Uber and a luxury OEM recently teamed up to offer free rides in the backseat of a newly redesigned 2016 luxury vehicle. Granted the partnership was only for 8 hours in four cities (unless the partnership was a success and then presumably it will continue), but still, strange bedfellows indeed. Let’s take a look.

In one corner we have Uber (established 2009, $50 billion valuation) whose CEO, Travis Kalanick, has a stated corporate mission of ending car ownership and turning personal transportation into a utility. When Uber launched, its goal was to become "Everyone's private driver." Now it's transportation “as reliable as running water, everywhere for everyone."

In the other corner we have a 100 year old luxury OEM with a similar valuation, manufacturer of some of the best engineered products in mankind’s history, and one of the most respected brands in the world.

We won’t get into whether Kalanick’s vision is feasible, or the economics of ride sharing vs. car ownership, or even the wisdom of the (short term) partnership. We understand the benefits to both companies. Uber gets to promote its brand alongside a luxury OEM implying that ride sharing is good even for the affluent market, not to mention capturing some of the OEMs well-heeled customers. We’re not entirely sure what the benefit is of asking loyal customers to download a ride sharing App. Ostensibly, the OEM believes there is value in getting its soon-to-be released luxury automobile into the hands of prospective customers to experience – not a test drive, since they are sitting in the back seat of the car – that new car smell and the back seat. And let’s be real, for the subject luxury vehicle it is one delicious scent and may indeed inspire sales. No, we want to explore the message the partnership sends to the market, especially franchise dealerships.

Underlying Uber’s tagline is Kalanick’s dream and stated corporate mission to “make car ownership a thing of the past”. He tweeted:

"Our intention is to make Uber so efficient, cars so highly utilized that for most people it is cheaper than owning a car."

Here’s another Kalanick quote from an interview at the 2014 Code Conference in Southern California when talking about self-driving cars:

"The reason Uber could be expensive is because you're not just paying for the car, you're paying for the other dude in the car. . . .  So the magic there is you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away."

Stated bluntly, Uber is anti-automobile industry. Uber wants to turn transportation into a commodity, as free flowing, as ubiquitous and as bland as water. Kalanick could care two wits about the beauty of the automobile, the freedom it affords, the individuality it symbolizes. Car ownership is inconsequential in his future. You don’t need to own one of these machines, just hail it, push a button and it’s there. Get in, go, get out.

Even worse for the OEM than partnering with an anti-auto industry heavyweight is the message teaming with Kalanick sends about drivers of cars, whether they are Uber drivers or the cargo they transport. It’s not about the car, nor is it even about the “dudes” in the car. Uber cares about efficiency, economy and utility. Granted Kalanick’s quote about “dudes” is in the context of the driverless automobile but the point remains. Uber stands for nothing but faceless convenience.

The messaging it sends to luxury car owners, and to the people in their lives, couldn’t be more awkward. Luxury automobiles are all about individuality, distinction and emotion. The whole purpose of owning a luxury vehicle is to make you FEEL special. You don’t even have to drive the car, just get in it and you feel good (again, that new car smell).  You could be sitting in your kitchen, and the car could be parked in your driveway, and you still feel special. Of course high line OEMs want people to buy their cars, and teaming with Uber could perhaps advance that goal in the very short term. But luxury buyers  don’t purchase expensive cars just to get from point A to point B, they pay for luxury because it is manna for the soul.

Few and far between is the pairing of messages and symbolism this contradictory. But so what? Why does this matter and who should be concerned? Getting customers in the new model is the important thing... right?  They’ll experience the car, and they’ll want to buy one. Not so fast.

Other than the contradictory message it sends to the market, the partnership matters because the OEM bypasses their real partners, the franchise dealers. Instead of summoning a car through a faceless app to take a ride in the backseat, why not give the opportunity to show off the vehicle – AND EVERTHING THAT COMES STANDARD WITH THIS VEHICLE, SUCH AS COMPLIMENTARY SERVICE VALET – to a real salesperson or product specialist from a real franchise where the car will likely be purchased. Not only will the branding stay consistent, but the OEM would be delivering a much more appropriate, if not the quintessential message, to prospective customers: “We care about you -- your safety, your time and happiness. We drive to you.”  Not some Uber Dude who really could care less about the experience as long as he gets his pay.

