As NCM brings 2016 to a close, I’m excited to share with you some results from a recent research project by TrueCar. I know that you are hungry for data—and we at NCM strive to give you the best franchise and operational data and benchmarks in the business. TrueCar, on the other hand, has substantial insights into the consumer end of things. Realizing the importance of these customer insights, I asked them to research what consumer-focused behaviors helped some dealers outperform their competition.
To answer the question, data analysts at TrueCar examined the aggregated information they’ve collected on automotive dealerships, distilling it into their new report “10 Habits of Highly Successful Dealers.”* The research identified 75 top-performing dealers and set out to understand the key differentiators, sales tactics, and strategies these businesses used to outperform the competition.
In a nutshell, these dealers more directly addressed the pain points of the consumer, in part through their upfront pricing (e.g., transparency), yet still enjoyed close rates that were 2x better than their local competition. Here are some key areas that TrueCar believes set these top dealers apart.
Top dealers aren’t successful because they give cars away. In fact, top dealers sell at 93.6% of MSRP—nearly the same rate as the average dealer on TrueCar (93.7%). They achieve this by investing more time in analyzing and adjusting their vehicle pricing to ensure they remain competitive in their markets. TrueCar found that the high-performing dealers are 1.5x more likely to evaluate their pricing each month, avoiding the trap of “set it and forget it” pricing.
Better understanding of clients
Top dealers have a solid understanding of car buyers and their buying habits. For instance, consumers often change their minds on which vehicles they want, slowing down the car buying process: 67% of TrueCar new vehicle buyers purchase a different vehicle (make/model/trim) than they originally configured. These dealers stay ahead of consumers by proactively sending them vehicle alternatives (with pricing), which makes it easier for the customer to land on the right vehicle and increases the dealer’s likelihood of closing the sale. It’s a smart tactic.
Value beyond pricing
A critical component to top dealers’ success is the understanding that in the absence of value, it is only about price. The websites of top performing dealers put great emphasis on “why buy here” messaging and their unique value proposition, whether it’s their superior people or process, community involvement, or ownership benefits. Additionally, TrueCar found that vehicle deals that included their consumer ownership benefit called “Buyer’s Bonus,” which includes up to $2,000 in Auto Deductible and Repair reimbursements, closed 35% faster than deals without this benefit.
What this all goes to show is that top performing dealers don’t win on price alone. They streamline the online and offline process and remove disconnects that erode credibility. They deliver a superior in-store experience, build trust by offering the consumer validation, and lead with their unique value proposition.
I hope that you’ve enjoyed these new insights from our content partner TrueCar. Look for more data research soon. In the meantime, learn how NCM Associates can assist your dealership implementing changes that drive performance with our 20 Groups, consulting, software, and training options.
*Top Dealers were studied using various methods including online mystery shops, dealer website reviews, management interviews, in-store observations, customer ratings/reviews, and their strategy/tool usage on the TrueCar program.