online car shopping
J.D. Power data shows customers voice a clear preference for receiving pricing digitally.

Price Quotes Deter Customers Cross-Shopping Car Dealers

Dealers who provide digital pricing can impress upon customers there’s a set process being followed, which can indicate they’re getting a fair – and even the best – deal.

It’s imperative that a customer’s online shopping experience dovetails with the in-store experience for car dealers to make a sale.

Vehicle shoppers go online to help make their shopping experience easier and minimize multiple dealership visits. Many are spending about 13 hours researching and browsing makes and models online before making a purchase.

Chances are, once an in-market shopper walks onto a showroom floor, that person has done most of the legwork and is just looking for the exact inventory at the right price.

Unfortunately, some dealership processes aren’t aligned to this new reality.

For example, J.D. Power data shows customers voice a clear preference for receiving pricing digitally, either by tablet, email or computer-generated printouts. Their satisfaction with the sales process is higher when these options are used. Dealers, by contrast, still provide hand-written quotes approximately half of the time.

Why not offer a more formal pricing quote? Perhaps the belief remains customers will take this price and shop it at multiple other dealerships. J.D. Power data shows this isn’t the case.

In fact, the number of dealer visits doesn’t matter when compared with the method of in-store pricing quotes. By doing their homework ahead of time, shoppers don’t have the desire to visit a variety of dealer. Dealers who provide digital pricing can impress upon customers there’s a set process being followed, which can indicate they’re being given a fair – and even the best – deal.

Dealers can further limit cross-shopping early in a shopper’s car-buying journey. The J.D. Power 2018 U.S. Sales Satisfaction Index Study shows those who rate their selling dealer’s website highly are less likely to visit other dealer or third-party sites.

This means they’ve found a dealer who meets their needs regarding content, inventory and pricing. Dealers perform higher on dealer website ratings when new vehicle specials are easily accessed and current, as well as when attractive images of actual vehicles on the lot are displayed, not just stock photos. (Wards Industry Voices contributor Chris Sutton, left)

Depending on the brand, dealer close rates can range from 15% to 32%. With approximately half of customers visiting their dealer’s website, it’s fair to say effective digital retailing tools help improve dealer close rates.

This improvement comes from limiting dealer rejection caused by cross-shopping that squeezes dealer negotiation room. In the next five years, we anticipate digital retail tools and effective processes will increase dealer close rates to 35% from 25%.

To stand out and succeed in a crowded marketplace, dealers need to engage with shoppers in a manner that’s consistent with their wants and needs. That means engaging on a digital level.

Chris Sutton is J.D. Power’s vice president-U.S. automotive retail practice.

TAGS: Dealers
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