OEMs should give the opportunity to the hard working folks at the franchisees to provide the experience. Definitely not Uber which is trying to demolish the industry in the long run.

Uber and a luxury OEM recently teamed up to offer free rides in the backseat of a newly redesigned 2016 luxury vehicle. Granted the partnership was only for 8 hours in four cities (unless the partnership was a success and then presumably it will continue), but still, strange bedfellows indeed. Let’s take a look.

In one corner we have Uber (established 2009, $50 billion valuation) whose CEO, Travis Kalanick, has a stated corporate mission of ending car ownership and turning personal transportation into a utility. When Uber launched, its goal was to become "Everyone's private driver." Now it's transportation “as reliable as running water, everywhere for everyone."

In the other corner we have a 100 year old luxury OEM with a similar valuation, manufacturer of some of the best engineered products in mankind’s history, and one of the most respected brands in the world.

We won’t get into whether Kalanick’s vision is feasible, or the economics of ride sharing vs. car ownership, or even the wisdom of the (short term) partnership. We understand the benefits to both companies. Uber gets to promote its brand alongside a luxury OEM implying that ride sharing is good even for the affluent market, not to mention capturing some of the OEMs well-heeled customers. We’re not entirely sure what the benefit is of asking loyal customers to download a ride sharing App. Ostensibly, the OEM believes there is value in getting its soon-to-be released luxury automobile into the hands of prospective customers to experience – not a test drive, since they are sitting in the back seat of the car – that new car smell and the back seat. And let’s be real, for the subject luxury vehicle it is one delicious scent and may indeed inspire sales. No, we want to explore the message the partnership sends to the market, especially franchise dealerships.

Underlying Uber’s tagline is Kalanick’s dream and stated corporate mission to “make car ownership a thing of the past”. He tweeted:

"Our intention is to make Uber so efficient, cars so highly utilized that for most people it is cheaper than owning a car."

Here’s another Kalanick quote from an interview at the 2014 Code Conference in Southern California when talking about self-driving cars:

"The reason Uber could be expensive is because you're not just paying for the car, you're paying for the other dude in the car. . . .  So the magic there is you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away."

Stated bluntly, Uber is anti-automobile industry. Uber wants to turn transportation into a commodity, as free flowing, as ubiquitous and as bland as water. Kalanick could care two wits about the beauty of the automobile, the freedom it affords, the individuality it symbolizes. Car ownership is inconsequential in his future. You don’t need to own one of these machines, just hail it, push a button and it’s there. Get in, go, get out.

Even worse for the OEM than partnering with an anti-auto industry heavyweight is the message teaming with Kalanick sends about drivers of cars, whether they are Uber drivers or the cargo they transport. It’s not about the car, nor is it even about the “dudes” in the car. Uber cares about efficiency, economy and utility. Granted Kalanick’s quote about “dudes” is in the context of the driverless automobile but the point remains. Uber stands for nothing but faceless convenience.

The messaging it sends to luxury car owners, and to the people in their lives, couldn’t be more awkward. Luxury automobiles are all about individuality, distinction and emotion. The whole purpose of owning a luxury vehicle is to make you FEEL special. You don’t even have to drive the car, just get in it and you feel good (again, that new car smell).  You could be sitting in your kitchen, and the car could be parked in your driveway, and you still feel special. Of course high line OEMs want people to buy their cars, and teaming with Uber could perhaps advance that goal in the very short term. But luxury buyers  don’t purchase expensive cars just to get from point A to point B, they pay for luxury because it is manna for the soul.

Few and far between is the pairing of messages and symbolism this contradictory. But so what? Why does this matter and who should be concerned? Getting customers in the new model is the important thing... right?  They’ll experience the car, and they’ll want to buy one. Not so fast.

