Vehicle dealers fail to keep pace as balance of power shifts. 

According to a recently-released study by the Car Internet Research Program (CIRP) and Capgemini, a global consulting firm, the increasing use of the Internet has given automotive consumers an edge in the vehicle buying process, making them less dependent on dealers. The result is a significant shift in the balance of power as dealers fail to keep pace with the changing consumer dynamics.

The qualitative study, titled "Inside the Customer/Dealer Relationship," examines that shift of power and the influence of the Internet on the vehicle buying process inside dealerships.

"Consumer change has accelerated rapidly due to consumers' increasingly sophisticated buying behaviour and the availability of information on the Internet, which is helping to delay their moment of entry into the dealership," said Dr. Christian Navarre, director of the Ottawa-based Car Internet Research Program. "It's critical that the dealer role changes to adapt to this new world. Companies must move away from the traditional asymmetrical customer/dealer relationship so often characterized by negative preconceptions and stereotypes on the part of both parties. The key is to move toward a more balanced relationship where there is transparency of information and mutual trust, thereby improving sales and beginning to build customer loyalty. "

The research, consisting of observations and interviews with both consumers and dealers, was undertaken in North America (U.S., Canada) and Europe (France, UK) at car dealerships representing 12 North American, European and Asian mid-market brands.

Improved customer intelligence was found to be a critical success factor in responding to the changing dynamics of the customer/dealer relationship. Automakers and dealers must gain a better empirical understanding of consumer behaviour in order to improve the customer/dealer relationship and in the process drive increased sales and strengthen brand and dealer loyalty.

Because customer behaviour evolves, it's critical to keep a finger constantly on the pulse. Best practices include sales training seminars that incorporate intelligence about customer research tactics, as well as careful and constant observation of consumer behaviour through the entire vehicle buying process.

In addition, it is important to capture customer intelligence coming from new tools, such as web forums, as well as the information traditionally gathered in the showroom. This valuable insight should be used to constantly refine products and services in a continuous improvement process.

"Customers' search for information during the vehicle buying process has become increasingly diverse and complex, making it more difficult for automotive companies and dealers to predict their behavior," says Nick Gill, Global Automotive Leader for Capgemini. "It is essential that dealers and manufacturers learn to understand the consumer's universe, the tools at their disposal, and the state of mind they are in when deciding to buy a car in a dealership."

Do's and don'ts in the showroom
The research found that what happens inside the dealer showroom is critical to ensuring a positive outcome. It identified three key stages of a customer's visit:

Ô  Stage 1: entering the dealership and initial  interaction with on-site personnel (receptionist, salespeople);
Ô  Stage 2: interaction with a salesperson over a  particular vehicle (request for information,  examining the car, potential test drive);
Ô  Stage 3: negotiation (over vehicle availability,  extra options, delivery, terms of payment).

Whatever the stage of the visit, certain key practices should be maintained. For example, the study showed that customers responded better to less-aggressive behaviour on the part of salespeople, whether they had just entered the showroom or had been inside for a period of time.

Some practices, however, were more critical to maintaining the relationship during a specific stage. Following are some examples of "bad" and "best" practices for each stage.

 Stage 1: entering and initial interaction

Bad practices:
Ô  Walk up to customers as soon as they enter the showroom.
Ô  Use standard "tricks" such as "happening to   walk by" just as the customer enters.
Ô  Ask too quickly how to help the customer.
Ô  Insist, even when the customer answers, "no  thank you, just browsing."

Best practices:
Ô  Let customers walk around on their own for  five to 10 minutes.
Ô  Then walk straight up to welcome them - possibly introduce oneself by name (but not  necessarily) - and simply say "If you need me/if  I can do anything for you I'm over there at my  desk" (indicating where that is).
Ô  Unless they have questions, leave customers alone.

Stage 2:  interaction over a particular vehicle

Bad practices:
Ô  If the customer expresses the desire to be left alone:  Stick to them and keep asking questions;
 follow them around the showroom; don't  respect the personal "bubble" they might try to establish inside a vehicle.
Ô  If the customer accepts the presence of the salesperson: Block the space between the customer and the vehicle by standing in  between, by showing the vehicle off, or  by encouraging the customer to have a seat.

Best practices:
Ô  If the customer expresses the desire to be left alone: Walk away after having reminded them that you are available to help if needed. Come back 10 to 15 minutes later (at least) to ask if everything is all right.
Ô  If the customer accepts the presence of the  salesperson: Open up the space between the customer and the vehicle, respect the customer's attempts to examine the vehicle.  Maintain an attitude of politeness, allowing the customer to go first.

Stage 3: negotiation

Bad practices:
Ô  If the situation is tense: Show that one is suspicious, be defensive mode, and answer  the customer's attacks. Use sales "tricks" such as pretending to make very special  offers.
Ô  If the situation is easy-going: Adopt a cool attitude and behave as if customer and  seller are "pals."

Best practices:
Ô  If the situation is tense: Do "the little things" that  reassure the customer (suggest a cup of coffee,   adapt a soothing tone, in some cases take a seat  next to the customer). Establish transparency,  lay cards on the table when the negotiation  starts.
Ô  If the situation is easy-going: Keep some distance without becoming formal; do not mix  up statuses.

Do you recognize any of your practices in those lists? Which column are they in? Given that much of this feedback came from customers, it seems apparent that too many of your colleague's answers are still on the "bad" side of the ledger. If yours are, too, it may be time to switch sides.

The Car Internet Research Program (CIRP) is an industry, government and academic-sponsored automotive research program, administered through the University of Ottawa and directed at understanding how new information and communication technology will impact the automobile industry.
Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services, with a unique way of working with its clients called the Collaborative Business Experience.
For more information on the Car Internet Research Program, please contact Christian Navarre at (613) 562 5800 ext. 4688 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
For more information, on Capgemini, please contact Elynn Wareham at (416) 486 5910 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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