By Professor Jim Saker
One of the great things about my job is I get to mix with people from a variety of industries and sectors. I was recently with the management of an international sport’s governing body, based in Lausanne, discussing how people from different national cultures make decisions.
In most Western countries, we are trained to use analytical techniques based on data and make the decision on what the figures suggest.
The group suggested this worked in most countries except France, where if the statistics don’t match the conclusions of natural logic then you ignore the statistics. Basically, you go with the decision that you intuitively know is right. For many this is alien, but over the years and having listened to the way in which people in our sector use data I am increasingly being won over by the French approach.
One example of this is the figures that are being generated regarding the number of times people visit a dealership to buy a car. Last year, the figure quoted was 1.3 times. This year, AutoTrader is saying the figure is 2.2, with forecourt visits being down by 15 million since 2010. Using their figures, this is a drop of 50%. I don’t doubt the authenticity of these figures, the interest is in how you interpret them.
Dealer visit numbers need to be interpreted correctly
One view is if the number of face-to-face encounters has fallen by 15 million, then dealerships should be able to do with a lot fewer staff. With 50% fewer visits, logic says you need 50% fewer sales staff.
The thing missing from the equation is whether the length and nature of these visits have changed. Most research shows the consumer buyer behaviour models of the past still apply, but the location of the activity has changed.
Most of the information search takes place online and therefore the customer comes equipped with knowledge of the vehicle, a range of price comparisons and feeling much less anxious than they did in the past.
Although there is no comprehensive data on this, qualitative soundings from a range of dealerships suggests that dwell time has increased dramatically, in line with the decline in the number of visits.
People come with specific questions and are looking for clarification and to physically experience the product either in the showroom or on a test drive.
I talk to a number of sales people from across a range of franchises each month and they talk about dealer principals and sales managers putting pressure on them to make a sale because ‘we only have one opportunity to nail it.’
The problem with this attitude is it fails to recognise where the customer is within the buying process.
With the internet, customers define their own sales process. One customer may do 90% of the process online and just visit for the final 10%. Another may do it completely the other way around.
When dealership visit figures such as 1.3 are 2.2 are quoted I am left bemused. How are these figures calculated? Is an average an appropriate measure? What is the standard deviation? How does someone do 0.5 of a visit? Is that a phone call?
We should proceed with some caution. Yes, visits to dealerships have gone down, but the length and quality of those interactions have gone up. The discussions are likely to be better informed with a starting position further down the sales process. The fact that there are fewer dealer visits is not a cause for concern if we understand that the nature of the visits has changed over time.
How even good data can lead to bad sales decisions
Jumping all over a customer because you believe it will be the last time they will visit is flawed.
One manufacturer is quoted as saying “the number of showroom visitors has dropped dramatically. We are reliant on one opportunity to create a good impression.”
This attitude is massively problematic and may lead to inappropriate behaviour.
The customer’s perception is formed by a variety of things, from the brand, the product range, the website, the PCP offering etc. The showroom visit is just one part in the purchase process.
That process started before they came to the forecourt and continues after they leave the showroom. This could be in the form of a Skype call or sending some digital footage about the vehicle. The showroom visit is part of a new buying pattern that calls for an alignment of the sales process to the digital age.
Maybe the French are right. If the data is saying something that goes against the rationale and logic of building a relationship with the customer, then you should ignore the data.