Forecasters expect recovering U.S. auto sales to hit the 16 million mark within a couple of years, but Ron Lamb looks beyond that, pondering how a leaner dealer network might cope with an expected onslaught of customers.
“A wave is coming that no one really talks about, but it will create intense pressure on dealers,” says the president of automotive information-technology provider Reynolds & Reynolds. “Annual vehicle sales of 16 million could be followed relatively soon by 20 million.”
The idea of that is enough to make auto makers dreamy-eyed, but Lamb sees a practical reality he scribbles figures on a piece of paper containing a graph labeled “The Gap.”
It shows an annual trend of auto sales increasing but dealership ranks decreasing, from about 21,000 in 2008 to just over 17,000 now. That’s mainly the result ofand making deep cuts in their distribution network a few years ago.
Fewer dealers selling more vehicles increases throughput, or sales per store, a profitability factor. But it also can cause problems if dealers are hard-pressed or ill-prepared for a surge in business.
“Dealers will have to become more effective because there are 20% fewer of them,” Lamb says. “I’d argue they’ll have to increase effectiveness because of the wave of sales coming.”
He cites a second trend affecting dealers: the current across-the-board improvement in vehicle quality. “You can buy two types of cars today; great cars and greater cars. In the past, there were wide quality differences among manufacturers.”
For auto makers to differentiate their brands as the quality gap narrows, “more pressure is put on dealers to offer a great customer experience,” says Lamb, a native of Flint, MI, and from a family of auto workers.
A third auto-retailing trend is the new level of customer expectations driven by, among other things, the Internet empowering consumers who use it in many ways, from obtaining prices to reading reviews of dealerships on social-media websites.
“The world has changed and customer expectations have fundamentally changed,” Lamb says.
Considering those three trends, Reynolds four years ago started betting big on what type of new products to put on the shelf.
“We decided we needed to completely rebuild everything we provide to dealers,” Lamb says. “We wanted to provide technology that engages and empowers consumers like never before, gets work done quickly by cutting out unnecessary steps and key strokes and operates on one platform.”
The result is the company’s Retail Management System. Lamb paints a portrait of how it works throughout the buying process.
An online car shopper garners assorted information from a dealership website, eventually providing contact information, vehicle preferences and more. That data goes into the store’s customer-relationship management system.
When the shopper goes to the dealership, a sales person uses a computer tablet to immediately retrieve the stored customer information. The system is used throughout the various steps of buying a car, including structuring the deal, closing the sale and selling aftermarket products.
Theoretically, one dealership staffer can handle the transaction from start to finish, Lamb tells WardsAuto. “I don’t know of any dealership that has taken it quite to that extent, but several are moving in that direction.
“The technology we provide makes that possible though,” he says. “If the dealer wants to go there, wants to change mindsets and retrain people, we can support it from a technology standpoint.”
Today’s consumers can become impatient quickly if a dealership fumbles around trying to retrieve customer histories in the sales and service departments. That is where CRM can help, offering features such as telephone software that immediately identifies a caller by number and flashes his or her name and purchase information on a screen in front of the dealership employee answering the phone.
Dealerships without such technology run the risk of customer disconnect, Lamb says. “My local pizzeria has a CRM phone system like that. When I call, the person on the other end immediately says, ‘Hello Mr. Lamb, would you like the same pizza you ordered last time?’
“But when you call a dealership in preparation for spending $1,000 on service, it may take five minutes before they figure out who you are.”
Lamb recalls a conversation he had with a former chairman of the National Automobile Dealers Assn. “He said, ‘Ron, why is that when I call the local pizza parlor, they know me better than when I call my own dealership?’ We provided him with a phone system that changed that.”
The Retail Management System and the customer-friendly dealership process it facilitates are intended to evoke technology giant Apple, says Jonathan Strawsburg, Reynolds vice president-product planning.
“Apple products are intuitive and easy to use,” he says referring to merchandise such as iPhones and iPads. “They do everything you need without a lot of fuss. Apple took that approach to product and used it in retail as well. Apple stores are clean and uncluttered. What you look at is right there.”
Lamb adds, “And Apple sales associates escort the customer through the purchase. There is no handoff.”
Reynolds touts its new docuPAD as a product that will change the way finance and insurance products are bought and sold.
The F&I office is a dealership profit center where customer financing is arranged and aftermarket products sold. But many customers disdain the traditional F&I process in which a staffer pitches products during lengthy, one-sided presentations.
“People say they felt pressured, uncomfortable and not really sure of what they bought, which leads to many of them later cancelling orders,” Lamb says. “Customer-satisfaction scores from those who went through that are not good. Three of five consumers do not even want to go into the F&I office because of a prior experience. The statistics are overwhelming.”
The docuPAD resembles a supersized touchscreen computer tablet that allows the F&I manager and customer to go through menu offerings together.
“The customer drives it with the F&I person helping,” Lamb says. “That is what changes the game.”
It creates a higher comfort level for customers because they make choices on their own, Strawsburg says. “They have a sense of control, but the F&I manager doesn’t lose control. The system has intelligence, so that you can tailor presentations for customers and highlight what they are interested in.”
Lamb tells of two dealership customers who were awed by how docuPAD improves the F&I process. One of those people, who didn’t realize docuPAD is a Reynolds product, sent an email about his experience to his son-in-law, a Reynolds employee.
He said in the email, “I just had the most amazing car-buying experience. You need to check out this docu-thing. Reynolds & Reynolds should be doing something like that.”