Other than the contradictory message it sends to the market, the partnership matters because the OEM bypasses their real partners, the franchise dealers. Instead of summoning a car through a faceless app to take a ride in the backseat, why not give the opportunity to show off the vehicle – AND EVERTHING THAT COMES STANDARD WITH THIS VEHICLE, SUCH AS COMPLIMENTARY SERVICE VALET – to a real salesperson or product specialist from a real franchise where the car will likely be purchased. Not only will the branding stay consistent, but the OEM would be delivering a much more appropriate, if not the quintessential message, to prospective customers: “We care about you -- your safety, your time and happiness. We drive to you.”  Not some Uber Dude who really could care less about the experience as long as he gets his pay.

OEMs should give the opportunity to the hard working folks at the franchisees to provide the experience. Definitely not Uber which is trying to demolish the industry in the long run.

It seems easy: a clean, fueled and available loaner vehicle parked in the lot; a service advisor who understands the value of excellent customer service; an employee with spare time; and a customer with no spare time.

Why not save the customer a time-consuming trip to the dealership by delivering a loaner to them and bringing their car in for service? All the elements are there for the taking, and all the industry statistics suggest customers desperately want this:

     ►  J.D Power Survey: 35 point (3.5%) average increase in CSI for customers using pick-up and delivery

     ►  DrivingSales Survey: 56% of customers said they would buy cars more often if the experience at the dealership were better

     ►  RedCap RESULTS: More than 70% of customers use pick-up and delivery when offered (with an average of 20% in additional RO value for customers who use pick-up and delivery but that’s a different blog post on the DrivingSales website, "Psychology of Service Valet and the RO Value Increase"). 

It’s the old cliché’: If it was so easy, everyone would be doing it. Before going it alone, consider some of the things we’ve perfected with our Uber-like platform that delivers personalized out-of-store experiences:

     1.  How do you communicate the offer, not to mention the logistics of the transaction, with the customer? Over the phone when taking an appointment? By email, text, postcard? When they’re already in the store?

     2.  How do you route the order to a driver? And what happens if they are not available? Is the customer left hanging out in the wind?

     3.  How do you deliver instructions to the drivers that are specific and unique to the customer and their relationship with you?

     4.  How are you going to collect driver’s license, insurance and credit card information before releasing the loaner? Are they stored in a secured place? (Someday, we’ll blog about the service advisor who was stealing customer credit card information and the six figures in restitution it cost the dealership. We won’t disclose names, of course.)

     5.  Does the loaner paperwork need to be signed? Does the driver need to confirm the identity of the person taking control of the loaner? What if that person is the customer’s spouse or employee?

     6.  What happens if a driver gets lost driving to the customer location and will be late for the drop-off time? Does she call the service advisor to get directions? Does the driver call the customer to notify her that delivery will be late?

     7.  How do you track your driver and make sure they are executing the trip as efficiently as possible?

     8.  Are your drivers driving safely? Are they texting and driving? What happens if they get into a fender bender? A serious accident?

     9.  What happens if the customer is not on location at the time of the pick-up or drop-off? What if the location is in a downtown area, how is the driver going to handle parking and the key exchange at a high rise office building?

     10.  Do you want just any employee delivering a loaner vehicle? What if the customer doesn’t recognize the driver? Are they going to turn over their keys to someone they don’t know?

     11.  How do you coordinate a consistent service across all service advisors? Across other functions or departments, such as the BDC, loaner desk and cashier?

     12.  What’s the ROI? Are you considering loaner turn time in the ROI calculation? RO value? Employee efficiency? Are you even able to report on these metrics?

     13.  Is there a service to sale opportunity with pick-up and delivery? What’s the best way to capitalize on it?

These are just some of the issues we’ve thought through before releasing our platform, and some we’ve experienced (unpleasantly) through trial and error. You can benefit from our experience, go it alone, or not offer out-of-store experiences at all. But, without doubt, dealerships will have to grapple with the trend. Consumers want the same level of accommodation and convenience they experience in other aspects of the consumer economy. After all, any consumer item can be purchased in the comfort of your home and delivered to your door step (soon within 30 minutes by drone for many items).

