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Are Dealerships a Thing of the Past?

Even after online research, consumers want to learn firsthand about a vehicle and take it for a test drive before making a decision, regardless of the brand. What’s this mean for dealerships? It means going back to and sticking to the basics.

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Go to virtually any mall or main street. Brick and mortar stores are closing at a rate never experienced and are moving online to survive. Should dealerships follow suit? Are dealerships a thing of the past? No, especially not the good ones.

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This year, Tesla announced it planned to close its stores and move to 100% online sales. Only 10 days later, the company changed its position, stating it will evaluate each site and keep some higher producing stores open. This abrupt reversal reinforces the need consumers have to learn firsthand about a vehicle and take it for a test drive before making a decision, regardless of the brand. What’s this mean for dealerships? It means going back to and sticking to the basics.

Consider this comment from Don Hall, CEO of the Virginia Automotive Dealers Association, “Though the franchise system is literally over 100 years old now, it has worked for a reason, not because we’re dinosaurs holding onto dinosaur practices, but more because a car is a huge purchase in one’s life.”

This sentiment was echoed by David Whiston, an analyst from Morningstar, “…if a consumer is really undecided between, say, a Tesla, an Audi and a Mercedes…that person may just prefer to go to the dealer and test drive something before signing a contract.”

This makes it even more essential to take care of the customer, flawlessly. And it may mean refocusing priorities. For example, almost any general manager at a dealership can easily tell you how much they are spending on technology — CRM systems, online marketing, the internet. But, if you ask them how many customers came in yesterday, how many had been entered in their CRM system, how many bought a vehicle, how many left without purchasing and how many had been re-contacted within 24 hours, most will not be able to answer.

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While technology plays an important role at every dealership, if not balanced with human interaction, it can backfire. Human interaction creates excitement and builds trust for the product, the dealership and the salesperson. Technology doesn’t sell vehicles, people do.

The roles have changed. Managers must educate and train their salespeople how to work as product advisors who guide customers in finding the right vehicle, the one that meets their needs, wants and desires. They must model behavior and show their salespeople how to develop trust with customers — for the dealership, the brand and themselves. They need to seek out, hire and retain salespeople who have a sincere interest in building a relationship with customers.

Car buying is a personal experience, and as long as dealerships take care of their customers, they will never become a thing of the past. It starts when management has a clear understanding what is going on in their dealership. Armed with this, they can build a bridge between technology and human interaction, establish effective customer-centric processes, educate and train their salespeople as product advisors. When technology and people work together to provide the best customer experience possible, dealerships will continue to thrive.

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Dealerships must invest in both technology and their people. Having data is important, but using it effectively to help your people focus on the customer and create a positive experience is what’s important. It looks like brick-and-mortar dealerships are here to stay, for a while longer, at least.

Richard F. Libin

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