Georg asked after our presentation about the brand experience audit yesterday why more companies are not clued in. With the benefit of more time to contemplate his question, I would like to further explain why car dealers probably do not feel the need to invest in improving the customer experience.
I think there are three reasons car dealers in particular do not feel the need to improve the customer experience. First, as Professor Fournier mentioned yesterday, they have a captive audience. If you want to purchase a VW in Boston, you most likely will go to Boston VW since it is the only VW dealer in Boston. Although you have the option of going to dealers located near Boston, such as Brookline VW, you will probably purchase your car at the closest location since you will need to service your car at least once a year and most dealers give service preference to the customers that have purchased from them. Second, as we discussed in the SCPT case, there are societal trends that will also influence whether Boston VW invests in improving the customer experience. For example, people are moving more often for job relocations and from the city to the suburbs. Assuming that the average person owns a car for 7.5 years, although you may purchase a VW from Boston VW, there is a good chance that you will probably not be a repeat customer for the dealer. You may feel loyalty to VW and want to purchase another VW in the future, but if you have moved, will most likely find a closer dealer to purchase from (again since you will want a relationship with the dealer that you have your car serviced at). Third, improving the customer experience may be helpful in helping sway the customers on the fence between fairly comparable cars, but if the customer has already decided to purchase a BMW for example, Boston VW will not be in the consideration group of dealers.
As Sein described yesterday during our recommendations, VW has a new concept for VW dealerships, but I believe it will be up to corporate to provide incentives to dealers to invest in the customer experience since it will help strengthen the overall brand.
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3 comments:
I agree with the reasons mentioned as to why car dealerships are not clued in to the improvement of customers' experiences in their dealership. However, with so much competition out there (how many dealership ads do we see in just an hour of watching TV??), I would think that dealerships would be willing to try anything and everything to differentiate themselves from the sea of new-car-filled-parking-lots out there. Also, buying a new or used car is a fairly large event, and consumers talk about it with others. If a consumer had a really great experience at a dealership, it is very likely that the positive word-of-mouth resulting from their experience would be very beneficial to the dealership.
I agree with Roz, especially in an area such as New England, the opportunity to form a coalition among dealers to ensure the same pleasant buying experience across dealerships would be a very very appealing one with only positive long term impacts for both the dealer network as well as the manufacturer.
With the manufacturers not being able to control the dealer, this initiative should come from the dealers in order to be truly effective. Their incentives have to be aligned and enforced in order for the concept to work. This is however most likely never really going to happen because if their approach was anything but nearsighted they would have instituted something of this nature a long time ago. Instead they continue to accept the status quo and capitalize on the combination of plentiful marketing dollars from the manufacturer and the sheer need for a vehicle to reluctantly drive customers to them. If they had a clear sustainable long term strategic vision, dealers would have gotten together a long time ago and would be sharing the profits from consistent loyal repeat customer sales and not resort to squeezing dollars in the back room after having you lured there with bad cheesy local commercials.
I'm not so sure dealers aren't already catching on - for me that was the slightly odd part about the presentation. It seems that the team had a highly positive experience in Herb Chambers (which is a large chain especially for NE), but spoke of it very briefly.
Maybe that's the difference: dealers like Ernie Boch, Jr and Herb Chambers are able to form huge chains because they are "clued in" and because they understand how to treat their customers (more sales than competition -> higher profits _> ability to grow?), and do so on a consistent basis. Sustaining positive word-of-mouth, as Roz mentioned, and maintaining a good reputation is likely to be much more important to these dealers because at the end of the day, it's not one location but 30, 40, 200 that are being affected. Whereas independent dealers located in exclusive areas (VW Boston's sole dealership for all of Boston) may be able to rely solely on the supply and demand needs of the market and not have to work at winning their buyers over.
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