As the economy reopens and begins its slow recovery, should dealers focus on retaining existing customers, courting new buyers or both?
Opinion is divided among retailers interviewed by Automotive News Canada, but proponents of e-commerce say now is the time to chase conquest buyers.
“A lot of dealerships are currently asleep,” said Steve Desjardins, group operations manager of the nine-store Lally Auto Group, based in southwestern Ontario. “They are asleep at the wheel … and are trying to scramble to figure out what the Internet is and what it can do for them.
“There has never been a better time to increase your market share by leveraging social and digital platforms.”
Government stay-at-home orders imposed throughout much of the second quarter created a captive audience online, he said.
“The focus always should have been on current customers, [but] the biggest opportunity I see is conquesting customers.”
TIME FOR GROWTH
The pandemic has created opportunity to reinvent automotive retail, said Greg Carrasco, vice-president of operations and general manager of Oakville Nissan and Oakville Infiniti, located just outside of Toronto.
“The government forced us to close our operations so everybody was laid off, so now you can literally build the process whichever way you dream up.”
About 65 per cent of his stores’ business is generally generated through the Web, Carrasco said. When stores were closed in April, having an established Internet presence helped hold new-vehicle sales declines to about 66 per cent, compared with an overall market decline of 75 per cent.
Since showrooms in Ontario reopened by appointment only on May 4, and fully on May 19,it’s taken time to increase foot traffic as people remain wary about health and safety. But “if a customer shows up, our closing ratios have gone through the roof, [from 45 per cent to] about 75 per cent. Nobody is wasting anybody’s time.”
Reed Clarke, marketing director of Edmonton-based AutoCanada Inc., said traffic to the group’s websites has reached record numbers during the pandemic.
“People are going there because they are interested [in buying a vehicle] maybe not right now but maybe later,” Clarke said in a recent webinar hosted by Motoinsight, a Toronto-based digital-retailing platform. “Everybody has been forced into that in the last few months, to really do anything. People are there whether they want to be or not.”
AutoCanada is the only publicly traded dealership group in Canada. It operates 63 franchised dealerships in eight provinces, including a group of stores in Illinois.
Digital software enables consumers to go through the bulk of the purchasing process online, said Klaris Kovacs, who leads product marketing at Motoinsight.
“It makes the process more efficient and effective,” By the time they visit the showroom, “they’re ready to finalize the deal.”
‘LOOKING AFTER OUR GUESTS’
While Mississauga Toyota’s website offers digital retailing tools that include 24/7 live chats, at-home test drives and online purchasing, CEO Susan Gubasta said she is concentrating on existing customers.
“You need to focus on your own customers, especially during this time, people that already know you and have experience with you.
“It’s all about looking after our guests, and that includes new guests if we’re lucky enough they are coming to check us out.”
Nick Coatsworth, customer-care director for Applewood Auto in Mississauga, agrees.
“During the lockdown, we found that the dealers who had the most success spent time prospecting existing clients in their database as opposed to converting new internet lead clients,” he wrote in an email to Automotive News Canada.
“Whether it be upgrading a lease or finance customer who’s nearing maturity or sorting through your portfolio to find lower payment scenarios, those calls were a much higher return on investment than prospecting fresh inquiries.
“There were also more opportunities, since the number of internet leads decreased as a result of pulling back on marketplace spending and listings. As much as a digital retailing tool can help a new client learn about payment scenarios, I believe it’s leveraged best with existing clients whom a dealership has already conducted business and built rapport with. The conversation becomes very transparent and allows for due diligence to be completed outside the dealership.”
But AutoCanada’s Clarke and Oakville Nissan’s Carrasco held to their view that the pandemic is reshaping the auto retail business model in favour of e-commerce.
“Don’t take your foot off the throttle,” Clarke said. “You can gain market share now you might have for the next five to 10 years.”
Added Carrasco: “The chips have been tossed up in the air. The top dealers may not be the top dealers anymore. The question is, what are you doing to capitalize in this new way of business and the new opportunities this crisis has brought to the table?”