Dealers that want to grow their dealerships should define online channels to meet customers wherever they want to work – remote or in the dealership, either independently or with help.
And, of course, dealerships must be flexible enough to seamlessly continue deals as customers change their preferred method of interaction, Bill Nash, CEO and president of CarMax, told attendees earlier this month at Reuters’ Automobile Retail 2022 in Las Vegas.
“You’ve got to have great stores, great associates, great technology and great digital capabilities,” Nash says. “Now it sounds complex, and it is, and you may ask ‘Is it worth it?’”
Nash notes it certainly was for CarMax. The company reports in the zero- to 10-year-old used vehicle market in the U.S. its share rose to a record 4% in calendar year 2021, up approximately 13% from 3.5% in calendar year 2020. Net revenues rose 48.8% to $7.7 billion compared with the prior year fourth quarter. Online sales doubled and the company has adjusted its long-term targets up.
“We feel great about the future and the opportunities that are out there,” he says. “But more importantly than all this is, it was a better company. We are completely different than what we were back in 1993 (when the company was founded). We're a much more nimble company.”
Nash says other dealerships can replicate CarMax’s success. A first step is to analyze how customers want to shop and meet those customers on their own terms.
“In the most simplistic way we think about omni channel as we've defined it, it doesn't matter…how you want to shop,” he says. “We want to have a very personalized, tailored experience for you, whether you want to do 100% in-store, which last quarter for us a third of our customers did everything in the store, or we got the other end of the spectrum where you want to do everything online. That's (currently) the smallest subset of our customers.”
Yet that segment is growing, and many customers want to move from online to the dealership and even back.
“You have to have continuous improvement, because the customers’ expectations and behaviors are constantly changing,” he says.
CarMax replaced traditional customer service staff with multiple customer-experience centers. The 2,000-plus associates handle calls, but they are trained to proactively help customers untangle snarls and proactively move to best actions. They also proactively reach out to customers who have completed steps online.
“There is still a good chance the customer is going to fall off,” says Nash. “This is a new area for us. We haven’t figured it out. But it’s absolutely a key to our success as we go forward.”
Nash notes progression to technology that allows customers to do everything on their own is key to success.
“Now it seems simple, but buying a used car is definitely not buying like buying a shirt. I think about all the use cases,” Nash says. “Some customers need a loan. “Some customers have a trade. Some customers are upside down in their trade. There's lots and lots of different use cases and you have to be able to have a capability to meet each one of those.”
That’s where integrated seamlessly connected technology is a must-have.
“Sure, they're okay with having a clunky process right now, but as time goes by they're going to want it simple and seamless,” he says.
The process takes time, but Nash says CarMax began with developing and refining online finance.
“Just a few years ago, if you wanted to buy a car from CarMax, the only way…was to come into the store. So that's one of the first capabilities we put online,” Nash says. “That's been a huge home run. Why? Because when a customer gets approved online, they're fired up. They're excited or excited about continuing that journey.
“But equally important are those customers that go online and realize, I'm not in the market right now for a used car because I can't afford it,” he adds. “We just saved some time from having to come into the store and we saved our sales consultants from having to work with that customer when…they can't afford a car right now.”
Before dealers can hit any goals, though, they must make sure all associates are trained and on board, Nash says.
“You won't realize the ultimate benefits of this if you don't bring the associates along. And I can tell you it sometimes can be the long, too long pole in the tent,” he says. “You can only go so fast as your associates can digest, and you're going to have external stakeholders that are pushing. You go faster and faster. And while we could have gone faster. It's not the best decision long term if you're not bringing your people along.”