Points of Friction - The Rikess Group Points of Friction - The Rikess Group

Points of Friction

by / Tuesday, 07 March 2017 / Published in Uncategorized

Points of Friction…OUCH!

We’ve all been to stores where:

…What you saw online—or were promised online—isn’t available on-site …  You can’t find what you’re looking for, or find someone knowledgeable and friendly to help you …  The website is information-rich and pressure-free, but in-store personnel make up for their lack of knowledge by being smarmy or pushy …   It takes hours to finish the deal – even after you’ve decided on the car and have agreed to the price and trade-in…

Friction in New Car Buying

Consumers hate any form of friction and the number one “pain point” found in most automobile dealerships is the traditional negotiations sales model. Companies today need to remove friction, not add to it, by simplifying customers’ lives.  Let’s dig deep …

In general, salespeople don’t negotiate. They are either a conduit for desk managers’ “pencils” or they tee up their first customer price quote with enough gross to allow a manager room to negotiate a little and try to close a deal. Very few salespeople today, especially new ones, have competent negotiating skills. This reliance on sales management is expensive. Most traditional dealerships have at least one sales manager for every four sales associates!

This lack of sales associate empowerment is a very costly proposition and an unnecessary critical point of friction. Your customers hate the “back and forth” sales people do while hopping between them and the desk and negates the authority of the salesperson because, at this juncture, it’s clear they aren’t dealing with a decision maker.

There is no other shopping environment where they encounter this type of experience.

Bottom line, this is a very expensive and redundant model.  Well paid managers are really “super sales people” – when their real job should be to hire, manage and train their sales staff to handle the entire transaction.   But why would they do that?   An empowered sales staff needs less managers – so it would be job suicide.

It may be counterintuitive, but grosses are higher when you eliminate negotiations. When you add value to a transaction you can charge more. By providing a fast, fun, and transparent experience through a knowledgeable sales associate you will have the ability to charge a small premium for a great experience. Happy customers equal higher referrals, more positive online reviews and repeat business.

The Times They Are a’ Changin’

Most of you buy products from Amazon. You take for granted, the hassle-free experience. Amazon works hard to eliminate points of friction, and automobile dealerships must do the same. The average auto buyer spends over ten hours doing research before ever contacting a store.  When they are ready to buy, most know what they want to purchase.  At that point, friction in the form of a lengthy process and multiple back and forth buying steps, creates doubt and/or turns in to frustration/anger that can lead to lost sales.

(They don’t run into these hassles when buying anything else – why now?)

I’m sure you’re aware of the growing movement for consumers to buy everything from the comfort of their homes –  including automobiles. It is estimated that 28% of car buyers would buy “remotely” if given a simple, secure, friction-free method. New technology tools like Roadster Express Storefront allows consumers to complete an entire transaction without coming to the dealership. Recent pre-owned entrants like Carvana, Vroom and CarMax have proven they can sell pre-owned vehicles even without a test drive. They are all negotiation free.

Meanwhile, another “A” company, Apple, has disrupted brick and mortar retail operations with their Genius Bars – where consumers are served by salespeople who are friendly, patient and smart – with high levels of technical knowledge.

Automotive salespeople must also be product geniuses so they can keep up with today’s educated shoppers. Consumers don’t want an aggressive, high-energy closer focused on wheeling and dealing. They want a highly knowledgeable advisor who knows more than they do – focused on product features and value, financing, and what’s best for them. They want to deal with a true professional.

Does your store offer a significantly differentiated shopping experience than that of your same brand competition? In almost every case, the answer is no. So, if the shopping experience is similar from store-to-store, what drives most customer’s final purchase decision? Price! Isn’t it time to create a frictionless experience that allows you to sell more vehicles, for more gross, while getting a greater amount of positive reviews?

Can You Hear Me Now?

Ask yourself – why do I have a negotiation-based sales model, with all the extra time, expense, complication, and customer and employee dissatisfaction that come with it?    Most likely, it’s simply because it’s what you’ve always done.    It may require a leap of faith, but not a big leap. It’s time to THINK DIFFERENTLY.

 

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