The thought leaders at RedCap spend every waking moment on how to improve the customer experience through a combination of technology, workflows and training. We’re happy to share our knowledge (and even happier to demo our technology or design a pilot for your store). You can stay current by reading our Out-of-Store Experience blog at the DrivingSales website. 

It seems easy: a clean, fueled and available loaner vehicle parked in the lot; a service advisor who understands the value of excellent customer service; an employee with spare time; and a customer with no spare time.

Why not save the customer a time-consuming trip to the dealership by delivering a loaner to them and bringing their car in for service? All the elements are there for the taking, and all the industry statistics suggest customers desperately want this:

     ►  J.D Power Survey: 35 point (3.5%) average increase in CSI for customers using pick-up and delivery

     ►  DrivingSales Survey: 56% of customers said they would buy cars more often if the experience at the dealership were better

     ►  RedCap RESULTS: More than 70% of customers use pick-up and delivery when offered (with an average of 20% in additional RO value for customers who use pick-up and delivery but that’s a different blog post on the DrivingSales website, "Psychology of Service Valet and the RO Value Increase"). 

It’s the old cliché’: If it was so easy, everyone would be doing it. Before going it alone, consider some of the things we’ve perfected with our Uber-like platform that delivers personalized out-of-store experiences:

     1.  How do you communicate the offer, not to mention the logistics of the transaction, with the customer? Over the phone when taking an appointment? By email, text, postcard? When they’re already in the store?

     2.  How do you route the order to a driver? And what happens if they are not available? Is the customer left hanging out in the wind?

     3.  How do you deliver instructions to the drivers that are specific and unique to the customer and their relationship with you?

     4.  How are you going to collect driver’s license, insurance and credit card information before releasing the loaner? Are they stored in a secured place? (Someday, we’ll blog about the service advisor who was stealing customer credit card information and the six figures in restitution it cost the dealership. We won’t disclose names, of course.)

     5.  Does the loaner paperwork need to be signed? Does the driver need to confirm the identity of the person taking control of the loaner? What if that person is the customer’s spouse or employee?

     6.  What happens if a driver gets lost driving to the customer location and will be late for the drop-off time? Does she call the service advisor to get directions? Does the driver call the customer to notify her that delivery will be late?

     7.  How do you track your driver and make sure they are executing the trip as efficiently as possible?

     8.  Are your drivers driving safely? Are they texting and driving? What happens if they get into a fender bender? A serious accident?

     9.  What happens if the customer is not on location at the time of the pick-up or drop-off? What if the location is in a downtown area, how is the driver going to handle parking and the key exchange at a high rise office building?

     10.  Do you want just any employee delivering a loaner vehicle? What if the customer doesn’t recognize the driver? Are they going to turn over their keys to someone they don’t know?

     11.  How do you coordinate a consistent service across all service advisors? Across other functions or departments, such as the BDC, loaner desk and cashier?

     12.  What’s the ROI? Are you considering loaner turn time in the ROI calculation? RO value? Employee efficiency? Are you even able to report on these metrics?

     13.  Is there a service to sale opportunity with pick-up and delivery? What’s the best way to capitalize on it?

These are just some of the issues we’ve thought through before releasing our platform, and some we’ve experienced (unpleasantly) through trial and error. You can benefit from our experience, go it alone, or not offer out-of-store experiences at all. But, without doubt, dealerships will have to grapple with the trend. Consumers want the same level of accommodation and convenience they experience in other aspects of the consumer economy. After all, any consumer item can be purchased in the comfort of your home and delivered to your door step (soon within 30 minutes by drone for many items).

The thought leaders at RedCap spend every waking moment on how to improve the customer experience through a combination of technology, workflows and training. We’re happy to share our knowledge (and even happier to demo our technology or design a pilot for your store). You can stay current by reading our Out-of-Store Experience blog at the DrivingSales website. 

Why do customers who do not visit the dealership spend 18% more on auto service? Evidence and armchair psychology support our analysis.

I recently published a case study about the effects of service pick-up and delivery (service valet) on loaner turn time.  You can read the paper . (Spoiler alert: Loaner turn time was reduced by approximately 1.2 days, or over 40%.)

