Forrester Wave Report
Leslie Stretch, Medallia CEO, and Borge Hald, Medallia Founder, Reflect on Being Named A Leader by Forrester in The Forrester Wave™ Customer Feedback Management Platforms, Q4 2018 Elena:...
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Suppose you walk into a high-end clothing store and you tell the manager that you plan to spend $30K on a new wardrobe. How do you think the manager would react? I suspect you’d receive a pretty awesome shopping experience for the next hour or two, really solid fashion advice from their top staff, and a store that hopes to earn your loyalty for the long run. Yet today, in the typical car dealership, things don’t always go so well. Same $30k to spend, but not the same treatment from the sales team.
Buying a car shouldn’t be just your average customer experience. Think about the last time you had to put down over $10,000 for a single item or event — if it wasn’t a car, chances are the experience was a lot more fun than your typical car-buying experience. Since a car is frequently the second most expensive thing that Americans buy (behind their house), the purchase is really more of an occasion, filled with emotions and expectations, than a mere event. The signs are emerging, though, that while negative purchase and servicing experiences were forgotten or forgiven by the next buying occasion, new forces are shaping the marketplace.
So how will customer experience fit in? Here are four key ways that customer experience is becoming increasingly important to the car purchasing experience.
1. Changing customer expectations
Carmakers have historically focused on product quality and the driving experience to create customer loyalty and repeat purchases. Customer loyalty was first and foremost based on the product experience — how satisfied customers are with the reliability of the vehicle and the driving experience. But product quality has improved dramatically, largely taking the reliability factor off the table. Over a ten-year period, from 2003 through 2012, reliability has improved so much that the top 20% of models available in 2003 would fall to the bottom 20% in 2012. Meanwhile, the myriad of comforts and features offered in today’s cars is making it harder to compete on the driving experience – it’s pretty good on most vehicles in the competitive set. And finally, consumer expectations for the dealership experience are being elevated to new highs thanks to the superior experiences they’re getting in other large-ticket retailers such as Four Seasons, Nordstrom, Sephora, Tory Burch, and a whole host of other companies that have made customer experience a top priority. The customer now has a lot more choice and a lot more experience with great customer service, both of which places the burden on dealerships to provide exceptional customer experiences.
2. The power of word of mouth
While customers may forget their previous poor experiences of purchasing a car, the internet doesn’t. Location-based online review sites are increasingly popular and it’s easier than ever for disappointed customers to air their poor sales experiences in a very public forum. Since the purchase experience is both stressful and expensive, customers are willing to travel a bit further from where they live to find a suitable car dealership, a decision made easier by looking at online reviews. And as millennials, the generation most plugged into social media, approaches the age with the purchasing power to buy a car, online reputation becomes ever more important.
3. Transforming single transactions into a relationship
While the average American purchases cars infrequently due to cost, ideally the relationship with a car dealership doesn’t end there. The gross profit margins for dealerships are much higher for the Service and Parts Department than the new car sales department. But with a stress-inducing sales experience, customers may not want to return to the car dealership for servicing. This is a wasted opportunity. Scrolling through online reviews for car dealerships, you’ll notice that most of the positive reviews are reserved for the servicing side of the business, and many one-star reviews are given for the purchasing experience. Improving the sales experience will give dealerships the opportunity to connect a happy customer to the servicing department, establishing a relationship from a single sales transaction.
4. Building trust
Part of transforming the sales transaction into an ongoing relationship is building trust with the customer. Today’s typical car-buying household has more than one car in the driveway; so family input and trust in a car dealership can play a large role in purchasing decisions. In fact, since individuals, on average, purchase cars every 7-10 years, ensuring retention and loyalty often involves extending the web of connections to the entire family. A lot of the time, each spouse needs his or her own car for work and for shuttling the kids to their after-school activities. Once those kids become teenagers, they’re likely to clamor for a car as well. Having a great dealership experience helps strengthen a relationship between the dealer and the family, building trust and promoting customer loyalty.
With changing customer expectations and the rising importance of online reviews, car dealers can no longer afford to ignore the customer experience of new car sales. Buying a car is one of the most stressful purchasing decisions most Americans have to deal with. Easing the process can go a long way in cultivating a relationship with the customer that lasts well beyond the single transaction.
Photo credit: Alden Jewell