Car Dealers: Want Digital Retailing? Start by Redefining your People Strategy
Digital retailing has officially arrived. The perfect storm of change is upon us. Technology advancements, customer demand and OEM programs are pushing retail automotive down a new path.
The early adopters of this technology have figured out what the rest of the industry is going to uncover. This isn’t a simple plug and play application that allows us to engage with our customers online, nor is it just a new and improved lead generation tool. If done correctly, digital retailing will impact every facet of your dealer business. Pricing, compensation, sales process, branding and communication all have to be evaluated and revolutionized.
If you are not sure if your business can handle all this at once you are probably right. Here’s where to start…
Why is Digital Retailing Different?
By investing in this methodology, you will lose control over aspects of the sales process that we as an industry have spent years perfecting. All those meet and greet word tracks, fact finding scripts, TO set ups, and back and forth negotiating will have to change, and that’s assuming the customer doesn’t buy the car online.
Tools like Roadster and CDK Connected Store provide an electronic showroom to the 53% of consumers that when given the chance would either be extremely likely or very likely to buy a car online. This means more than half our customers will move down the sales funnel in the electronic showroom at their own pace and without your/our involvement. Vehicle selection, trim level, pricing, trade appraisal, financing options and financial products will all be transparent to the customer with minimal or no interaction from our sales team. With predictions hovering around 10% of total vehicle transactions online by 2019, most customers will get to the finish line on their own but not cross it.
So What Does this Mean for Automotive Retail?
We can no longer treat the customer as a lead and send them back to the starting gate when they arrive at the store. Reverting to the old process of setting an appointment or forcing the customer to start with the needs analysis before allowing the test drive is equivalent to ordering a meal for pickup and finding out you have to re-order once you arrive at the store. Our customer has given us more information about what they want, what they are willing to pay and how they want the deal structured. We need to respond with a reengineered process that leverages the information we’ve been given to get the customer out the door quickly and efficiently.
Preparing Your Teams
This is bigger than just redefining sales process. If we are going to win in digital retailing we need to reconsider strategic concepts such as employee autonomy, role and organizational design, compensation and accountability.
Employee Autonomy: Who can make decisions? In the traditional world only managers could. In the new digital world, customer facing employees must be empowered to pivot along with the customer. The number of steps to be completed before the sale remains the same, but digital retailing has the potential to change the order of the steps. Every sales team member should have access to where the customer is in their journey and be empowered to assist them along the way.
Role and Organizational Design: As the selling process moves away from a linear forced march, so should the design of our roles and teams. Roles with a limited scope and departments that operate in a silo will slow down the process and take decision making ability away from front line employees. Progressive dealers have already begun to implement concepts such as a one person selling model and small teams to leverage collaboration, communication and efficiency. In order to fully embrace this new way of interacting with our customer, we need to break down department walls to create smart, empowered employees that can impact the customer experience at every level.
Compensation: The economy is strong and unemployment rates are experiencing record lows. The nation is in a war for talent and retail automotive is on the losing end. Highly variable commission based pay plans are no longer attractive to the labor market and the design of our compensation plans do not align to success metrics. If we lay awake at night wondering if our people are delivering a customer experience that will keep the customer coming back then we need to reward for the creation of that experience, not solely on how much gross each person or department is attempting to generate.
Equitable compensation plans that eliminate rivalry between departments and reward for meaningful results are not only more attractive to the labor market, but more importantly get your team working together to accomplish a common goal.
Accountability: Similar to the shift in compensation philosophy, the way we view accountability needs to evolve as well. We can no longer afford to allow our compensation plans to be the primary driver of behavior. Digital retailing will force increased transparency with the customer and the same concept should apply to how we communicate with our teams and hold them accountable for performance. Goals need to be set at the dealership level, not at individual level. Conversations should occur daily regarding planning, execution and collaboration. This is no longer about what each person can do, it’s about how we as team can win the customer for life.
Where to Go from Here
If these concepts sound big and complicated it’s because they are. Moving an organization forward and embracing transformational change is not easy. It starts with recognizing the need for evolution and putting into motion small and incremental shifts that will advance process, people and strategy. The best place to get started is a familiar one – your sales desk.
Clear your schedule, keep your phone in your office, and sit at your Managers desk all day. Observe. Ask questions about process. Take notes. Do a time study to see how long customers spend in your store and how many employees engage with them during the selling process. Ask your team members what is working and not working. Talk less, listen more. If you do this well the problems become clear and the solutions begin to make more sense.
Bobby Knight once said “your biggest opponent isn’t the other guy, it’s human nature.” Don’t let the way we’ve always done things prevent you from building a foundation that is going to support your future. Your customer and employees are asking for change – the time to act, is NOW.