What's the Deal With Car Sales on the Internet?
By Peter Brandow
Everyone these days is grabbing onto the Internet. The question is no longer whether or when the Internet will be here, the question is how to protect your turf and/or alternatively how to raid someone else's.
But to quote Jerry Seinfeld, "What's the deal with car sales on the Internet?"
For most dealers, the impact has been distant and they have been well within their comfort zones dallying with a minimal degree of financial investment while committing little to nothing to personal or cultural change. I have spoken to hundreds of dealers and have yet to come across more than a few who have materially altered the traditional business model. Go one-on-one with four customers, move a unit, start over. For these dealers, the Net has offered little more than a Web site "http://www.I'mOnTheNetToo.com" and a string of buzz words that have been added to their already-colorful sales pitches. "Absolutely we sell on the 'Net, but I can help you best right here on our Cyber phone. Come in today and see me for our best Web deal."
I am not suggesting that nothing has changed, certainly meaningful money has been spent and lots of time has been poured into meetings. But to parody Jerry Seinfeld, "What's the deal with car sales on the Internet? Do you really think a car is going to show up at your door like with pizza delivery?"
Unfortunately, many a surfer expects exactly that. In fact, most of the ads today suggest that cars will show up with the click of a mouse. At the same time, everyone from manufacturers to dealers to computer companies want to dot-com their way into your wallet on the promise that cyber customers will favor you if you align with them. The difficulty is that none of them seem willing to give up their profit margin or to share unvarnished information about their products. It seems that even asking them to offer complete and accurate information about pricing or an unbiased comparison between then and their competition is unthinkable. The result is that while over 60% of the new car buyers nationally are logging on, only 2% are doing any business on the 'Net.
To date, the Internet has offered not much more than advertising with little new other than a 24-hour virtual catalogue coupled with creative attempts to personalize the browsing experience. I remember a few years ago receiving a poster of a Porsche with my name on the license plate. Technology had allowed the printer to personalize my poster as if someone at Porsche were waiting to deliver that sports car created just for me. Wow. Unfortunately, just like with the Internet, when I tried to find someone to deliver on the promise, it all fell apart.
So question one is whether you need to offer anything new and different on the 'Net. If you think so, you have only to broadcast it to see if anyone believes you or cares. If you think not, you can join the ranks of the dot-coms who wrap themselves in cutting- edge cyber images without giving up any of their traditional approach. Either way you will be riding the wave of Internet opportunity. The toughest decisions will be how you will answer the call or email, then decide if there will there be enough incremental business to cover the costs.
A second question you'll face is whether the 'Net offers a new market or just makes you vulnerable to more desperate competition willing to slice the margin ever thinner in your marketplace. Your answer will either put you in a defensive play, i.e. to protect your home territory or in an offensive play, i.e. looking for incremental sales in a competitor's marketplace. Most dealers are still in the "CYA" mode, while those I've seen winning are "poaching" from their neighbor's back yard. The key lies in how and where they advertise for leads.
Where is it all going from here? From the beginning, the Internet has been linked to the promise of an increasing share of your customer's non-automotive discretionary purchases in exchange for an easier car-buying experience; the trade-off for giving up some immediate margin has been the hope for a lifetime of future sales of affiliated products and services. What has yet to materialize in the broad market is a way to keep track of the full range of interests that our customers have. It is even more difficult to cultivate a cost-effective relationship after the original car sale. Clearly the winners are those visionary dealers who manage an inventory of customers while their competition is stuck in the old ways of managing an inventory of cars. The cutting edge of Customer Relations Management takes the inventory of customers to a level where volume is measured in annual gross profit per customer rather than the traditional profit per retail delivery (of a car). The term for this vision is "Business Development."
My Cyber Center is unveiling just such a system as of the writing of this article. In the meantime, they're in full swing of what promises to be a thousand cyber-sales year (most of them poached from neighbors). Stay tuned for how you can match their results in your back yard and more importantly, how to be the visionary retailer in your marketplace.
Peter Brandow is a successful multi-line dealer and one of the top five Internet new car dealers in the country. He is the dealer of the Brandow dealerships, the national dealer technology chair of e-GM, a board member of NADA's IT committee, and an attorney in Pennsylvania. pbrandow@dealeronline.com
