The Internet is not what it's cracked up to be, because dealers have been unprepared to use the new medium.
Although the Internet sales process is supposed to be faster, more convenient and more customer-friendly, the traditional way of selling cars gets better grades from consumers, according to a study from J.D. Power and Associates.
'Internet shoppers are less satisfied with the sales experience than traditional shoppers,' says Steven Goodall, president of the Agoura Hills, Calif., consulting firm.
Internet shoppers gave the sales process a 113 score on J.D. Power's Sales Satisfaction Index, but traditional shoppers who did not use the Internet rated the sales process 130. The industry average is 128, and a perfect score would be 235, based on customer responses to a 21-question survey covering various aspects of the transaction.
People generally assume an Internet-initiated car sale would take less time because the customers have already done their homework online. But the opposite is true. The average Internet sales transaction took 74 minutes, compared to 63 minutes for the average traditional car sale.
And customers who shopped for cars online actually thought the sales force was more pushy, even though consumers turn to the Internet to avoid high-pressure salespeople. Forty-two percent of the Internet shoppers felt pressured during the sale, compared with 31 percent of traditional shoppers.
'In one instance, one customer who went online for pricing information had to show it to a salesperson. The salesperson didn't believe the customer could get that information,' says Goodall.
Salespeople often are challenged by online customers' extensive knowledge of the product and pricing. And the sales force has less incentive to provide good service to an online customer who is likely to negotiate a lower price, because most salespeople are paid a percentage of the gross profit.
Dealerships also fail to give online customers as much attention as traditional shoppers because fielding Internet inquiries is often a part-time job. In at least half the dealerships surveyed, the general manager or sales manager was designated to respond to e-mail and online referrals, says Goodall.
The good news for dealers is that the study dispels concerns that the Internet will undermine dealership sales territories. Although 47 percent of the online shoppers surveyed said they did not purchase a new vehicle from the closest dealership, they are not very different from traditional shoppers. Forty-one percent of the consumers who shopped without the Internet did not purchase from the nearest dealership.
The statistics are based on surveys of 45,006 randomly selected 1997 new-vehicle registrations.