The document examines how the relationship between car dealers and customers has shifted as a result of increased internet usage by consumers. It finds that customers now do extensive research online before visiting dealerships, giving them more power in negotiations. While some dealers have adapted by providing more transparency and personalized service, many still rely on traditional high-pressure sales tactics. The document advocates for a more balanced, trusting relationship where dealers help rather than rush customers, in order to better address changing consumer behaviors and build loyalty.

1. the way we see it
Inside the
Customer/Dealer
Relationship
A Qualitative Study Examining the Shift of
Power and the Influence of the Internet on
the Vehicle Buying Process in Dealerships

2. Contents
Introduction 1
Executive Summary 3
The Initial Search for Information 7
Key Dimensions of the Buying Process 11
What Happens Inside the Dealership 14
Conclusion: Rethinking the Customer/Dealer Relationship 27
Acknowledgments
The survey data used in producing this document was collected by the
Car Internet Research Program (CIRP). All analysis and interpretation of the
research and data has been made by CIRP in collaboration with Capgemini.
The research and writing of this study was led by Magdalena Jarvin and was
completed as a post-doctoral research project financed by CIRP. Translated
from the original French by Karen Twidle.
The Car Internet Research Program is sponsored by: Capgemini, Ontario
Research Network for E-Commerce (ORNEC), PSA Peugeot Citroën,
Renault SA and The University of Ottawa.
© 2006 Car Internet Research Program
Reproduction in part or in whole is strictly prohibited.

3. Automotive the way we see it
Introduction
“The web is making the consumer much Furthermore, during final negotiations,
more aware of how the motor industry a well-informed customer is likely to
works and all the tricks of the trade, be more demanding and less flexible.
so companies have to clean up their act Indeed, using the Internet reduces the
and become more transparent, more customer’s list of car choices and
accountable.” increases their chances of obtaining
a better price than if they did not
“You can access incredibly specific use the Internet.1
information in a [web] forum. For
example, I was able to find out, in the It has been established that the
case of car electronics, which systems to process of buying a new car lasts,
avoid because of the bugs they contain.” on average, six months.2 During this
time, customers do their homework,
As these comments from consumers narrow down their choices to a small
confirm, the vehicle buying process selection of potential purchases, based
has changed considerably over the last on information from word-of-mouth,
few years. The increasingly pervasive traditional media sources (specialized
presence of the Internet in people’s written press, television, advertising)
daily lives has allowed consumers to and the Internet. However, it is usually
obtain more information on products only during the last few weeks of the
before choosing which one to buy and buying process that customers actually
therefore become less dependent on visit a dealership to see the final two
the car salesperson. In the case of a models (on average) that have remained
car purchase, the Internet has had an in their consideration set.
impact on a number of levels.
Thus by the time many customers
For one thing, using the Internet walk into a dealership, they will
delays the moment when a customer have decided on the price bracket
actually visits the dealership. Many within which they are willing to
customers today prefer to acquire negotiate, selected their preferred
initial information on their own. options, determined the trade-in
When those customers visit the price they want for their old vehicle,
dealership, they have a tendency as well as the terms of payment and
to refuse the dealer’s help. This the acceptable delivery date for the
puts salespeople at a disadvantage, new vehicle. In other words, the
since the faster direct contact can dealer is faced with customers who,
be established with the customer, to a large extent, already know what
the better the chance of influencing they want.3
the customer’s final decision.
1
For a detailed analysis of the gains to be made through prior consultation of the web, see “Consumer Information and
Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?” Fiona Scott Morton, Florian
Zettelmeyer and Jorge Silva-Risso, 2003.
2
CNW Marketing Research, Inc. and Capgemini’s Cars Online 05/06.
3
Clearly, there are also customers who visit a dealership during the initial stages of the decision-making process. One of
the issues for the dealer is to distinguish between those who are at the beginning of the process and those who, in
contrast, visit the dealership at the end of the process, and who are essentially hunting for the best deal. The former need
to be addressed according to their needs, the brand they are looking for, and so on.
1