The study had a few other gems.  Among them, analysis showed customers who used service valet had RO values 18% higher than those who did not use service valet. Theoretically, these service valet customers  could have had more expensive repairs but that is not likely given the large sample size.

Instead, our longstanding experience shows service valet customers purchase more recommended services. So this begs the question:  

Why do customers who do not visit the dealership spend 18% more on auto service?

Evidence and armchair psychology support our analysis.  Consider the psychology from the customer’s viewpoint.

The dealership saved the customer a few  hours by not requiring them to visit the store to service their car. Result: customer saved time, feels valued.

Customers expecting to wait in the customer lounge for an hour are less likely to purchase additional services if it requires more time at the dealership and less time where they were planning to be (i.e. work, family, golf).

Customers in the comfort of their home or office, with a loaner, have no time constraint and are more likely to say yes to a suggested repair as the car is already at the dealership, the repair is likely needed, and there is little sense is saying No only to bring the car back at a later time.

Many customer segments (females and non-automotive savvy males) are more likely to say no to an “in person” pitch, when the suggested repair is outside the realm of what they were expecting. This is a natural reflex, especially in the automotive sector.

The median annual income of a luxury car owner in the United States is $99,364 or approx. $50/hour. The average luxury car owner would equate two hours of savings to $100. A customer is more likely to make additional purchases if it’s directly connected to a savings or discount in the same transaction.

The pick-up and delivery service sets up the sales concept of reciprocity. Now that the dealership has given the customer something (time, less pressure, more convenience), the customer will feel better about reciprocating.

Is another explanation for the increased RO value that a service advisor could be a better salesperson over the phone? Granted, service advisors like to have a direct (emotional) connection with their customers but there is a valid explanation as to why service advisors who offer pick-up and delivery show higher RO values.

We’ll look at the upsell transaction and service valet from the viewpoint of the service advisor in the next blog post. Stay tuned. Be driven.

Why do customers who do not visit the dealership spend 18% more on auto service? Evidence and armchair psychology support our analysis.

I recently published a case study about the effects of service pick-up and delivery (service valet) on loaner turn time.  You can read the paper . (Spoiler alert: Loaner turn time was reduced by approximately 1.2 days, or over 40%.)

The study had a few other gems.  Among them, analysis showed customers who used service valet had RO values 18% higher than those who did not use service valet. Theoretically, these service valet customers  could have had more expensive repairs but that is not likely given the large sample size.

Instead, our longstanding experience shows service valet customers purchase more recommended services. So this begs the question:  

Why do customers who do not visit the dealership spend 18% more on auto service?

Evidence and armchair psychology support our analysis.  Consider the psychology from the customer’s viewpoint.

The dealership saved the customer a few  hours by not requiring them to visit the store to service their car. Result: customer saved time, feels valued.

Customers expecting to wait in the customer lounge for an hour are less likely to purchase additional services if it requires more time at the dealership and less time where they were planning to be (i.e. work, family, golf).

Customers in the comfort of their home or office, with a loaner, have no time constraint and are more likely to say yes to a suggested repair as the car is already at the dealership, the repair is likely needed, and there is little sense is saying No only to bring the car back at a later time.

Many customer segments (females and non-automotive savvy males) are more likely to say no to an “in person” pitch, when the suggested repair is outside the realm of what they were expecting. This is a natural reflex, especially in the automotive sector.

The median annual income of a luxury car owner in the United States is $99,364 or approx. $50/hour. The average luxury car owner would equate two hours of savings to $100. A customer is more likely to make additional purchases if it’s directly connected to a savings or discount in the same transaction.

The pick-up and delivery service sets up the sales concept of reciprocity. Now that the dealership has given the customer something (time, less pressure, more convenience), the customer will feel better about reciprocating.

Is another explanation for the increased RO value that a service advisor could be a better salesperson over the phone? Granted, service advisors like to have a direct (emotional) connection with their customers but there is a valid explanation as to why service advisors who offer pick-up and delivery show higher RO values.

We’ll look at the upsell transaction and service valet from the viewpoint of the service advisor in the next blog post. Stay tuned. Be driven.