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Full disclosure: I’m not a car enthusiast. Cars are a necessary evil for me.
But driving a car has never felt better. Features that were the stuff of science fiction not long ago are rapidly becoming standard as cars start to drive themselves, are controlled by voice, connect to your devices and profiles, and provide ever higher levels of performance, comfort and safety.
Contrast that to the experience of buying a car and keeping it running. When was the last time you had any fun doing that? The dealership is still a huge, empty showroom where you’re likely to be pounced on by a sales person intent on making their monthly quota.
And once you’ve bought the car, all the demands for time and energy fall on you to make sure it’s maintained, complies with recalls and gets the regular service needed to meet warranty requirements.
The auto industry is a glaring example of a sector that has become transfixed by its own product at the expense of good customer service.
The car ownership experience, as managed by dealers, needs to catch up to innovators when it comes to service. Starbucks SBUX, -1.01% lets you bypass the coffee line by ordering through its app; Amazon.com AMZN, +0.68% has the nation hooked on two-day shipping; Grubhub GRUB, -0.71%, UberEats and Doordash have brought every restaurant in town to your door — and are even letting you mash up menus in their cloud kitchens!
It’s no wonder that barely 71% of car buyers rate their purchase experience as satisfactory and a paltry 30% remain loyal to their dealership’s service department after purchasing their vehicle. That’s crazy — more than two-thirds of customers leave within the warranty window!
The auto industry is a glaring example of a sector that has become transfixed by its own product at the expense of good customer service. It’s become perpetually focused on the sale, forsaking the experience of owning that car.
It’s been asleep at the wheel on this for decades, with a sales culture focused on the showroom, flashy offers of cash discounts, and hitting quota targets and commissions.
Not for much longer, though. All kind of industries are moving to make life easier and more convenient for customers across the entire journey — not only the buying journey — leaving the auto industry in the dust, by comparison.
Those industries are succeeding because they’ve recognized that our culture is putting a big premium on time and convenience. If people can see how a service eases their life in terms of time and hassle, they’re much more likely to choose it, but more importantly, stay loyal to it.
Even highly regulated industries are catching on to this. The banking industry’s previously stodgy and slumbery relationship with customers is being transformed by the spread of online and mobile services. The key word is service.
The auto industry has no reason to think it will be immune to this trend. Car sales are falling and the younger generations of consumers see Uber UBER, -0.84%, Lyft LYFT, +2.03% and car-sharing services, such as Zipcar and Car2Go, as viable alternatives to car ownership. So, if you’re in the car business, you’re really in the car-ownership business — not the car-sales business.
Innovative start-ups in the sector are already threatening to eat into dealerships’ customer base. Seattle-based Wrench sends certified auto mechanics to the customer’s door. RepairSmith, headquartered in Los Angeles and backed by a major investment commitment from Daimler AG DAI, -1.37% DDAIF, -0.08%, provides repair and maintenance at the customer’s choice of home, work or in the shop.
Toronto’s Tire Butler performs seasonal tire changes when and where they are wanted. Gas Ninja delivers gas wherever you are. This is ownership, spiraling around you, at your whim, at the tap of your phone and any way you like.
Dealerships have all the staff, equipment and technology to connect the dots and provide the kind of owner experience that keeps customers loyal. It requires a change in mentality to focus on long-term customer satisfaction ahead of short-term showroom sales. If you win me through my ownership, you are likely to keep me for the next sale.
By providing service so good that customers will brag about it, and never switch, dealers can stop spending so much time and effort on hollow tactics to solicit strangers. There may be customers willing to pay for some of these services, which would give dealers a new revenue stream.
For example, your car is now smart enough to tell you when it has a puncture or needs an oil change. So why isn’t it telling your dealer so that he can text you about coming to get the car?
In the era of convenient delivery apps, why is the burden still on the consumer to drive their cars to the dealers for repairs and service? People think nothing of handing their car over for valet parking. They get into a stranger’s car for every Uber ride, so what’s to stop them from letting someone the dealer sends drive their car to a garage?
There’s a huge space for dealers to be innovative, from providing at-home repairs and overnight services to offering to fit new tires or switch-out seasonal ones in the office parking lot while you’re at work.
Dealerships could also look at ways to change customers’ experience of the showroom to make it less of an intimidating, anxiety-inducing experience. In the banking sector, Capital One COF, +0.96% has done this by developing cafes where people can get online, order a latte, do some gig-economy work, and maybe when they’re ready get some financial advice or service a new need.
Unlike the bureaucratic banking sector, car dealerships are basically small businesses and so have no excuse for lacking entrepreneurial drive. Take the example of Paragon Honda in New York.
The dealership has developed an app that lets customers have their car picked up, serviced and returned to their home within 24 hours. Brian Benstock, Paragon Honda’s owner, has discussed in public how he did this and the significant results he’s seeing, so it’s no industry secret. Yet, his peers are stalled — nobody else seems to have been brave enough to start their engines and be a fast-follower.
Sure, this requires some capital outlay and new infrastructure but the long-term returns are well worth it. The alternative is staring down the long haul of a dwindling business that’s going to be picked apart by entrepreneurial eager beavers.
Sean Claessen, known as the Customer Experientialist, is chief strategy officer at Bond Brand Loyalty.