4. Clearly, the traditional asymmetrical This study provides a close-up look fact adjusting their practices accordingly,
relationship between the dealer and at this relationship, examines the shift there remains significant work to be
the customer has been reversed. of power, and aims to help dealers and done. During the course of this study,
Customers are now capable of vehicle manufacturers better respond we observed numerous examples of
acquiring the knowledge that can to the changing market dynamics. negative interactions between customers
give them the upper hand in the The study was conducted by the Car and dealers, reinforcing traditional
power struggle that is played out Internet Research Program (CIRP) stereotypes. “There’s a breed of car
in the dealer showroom. Dealers can and sponsored by Capgemini, Ontario salesmen who you just don’t feel terribly
react to this change of circumstances Research Network for E-Commerce comfortable doing business with, and this
in two ways. They can increase and (ORNEC), PSA Peugeot Citroën, is an almost universal experience. The
refine their own knowledge base, thus Renault SA and The University of research that has been done says that
upping the stakes; or they can adopt a Ottawa. The qualitative research, many people hate going to dealerships;
different tack and provide added value consisting of observations and it can be one of the worst buying
to the customer rather than added interviews with consumers and experiences anyone ever has,” said
information. Key to this is establishing dealers, was undertaken in both one buyer, who was not alone in
a relationship based on trust, thereby North America (U.S., Canada) expressing this type of sentiment.
improving sales and building customer and Europe (France, UK) at car
loyalty—perhaps the most important dealerships representing 12 North It’s clear that many dealers have not
key to success in today’s highly American, European and Asian kept up with the pace of consumer
competitive automotive industry. mid-market brands. change, which has accelerated rapidly
due to consumers’ increasingly
The research demonstrates that while sophisticated buying behavior and
the industry acknowledges this shift the availability of information on
of power and recognizes the need to the Internet, which is helping to
change, and while many dealers are in delay their moment of entry into
the dealership. It’s critical that the
dealer role changes to adapt to
this new world.
We hope the findings of our research
will provide dealers and manufacturers
with insight into these changing
consumer dynamics and will lead them
to gain a better understanding of how
to improve the customer/dealer
relationship and in the process drive
increased sales and strengthen brand
and dealer loyalty.
2

5. Automotive the way we see it
Executive Summary
Examining the customer/dealer relationship in a new light.
It is essential that dealers Market relations between buyers and model between dealer and customer.
and manufacturers learn to sellers have often been analyzed by It’s a risk behavior in the sense that
understand the consumer’s academics through the prism of game there exists an imbalance or asymmetry
universe, the tools at their theory. This approach looks at the of information. In other words, all the
disposal, and the state of strategic rationale of players whose information resides with the dealer.
mind they are in when aim is to maximize their own
deciding to buy a car satisfaction by anticipating their Building a
in a dealership. opponent’s possible choices, as Symmetrical Relationship
well as anticipating the anticipations The new customer/dealer relationship
(the famous “prisoner’s dilemma”). model can be conceptualized as the
However, in a lengthy and complex result of an interaction between two
decision-making process such as the equal parties. In this case, there is
purchase of a new vehicle, what transparency of information, with the
factors ultimately affect the same or similar information residing
customer’s actions? with both players. Trust is granted
after an exchange, comments, words
Reducing this process to simple and gestures, in some contexts and
arithmetic seems incomplete, and not others, to some people more than
that is why, in this context, the “human” others. Trust is viewed as the result of
aspect needs to be highlighted. This is a construction, a dynamic process, in
particularly true given the fact that the which both parties feel confident of
Internet has taken much of the control the other’s intentions. By identifying
away from the dealer and put it into the those intentions, and ensuring that
consumer’s hands, resulting in new they do not go against self-interest,
power dynamics. In addition to factors this attitude encourages power
such as financial calculations, brand sharing and the establishment
perception, discounts and vehicle of an egalitarian relationship.
availability, companies must also
consider the nature of the relationship Approaching the relationship between
between customer and dealer. The focus customer and dealer in this way makes
here is on the notion of trust: In which it possible to go beyond traditional
context and in relation to whom does stereotypes. Furthermore, this approach
it appear? widens the scope of possibilities for
the dealer, by encouraging the use
On the one hand, trust can be of personality and human qualities
construed as compensation for lack to win the customer’s trust.
of information. In this sense, “giving
trust” stems from recognizing one’s The final purchase decision will only
own lack of information and a be made when both customer and
willingness to leave a matter in the dealer consider they have established
hands of someone who is seen as a relationship based on trust; when
possessing that information. This both feel they are in a sufficiently
represents the traditional relationship balanced or symmetrical relationship.
3

