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Market Insight: Slow process at dealers can hurt

Clock ticking: Car buyers have shown to be most satisfied in the first 90 minutes of the sales process – a target that dealers participating in a US study were unable to reach.

US study finds car buyer satisfaction starts to wane after 90 minutes at dealership

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Market Insight logo27 Jan 2015

CUSTOMER satisfaction with the dealership experience is at its highest within 90 minutes on the day of purchase, putting the onus on sales staff to ensure the car-buying process is a smooth one, according to new research out of the United States.

With buyer satisfaction levels declining markedly beyond the 90-minute mark, and dropping below the average satisfaction score at 2.5 hours, the Cox Automotive study – titled ‘It’s about time: Streamlining in-store processes to improve the customer experience’ – highlights the importance of efficiency and transparency at the dealership.

The study follows a 2014 IHS Automotive Buyer Influence Study (commissioned by Cox subsidiary AutoTrader.com) which found 55 per cent of new-car buyers experienced frustration during the vehicle purchase process, largely due to the amount of time it took to negotiate a purchase price and complete the sales process.

The time it took to complete the purchase was the top-ranked area of frustration (41 per cent), followed by price negotiations (37 per cent), getting a good trade-in offer (24 per cent), dealing with salespeople (19 per cent) and applying for and/or understanding financing options (18 per cent).

The latest Cox Automotive research attempts to better understand the disconnect between customer expectations and the dealership experience, based on an in-depth study of four US dealerships – said to be “geographically and demographically diverse” – that delves into the processes and times involved for the purchase to be completed.

The analysis found that, regardless of the different tactics employed within their unique demographic target areas, all four dealerships were unable to meet a 90-minute objective when it came to total customer cycle time.

With the stopwatch starting after buyers had made their vehicle purchase selection, average times for the process ranged from 115 to 184 minutes. The quickest time at one dealership was recorded as 43 minutes, compared to a high of 301 minutes at another.

Cycle times were grouped into three primary processes: sales, vehicle appraisal (for the trade-in) and F&I (finance and insurance).

“Across all of these processes, inefficiencies in people, process and technology contributed to lengthened time for each step,” the study’s authors concluded.

For the sales process, the average time it took to complete the sale was 53 minutes – more than half the “desired ideal customer cycle time” of 90 minutes, according to Cox. Negotiation took an average of 21 minutes and a maximum of 41 minutes.

Among the individual dealerships, the longest time recorded for the sales process was 149 minutes the shortest time was eight minutes.

While customer behaviour and preparedness can slow the process down, the study identifies a host of issues on the retail side such as multiple personnel hand-offs, poor communication between sales staff and gross versus volume-based dealer models (volume-based dealers are faster).

Technology was also identified as a factor slowing down the cycle time, with the combination of paper forms and “a lack of streamlined software integration” creating inefficiencies.

With trade-in vehicle appraisal, this took an average of 43 minutes – about half of the 90-minute target – while negotiation in this cycle took an average of 16 minutes and a maximum of 39 minutes.

The quickest time recorded for the appraisal was 12 minutes, while at another dealership it took 109 minutes to complete the same process.

Again, the various people often involved, lengthy administrative tasks and a lack of streamlined technology to complete the process all increased the waiting time for customers.

The F&I process, meanwhile, proved to be the most time-consuming, taking up an average of almost 61 minutes and slowed down by processes such as filling out and signing multiple paper forms (which took an average of 21 minutes and a maximum of 44 minutes to complete).

Two dealers managed to complete the F&I cycle in 24 minutes on one occasion, while another dealer took as long as 133 minutes for this process alone.

The study notes that the traditional selling approach in the US involves various dealership employees interacting with the customers, with most of the activities occurring on the premises, a variety of processes employed and multiple systems used to support the process.

Cox Automotive says that, in future, dealerships can “positively impact the customer experience by striving to provide a single point of contact for the customer throughout the sales process, by implementing an efficient standardised process where most activities occur off-site, and by ensuring that major customer decision points occur as close to the initiation of the sales process as possible”.

The bottom line will also be about maximising customer satisfaction and reducing the cycle time – 90 minutes being the benchmark – rather than simply maximising the profitability of each deal.

Cox Automotive is part of communications, media and automotive services giant Cox Enterprises and specialises in the areas of automotive auctions, financial services, media and software solutions. Its brands include AutoTrader.com, Manheim, Kelley Blue Book, Savings.com and Valpak.

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