Broken down

A lesson from car dealerships for every consumer business

Here at Moving Tribes, our venerable old car has reached the stage in its life where bits are starting to fall off. Reluctantly, then, we spent some of this weekend venturing into the peculiar world of the franchised dealer.

Now candidly, I do that with some negative perceptions already in place. My experience with the last two dealerships that I’ve used to service my current car have been so appalling, for example, that I’ve ruled out buying anything from them or indeed ever setting foot in them again. The final straw (almost literally) was the last dealer failing my MOT on the basis that the middle rear seatbelt didn’t close and offering to remedy that by charging me £300 for a new seatbelt assembly. I instead chose the alternative option of spending 10 seconds with a pair of tweezers removing the leaf which was preventing the lock from closing.

Money grabbing service departments to one side, though, this weekend offered a different lesson in retailing, and one which I think applies much more broadly to all of our businesses.

Let’s do some advanced data science together. We are going to think of ways of identifying consumers who are particularly interested in buying what we are selling.

Not that many people in the UK at any given moment are actively trying to buy a car (new car registrations remain much lower than pre-pandemic). Just stopping someone in the street and asking them if they’d like to buy one of your vehicles is likely to be a frustrating and low-return activity.

So how can we narrow down the set of people we should talk to, so that we are more likely to run into one of the potential buyers out there?

Well, here’s a way. If you happen to run a dealership which does nothing but sell cars and a customer walks in the door and starts looking around, that’s going to be a pretty good clue that they are a potential buyer. They probably haven’t wandered in to use the coffee machine, after all.

Indeed, one way of looking at the significant investment involved in opening a car dealership is that it exists precisely to save you marketing money by allowing customers to self-select and identify themselves as interested in your product. Just by walking in the door, they reveal something about themselves - that they are potentially in the market for a car - and that data has value. The pureplay e-commerce car dealer has to fish in the general population, spending loads on Google marketing and other paid ads to try to find the elusive potential customer, whilst you can sit back and watch them walk in your door.

This kind of self-selection is a powerful tool. Both visits to your shop (and, to be fair, those visits to your website that come from consumers searching you out, often called ‘organic’ visits) are highly likely to be indicators that those people are in the market for what you sell.

That is less true in some sectors where brands experience a lot of casual browsing (clothing, for example) or in shops where customers may come in just for the entertainment value of being there (think Lego stores) but for many retail businesses the main purpose of a visit is to find out more about the products on sale, and the only people likely to want to do that are the ones who are interested in buying.

In other words, you are given a massive clue when someone walks into your shop that they are a potential customer!

Why, then, would you ever consider ignoring them? That’s tantamount to taking the rent, rates and other costs you are incurring operating your shop and just setting fire to them.

No wonder, as we’ve explored before in previous posts here on Moving Tribes, that saying hello to customers as they walk in turns out to be key in running a successful shop. I’ve seen many examples where analysis of detailed data has shown a clear correlation between shops where colleagues offer a cheery greeting to arriving shoppers and those which deliver better results.

And that is especially true the higher the value of the product you are selling. Car dealers are therefore the extreme example. If a potential sale is worth tens of thousands of pounds, then the insight that a particular person is potentially interested in purchasing is itself extremely valuable. The logical flow would seem to be:

• initiate a conversation with some kind of greeting

• find out a bit about what the customer is interested in, and

• (assuming you aren’t going to be lucky enough to make a sale on the first visit) capture some kind of contact information from the customer so that you can continue the dialogue, either in person or via email.

Imagine my surprise, then, when our sample of car dealerships this weekend elected to squander the opportunity we gave them by visiting. All but one failed even to say hello or initiate a conversation at all, and none even asked what we were looking for let alone attempted to capture our contact details.

There will be many reasons for that. The businesses involved would no doubt argue that they were busy with higher potential discussions with customers who had booked test drives online (and therefore revealed even more information about themselves in advance). And there is no doubt that the teams on site this weekend were busy, because there was only a skeleton crew of staff working. (I guess because no-one shops for cars at the weekend?)

Selling is also hard work, especially with higher ticket products where conversion rates are inevitably lower, and so it is forgivable at some level for tired colleagues to take their eye off the prize.

But it remains a retail basic, not just for car dealers but for many different types of retail outlet, that offering a cheery greeting to every visitor and asking how you can help them is the basic foundation of commercial success. Motivating and training colleagues to do that every day, and ensuring you have the right number of people in store on the right days is therefore a key retail management discipline.

One which, sadly, my sample of dealerships this weekend had yet to learn.