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A River In Egypt: Dealers in denial about customer trust levels

July 11, 2017 3 Comments

Trust lies at the foundation of every good relationship, and businesses are not exempt. Last year, AMCI Inside released an interesting study on Trust, specifically on how much customers trusted automotive brands (spoiler: not much).

Earlier this year, MAXDigital, a premium end-to-end software provider for auto dealers, decided to conduct a study of their own on trust and transparency in the digital age.


Working with Erickson Research, MAXDigital surveyed nearly 400 dealers attending the 2017 National Automobile Dealers Association (NADA) Convention from all over the U.S., either online or in person. They gathered data including number of used car sales per month, what kind of dealership they worked at (i.e. domestic, import, or non-traditional,), and how the respondents identified professionally (general manager, dealer principal, internet manager, used car manager).

The goal of the study was to:  

  • Understand how much trust the dealers thought their customers had in them
  • Explore “key factors related to maximizing profits”
  • See how comfortable salespeople were with vehicle knowledge
  • Explore why there could be a perceived lack of trust on the customer’s end
  • Understand how auto salespeople conduct sales and go about the process
  • See what dealers thought customers were after

MAXDigital found that there is “too much hiding going on.” Dealers are in denial about how much their customers actually trust the dealership- and how the customer often knows more about the vehicle than the salesperson.

Overestimating Customer Trust

When it came to customer trust, the majority of dealers (nearly 70%) surveyed said their customers had a high level of trust in the dealer. However, according to a Gallup poll from 2016, only 9 percent of consumers reported a high level of trust in car salespeople – just a 1 percent increase from 2015.

Alas, car dealers seem to be stuck in the past, relying on the same old playbook to sell their vehicles – which, unfortunately, is not how customers want to buy anymore.

Data suggests that dealers are in denial when it comes to customer trust. The customer may not be direct or express any distrust outright, and of course people are still buying cars and thus providing dealership with profit, but many car buyers still “see it as a painful process” (MAXDigital, p. 4). Customers don’t want to be “sold to”; they want to be treated as a human being, not merely a commission or sales number. When a customer walks into a dealership, they want to talk/learn about the vehicle in question, maybe take it for a test drive, and then either purchase it or move on without deceit or pressure.

In other words, customers don’t want to deal with a salesperson; they want a product expert who is looking out for their best interest.

“Dealers have made great strides over the last several years, even decade, to be as transparent as possible throughout the buying and selling process,” said Patrick McMullen, Senior Vice President of Strategy and Innovation at MAXDigital. “However, the stigma with consumers appears to remain… [and] Despite dealers’ best efforts, we believe it’s important to recognize that a good number of customers still have these views toward car salespeople.”

Value Over Price

Another area that the auto industry is lagging behind in is the idea that customers just look for the best price they can get, and the lower the better. In a consumer study cited in the MAXDigital Study report, 79 percent of customers purchased a vehicle because of its quality and overall value at a fair price and not because it was the lowest price possible.

Of the dealers surveyed by MAXDigital, only 21 percent responded in complete agreement with the statement “Buyers are most concerned, above anything else, about getting the lowest price.”

Based on these results, MAXDigital suggests that dealers utilize evidence to be successful in selling cars based on value and price to improve the sales process. Show the customer the original OEM packages and the original MSRP. Provide them with Kelley Blue Book or NADA price comparisons. Be open about the vehicle certification and what it includes, as well as the vehicle history. Be transparent, be honest, and customers will impart more of their trust.

“I think that overall customers are looking for an easy, stress-free experience. We really focus on setting the customer’s mind at ease and not playing any of the games that have been used in our industry in the past,” said Greg Churchill, President at Honda West Calgary. “As soon as the customer understands how easy it is to do business with us, you can see how they visibly relax and the process becomes very easy.”

Discounts Through the Roof

With the auto market on a decline, dealers are offering higher and higher discounts and incentives to lure customers in. Coupled with “market based pricing, profit margins are already skinny” (MAXDigital p. 7). In their study, MAXDigital notes that dealers “have evolved their approach on pricing to put their best foot forward in order to compete with everyone else.”

Putting forth their best price is great, but the customer is used to haggling, and the dealer in turn is used to negotiating the deal. If a dealer puts forth his best price, the customer’s first instinct is to haggle it lower, and the dealer complies because he’s used to negotiating. Additionally, dropping internet prices can result in dealers leaving money on the table and eroding their gross profits.

MAXDigital found 56 percent of dealers negotiated down a used car’s price by $500 or more, while 11 percent of dealers don’t even know what their average drop is. Not exactly reassuring for dealers, is it? After all, “you can’t expect what you don’t inspect. And you can’t expect to get better.”

If a dealer is selling based on quality and value rather than focusing on price, they can hold pretty close to the asking price of the vehicle and still end up making the sale. MAXDigital offers some tips on how to start measuring and using drop to maximize profits:

  1. Include drop measurement in monthly report and analyze it
  2. Set a goal
  3. Work out a plan with your team to reach goals
  4. Track drops and look at them each sale
  5. Compare each salesperson’s drop performance and use it as a coaching mechanism
  6. Integrate “this thinking into your dealership’s culture and vernacular.”

