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Wednesday, November 24, 2010

Does J. D. Power Study Indicate Coming Shift in Automotive Marketing?


Let's take a look at a few conclusions we gleaned from an analysis of the recently released "New-vehicle sales experience study" by J. D. Power and Associates:

• 52% of new-vehicle buyers cite dealer treatment (salesperson) as a reason to purchase their new vehicle from a specific dealer...  

• 38 percent of buyers cite vehicle price or the deal offered as the reason for selecting their dealer...

• 60% of new-vehicle buyers visit more than one dealership during the shopping process.

• 18% of buyers "end showroom visits primarily due to poor customer treatment by the dealer's salespeople" (salesperson). The proportion of complaints about too much sales pressure equals those about receiving insufficient attention from salespeople.

Customers are now placing more value on how they are treated during the new-car buying experience. This is diametrically opposed to what many Internet sales channel pundits have predicted over the past 10 years... Which has been the "vending machine" concept of online automotive marketing with full web based vehicle purchase capabilities... I should know, since I am one of those Automotive Internet Sales pundits!  

Traditionally, our industry has been far more willing to bet on price versus process. I believe this is due to our industry's relative inability to effectively manage the customer experience at the dealership level... Plus, implementing anything across a franchise network of independent retailers can be a daunting undertaking.  Combine that with the prevailing wisdom of "Blow and Go" inventory focused marketing strategies driven by production centric manufacturing systems and we get the "What? Me worry?" auto industry personae of the past 50 years. 

Of course, for auto executives sitting in Detroit and Torrance located office, incentives, stair-step dealer cash, zone and district sales manager pressure is simpler to implement, requires only the most rudimentary business skills, and seems to have a direct impact in "Push" marketing effectiveness. 

This type of "Push" versus "Pull" marketing strategy has made the auto industry more cyclical than necessary, and if the time period measured is extended out far enough, has rarely produced an actual increase in sales beyond the "pull ahead" effect. With the automotive industry's recent near-death experience, I find myself wondering if we are  at the inflection point where there is an opportunity to dramatically improve retail sales management processes in a major share on dealership showrooms. 

Or, is now the window of opportunity for new  car companies to enter the North American market? (ie; Fiat) Their appearance and impact on the automotive scene happening in a manner that will require adaptation by the more established competition... Could these adaptations be manifested in significant new mechanisms for vehicle ordering, sales opportunity management, and retail operating systems?

Yes, it is an interesting time to be in the auto industry... An even more interesting time to leave the constraints imposed by the largess of current corporate environments for the opportunity to become more of a leader in the car business adaptation and transformations to come!

[Sent from Ralph Paglia's iPhone]

Ralph Paglia
cell: 505-301-6369