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The customer-centric dealership
![The customer-centric dealership](https://biz-file.com/c/1605/343746-700x364.jpg?2)
“Customers no longer spend days or weekends in automotive dealerships browsing around for and talking to automotive sales personnel for the best suited vehicle. The majority of research about the vehicle is done online and by the time the customer reaches the showroom floor they already know what model they want, in what colour and what they are willing to pay for it,” says Ricardo Coetzee, managing executive for automotive at Innovation Group South Africa.
Coetzee expands: “The cost pressures facing dealerships in this competitive environment are immense, and many question the sustainability of massive, luxury showrooms as well as the ability to carry a huge range. South Africa has one of the highest derivatives available in one market anywhere in the world – at last count there were about 57 different brands and more than 1,500 models and derivatives.”
“It’s prudent that we see transformations not as hard issues but as a call for adaption and evolution – albeit extensive and far-reaching,” concludes Coetzee.
“Sales people in many dealerships are not relating to customers. When the banks came in with their FICA and FAIS requirements, they also took away more of the trading relationship between dealers and customers. We need to change this in SA so that we are not merely order taking,” comments Arnold du Plessis, CEO of BB Auto Group.
Online vs brick and mortar
In Europe, where there is a real move towards internet purchases, they measure the number of deals concluded against digital enquiries. A year ago, those figures demonstrated 3.2 deals concluded against one internet enquiry. Today those figures are 1.1 to one – for every 11 internet enquiries they conclude 10 deals. In South Africa, according to the NADA, those figures are about seven enquiries to one deal.
In South Africa buying a vehicle is still a tangible and emotive purchase, requiring a large investment – one which not every customer is likely to make online, even if well convinced. It’s for this reason that online facilities are unlikely to completely eliminate the need for brick and mortar dealerships in the foreseeable future.
“Online won’t remove the need for people to visit dealers – it will change consumer behaviour. Dealerships need to be a destination. If you can create that then the investment in bricks and mortar will pay itself off very quickly,” comments Rory Beattie, customer services director of Jaguar Land Rover South Africa.
What is anticipated is that the future dealership model would need to evolve to fulfil a new role, as warehouses that stock a variety of vehicles perhaps. This would mean that customers would have access to all relevant information online and can conclude the transaction online with delivery from the dealership once the deal has been concluded.
Refining the supply chain
Dealerships are not the only entities impacted by changes within the automotive industry, which is why many predict the abandonment of the current automotive supply chain model in South Africa. The silo approach doesn’t suit the connected customer. Systems and processes are slowly adapting from the previously product-centric approach to customer-centric touchpoints. The ultimate goals is to towards customer-centricity and enabling the customer to 'live the brand' at every touchpoint – and within new channels of engagement.
The expectation is that there will be a rise in state-of-the-art automotive retail concepts such as brand experience centres or 'pop-up' stores that create a buzz with multimedia visualisation tools.
Integration with OEMs
In a declining economic environment, it is anticipated that new vehicle sales may decline and that a renewed focus on customer retention needs to be applied from both an OEM and dealership perspective. Many South African OEM’s don’t believe this will happen, but the majority expect to see a closer integration between dealerships and OEMs as they become more involved in retailing. In Europe, many of the larger OEMs are already operating in a similar manner.
The advantage of an integrated relationship is the enhanced sales opportunities and customer loyalty when the focus is on the individual customer journey all the way from brand introduction through to after sales and repeat purchase.
Dealer CRM
The majority of dealerships realise that the cost of losing a customer and finding a replacement is far greater than the cost of retaining one. This indicates that going forward there will be a greater focus on customer relationship management (CRM). Dealers are expected to move from order takers to relationship builders in order to progress to a true customer centric era.
Remaining in contact with customers over time and tracking them through their lifestyle requires good, relevant, actionable data. Currently, data accuracy remains an issue due to legacy systems and a lack of standardised data. It is expected, though, that this will change over time creating real reasons for interaction and sustained customer relationship management at dealer level.
Valerie Webley, an automotive CRM strategist comments: “We’ve got to stop talking customer centrism and actually do more about it. We say we are customer centric, but we are actually more product centric.”
Copies of the report may be requested from moc.puorg-noitavonni.az@mgrebnednav.
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