Why it shouldn’t be so hard to sell cars – part one
A Lexus dealer builds a new dealership building. It includes a putting green, a sushi bar, and a concierge. Both in appearance and service, it is modeled on the Four Seasons hotels.
The dealer is spending $12 million on it. He expects to recoup the investment in about three years.
Moreover, this dealer is not alone. This dealership is one of a number who are similarly upgrading, with support from Lexus.
Lexus won’t finance the dealer’s investment. But it will significantly increase the dealer’s allocation of new cars if the dealer makes that investment.
So, why is it that so many dealers still sell cars the old way – making the customers cringe before walking into the showroom and then ignoring them when they bring the vehicle back for service?
If you were charged with figuring out a way to squander a sales opportunity, it is difficult to believe that it would be possible to come up with a better way than operating the service department in the manner of most car dealers.
Many years ago, a salesman who annually called on my company dropped by. He was one of the remaining few in a vanishing breed, the traveling salesman with a territory. He covered it by car, and he drove Lincolns. But, this time around, he was driving a Lexus, about which he could not say enough good things.
But the things he had to say were less about the car than about the way it was serviced.
He had been in another state, several hundred miles from where he had purchased the car, and had taken it to the local Lexus dealer to have the oil changed. An attendant immediately came to the car and quickly glanced at the windshield. Moments later, the service writer came over and greeted the customer – by name. The service writer asked if he had brought the car in for an oil change. The service writer then determined the customer’s schedule, and had a driver both take him to his next appointment and pick him up. (The customer said he’d take a cab back, but the service writer was insistent.) Naturally, the car had been washed when he returned, and was immaculate. While changing the oil, the dealer had spotted a bulge in an inner sidewall of one of the tires. The tire had been replaced. The dealer took care of claiming the tire warranty.
That was at a dealership which had no reason to believe the customer would ever again be in that city.
And, it was fifteen years ago.
If you bought your Cadillac CTS in Chicago and took it for an oil change today at a Cadillac dealer in Milwaukee, you would not be greeted by name. They’d probably wash the car, but it would also probably still be dripping when you got it back. The customer service while you waited would be the same dealership fare: a television tuned either to ESPN or Oprah and a few jugs of self-serve coffee. They might give you a lift to your destination, but getting back would be your problem.
It’s not all about building better cars.
Time and again, it has been proven that people will pay extravagantly for feel-good service. Those Lexus dealers that are modeling their dealerships on the Four Seasons hotels aren’t doing it because they like being generous. They’re doing it to make money. They’re doing it because the BMW and Mercedes dealers are doing what the Lexus dealers have always done, so it takes a bit more to be distinctive these days.
But, they’re also doing it because it’s part of the Lexus culture.
For years, Lexus has held its dealer meetings at Four Seasons hotels. It has had Four Seasons hotel training Lexus dealers in the systems used by the hotel chain for customer service. Greeting the customer by name – that’s right out of the Four Seasons playbook: a combination of presentation, showmanship, and running the VIN through the computer to get the customer profile, all executed with perfect precision and timing.
But, underlying it all, is the revolutionary idea that you sell only the first car in the showroom. Every sale after the first is done in the service department.
Psychologists who have studied consumer behavior have documented a home truth: service matters. Suppose a customer is sold the perfect product. It works perfectly and nothing ever goes wrong. Another customer is sold a similar product with the same purpose, but it doesn’t work. So, the customer calls the manufacturer. The manufacturer immediately jumps to attention, pays to have the product returned, sends a replacement, and follows up to make sure the replacement functions properly and the customer is happy with it.
Which customer will most likely buy the same brand next time?
Yup. Customer number two. The one with the defective widget.
(Yes. You’re ahead of me. You’re thinking that the Detroit auto makers have really, really, really squandered an opportunity, aren’t you?)
Car dealers respond to what the companies that franchise them expect of them. Car dealers are not, really, independent – any more than a McDonald’s franchisee is independent. They respond to the incentives and dictates of the company. Changing the attitude of dealers and the way they do business is not the choice of the dealer. It is the function of the company whose products that dealers sells.
And that’s why car companies in the United States are doing poorly.
They have forgotten how to sell cars.
Because they only sell them in the showroom.