By Alysha Webb, Editor and Publisher
All the information available on the internet has produced price transparency, so dealerships must compete on customer experience is the current mantra. But price is still the number one reason for choosing a dealership, according to a recent study by market research firm Ipsos for Jumpstart Automotive Media.
“There is a gap between consumer and dealer perceptions,” Colin Thomas, a senior analyst with Jumpstart, a San Francisco-based digital automotive marketing firm, tells Automotive Buy Sell Report. “The lowest price and inventory are still key for consumers. There is a big disconnect.”
The “Today’s Auto Buyer and the Digital Retailing Experience” study looked at how digital and mobile have impacted the relationship between the customer and the dealer. Its findings suggest some deeply-held beliefs may need to be re-examined.
The study design included qualitative research consisting of a five-day online discussion with 28 U.S. consumers, a four-day online discussion with 28 dealers, and nine 60-minute phone interviews with dealership GMs and owners. Following these results, quantitative research was conducted in the form of online surveys of 263 recent buyers, in market or intending car shoppers, and 54 dealership employees.
For consumers, the top reason for selecting a dealership was lowest overall price, chosen by 49 percent of those surveyed. Then came vehicle inventory at 41 percent, customer service at 36 percent, dealership reputation at 32 percent, and less pushy sales environments at 30 percent.
Some 48 percent of dealership managers and employees thought dealership reputation was the number one reason for choosing a store, followed by prior positive experience at 41 percent, vehicle inventory at 36 percent, sales person reputation at 30 percent, and lowest overall price at 24 percent.
Another disconnect was the impact a dealership’s social media presence has on a consumer’s behavior compared to a dealership website. Though 91 percent of dealers who engaged in social media thought it was leading to consumers taking shopping actions, only eight percent of consumers surveyed said they saw a social media related to a dealership and acted as a result.
“Social media is one of the shiny objects,” says Thomas. “Maybe dealerships should put greater emphasis on the dealership website.”
Shoppers visit third-party, manufacturer, and dealership websites during the shopping process, and dealership sites are most influential for inventory, special offers, and pricing, the study found. The top reason to visit a dealership website during the shopping process, at 41 percent, was to check vehicle inventory. Number two, at 37 percent, was car pricing.
By comparison, the top reason to visit a third party website was to read car reviews, and the top reason to visit a manufacturer’s website was to compare models.
“Dealerships are undervaluing the role of websites,” says Thomas.
He recommends that dealership websites have shopping tools that allow consumers to build and price models, as well as finance calculator tools, trade-in pricing tools, and pre-approval for finance and insurance.
Getting the trade-in value was the most popular online shopping activity, the study found, at 38 percent, followed by applying for financing at 30 percent and learning more about finance and insurance products at 28 percent.
All this is not to say customer experience is still not a key differentiator. Customers prefer a sales person who is non-commissioned and “near my own age,” the study found.
The top salesperson attribute – at 48 percent – was “does not place a high level of stress on me,” followed by “is considerate of my time” at 41 percent.
Rather than pressuring consumers into buying a car, or giving them a price quote, Thomas recommends letting them take a test drive, even if they aren’t actively car shopping. The study found one in five shoppers who visit a dealership haven’t decided if they want to replace their current vehicle.
“If you can get the consumer to schedule a test drive, that will get them more comfortable with the dealership,” says Thomas.