fake claims that “I have to discuss it with my manager.”

In other words, pretty much the exact opposite of what I experienced when I bought that last car.

Also in this interview:

  • Why Kirkland LOVES hiring Millennials, and how they’ve helped his dealership stand out.
  • More about how his dealership handled the recession. (Hint: Look for efficiencies and value add. If you just cut staff or salaries, you’ll cut the customer experience.)
  • How to handle staff scheduling in a way that works. (Another hint: People take ownership of what they create.)
  • What they put in their newsletter to make customers happy to read it.

 

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