Non-Expert Salespeople (It’s Tough, We Get It)

Dealers tend to have a lot of vehicles in their inventory, and being well-versed in every single one is challenging at best. Only 35 percent of dealers surveyed completely agreed that their salespeople were “very familiar with all the cars” they sold. Add in off-brand vehicles and used cars – unique “snowflakes” – and you’ve got yourself a headache.

Churchill agrees, adding that it depends on the department.

“In the New Car Department, we maintain tremendous emphasis on product knowledge. By ensuring that our staff attend all Honda product training as well as reinforcing that on a day to day basis within the dealership, our sales staff are very knowledgeable,” he said. “In Used cars, product knowledge is much less of an emphasis. Because our inventory changes daily and over 50% of the vehicles that we sell are not Hondas, it is very difficult to maintain product knowledge on off-make vehicles. Customer expectations also tend to be lower.”

But salespeople should strive to learn as much as they can about the vehicles they’re selling. After all, customers are coming in to spend thousands of dollars on a car, and they expect the salesperson to be well-versed. Salespeople often can’t “effectively communicate the quality and value of a car” if they don’t know enough about it, and if it becomes apparent that the salesperson is not an expert, it can lead to frustration, mistrust, and lost sales.

“They can do better,” Jamil “The Carman” Ashkar, director of operations at Geneva Motors and founder of DealersGear, said in an email. “We try our best to train them and make them aware of the market and all the changes in the industry. However, it’s been hard to find qualified good staff and it’s a problem we all suffer from.”

Add in yet another factor – the savvy car buyer – and it’s even more difficult. Customers do an average of between 12 and 15 hours of research before coming into a dealership and buying a car, and dealers need to bridge that gap.

The Informed Customer, Armed to the Teeth with More Knowledge Than You

Customers are getting savvier and advancing with technology, becoming more informed and more “digitally-connected.” Coupled with potential “pre-conceived notions that car salespeople are untrustworthy” and that they care more about the sale than about the customer getting a good deal, it’s not exactly the ideal atmosphere for trust.

Herein lies the ugly truth: “If the customer already distrusts the salesperson, the minute they hear something that contradicts what they already know about the vehicle, they are going to be discouraged and will likely walk away” (MAXDigital p. 11).

Buying a car is a big, expensive investment, and customers won’t be coming in unprepared. In fact, 61 percent of dealers surveyed said that their customers “either sometimes, most of the time, or always” know more about the vehicle they’re considering than the salespeople (p. 11). Ouch.

Dealers need to level the playing field and work to help their salespeople become more knowledgeable about the vehicles if they want to increase sales and trust. A good salesperson should be able to tell the customer why their BMW 328i is better than the one down the road that costs $1,200 less.

“We believe that with the internet playing a more important role in consumers’ lives in general, there are shifting expectations as a shopper,” McMullen said. “Because so much information is available to a shopper online, consumers have increasingly higher expectations of a salesperson to be transparent and knowledgeable about the products they sell.”

As Churchill notes, “there is a consumer expectation [when it comes to dealerships] and… you can instantly erode any trust that you may have if you don’t know your own product.”

So What Can You Do About it?

First, dealers need to recognize the lack of trust in car salespeople and the changing buying habits,” said McMullen. “Then they need to adapt their sales processes and use technology to level the playing field so they can be experts on every car on their lot.”

“This research highlights the need for dealers to recognize that their sales processes may no longer match customer expectations or preconceived notions,” said MAXDigital CEO Steve Fitzgerald. “Consumer buying habits have changed and it appears that many dealers haven’t addressed the need to become product experts and to sell based on quality and value, instead of price.”

With car buyers evolving and advancing with the technology, dealers need to keep up and improve their customers’ trust. Dealers need to adapt sales processes, sell based on quality, and train their salespeople to be better informed. McMullen emphasizes the need to “embrace technology as part of the selling process – both online and in the showroom and on the lot – to communicate vehicle value and empower all salespeople to be product experts.”

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

Comments (3)

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  1. Mark Dubis says:

    The majority of auto dealers don’t feel that establishing trust is a critical component of their growth and marketing strategy. Dealers work hard to provide a good experience, and that means they sold a car and the customer left satisfied with the transaction. Gaining their trust was optional. The truth is that “Trust is the New Currency” and today consumers not only want good value they want a good or great experience during the purchase transaction. Here is where dealers fall flat. Every dealer’s website says they put customers first but 90% + of the public don’t trust auto dealers. If they did trust dealers, then CarFax would not exist. 25% of auto dealers put a real effort on taking care of their customers, their employees and their community. The rest, do what it takes to move the metal.

  2. Trust is hard to gain and easy to lose. I find being honest, transparent, and treating people with respect goes a long way for a car salesman.

  3. Philip M says:

    This problem isn’t going to go away until the compensation for car salesmen changes. If you pay someone to be informative and courteous, they will be. If you fire someone for letting a customer leave without buying a car, courtesy goes out the window.

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