6. To achieve a balanced This does not imply that a situation relationship with customers in order
relationship, the dealer must not of absolute transparency is always to build this more symmetrical
sell; he must instead enable the possible; rather, this is the ideal relationship. While in some cases
consumer to buy. It’s a subtle situation for which to aim. these changes are being made, they
but critical difference. are not keeping up with the pace
To achieve this balanced relationship, of consumer change.
the dealer must not sell; he must
instead enable the consumer to buy. Understanding
It’s a subtle but critical difference as the New Dynamics
reinforced by our research. As one Our research identified a number of
customer commented, “I felt no pressure key findings that can be instrumental
at all. The sales rep would say ‘We believe in helping automotive companies
this is a good car’ but he didn’t try to sell better understand and respond
it. And he wouldn’t say ‘These cars are to the shifting dynamics of the
going away fast, you better buy it today.’” customer/dealer relationship:
■ Greater transparency is essential
Of course, the approach to the to improving the customer/dealer
relationship will vary depending on relationship. The Internet, as a kind
whether the buyer is a new customer, of bottomless well of information, has
where the aim must be to build trust encouraged consumers to demand
from scratch and enable the purchase, higher levels of transparency. And this
or an existing customer, where the aim trend shows no sign of dissipating.
is to strengthen brand and dealer loyalty In this new era, where customers
in order to enable a re-purchase. In can get nearly all the information
either case, however, the goal should they need without even having to
be a more balanced interaction. visit a dealership, dealer salespeople
must view customers as partners on
In response to changes in the an equal footing. Their collaboration
automotive industry, including should be based on a transparent
heightened competition, declining attitude and information sharing—in
loyalty, more sophisticated consumers other words, a relationship based on
and the importance of the Internet trust. Their interaction should turn
in the buying process, dealers must into a co-production, where both can
make corresponding changes in their obtain satisfaction.
4

7. Automotive the way we see it
The move toward greater ■ The more knowledgeable consumers
personalization and customization become about the vehicle buying
is an increasingly important process, the more the balance of
element in the entire vehicle power shifts in their favor. Although
buying process. the Internet does not exclude
traditional dealership visits, the
salesperson is justified in evaluating
the growing use of this tool in the
information-gathering process. Our
research made it clear that the Internet
has an impact on the overall approach manufacturer and dealer websites,
of the consumer. During individual to advertising and promotional
research, customers can build up programs, to the approach taken by
sound background knowledge, a salesperson inside the showroom.
which can make them more nimble While the industry acknowledges
and strategic in their interaction the need for this kind of approach,
with salespeople. This ultimately our research makes it clear that
reduces the latter’s influence. practical application is lacking
■ Consumers increasingly demand in many dealerships today.
a personalized and customized ■ The customer/dealer relationship is
approach during the vehicle buying not a one-size-fits-all formula. During
process. In today’s world, customers our research, several typical scenarios
want to be seen as individuals, as inside the dealership emerged, ranging
people in their own right who from one in which both parties bring
cannot be reduced to a box in strong negative preconceptions, to a
a grid. Success inside the dealer scenario in which the interaction is
showroom rests in the salesperson’s more open and collaborative. These
ability to deploy a formal sales differences demonstrate that the
method in a personalized fashion. customer/dealer relationship can
Certainly no easy task. However, vary considerably depending on
it is essential that the salesperson a consumer’s degree of advance
make an effort to learn about the knowledge as well as existing
individual customer’s vehicle stereotypes on the part of both
wants and needs and factor that the customer and dealer. In each
information into their approach. scenario, there were critical points
The move toward greater where the potential for a breakdown
personalization and customization in the relationship was particularly
is an increasingly important element high. Understanding how each of
in the entire vehicle buying process, these scenarios can play out is
from the features offered on essential to a positive outcome.
Inside the Customer/Dealer Relationship | Executive Summary 5

8. ■ Improved customer intelligence is a the consumer’s universe, the tools
critical success factor in responding at their disposal, and the state of
to the changing dynamics of the mind they are in when deciding
customer/dealer relationship. The use to buy a car in a dealership.
of the Internet by customers increases
the diversity and complexity of their On the pages that follow we take a
search for information, making it more look inside the vehicle buying process,
difficult for automotive companies from the initial search for information
to predict their behavior. It is through the final negotiation that takes
therefore essential that dealers and place in the dealership.
manufacturers learn to understand
About the Study and Methodology
Qualitative research by the Car Internet Research Program (CIRP) into the changing dynamics
of the consumer/dealer relationship has been ongoing for several years. This research method
draws on ethnological practice, which involves spending prolonged periods of time in the
field alongside the individuals under study. In contrast, a quantitative research approach
is based on statistics. A qualitative study provides the additional dimension of viewing
actual behavior.
Approximately 150 hours were spent at a dozen dealers in Canada, France, the United
Kingdom and the United States, representing brands such as Ford, GM/Chevrolet, Honda,
Hyundai, Mazda, Nissan, Renault, Subaru, Volvo and VW. Research was conducted using a
mixture of direct intervention and mystery shopper techniques. Direct intervention was with
the agreement of dealership owners. The research included observations of the exchanges
between customers and dealers and their behavior in the showroom. Furthermore, interviews
were conducted with customers and dealers, without a predefined structure being imposed
upon them. An additional element of the research was a staff training course on sales
techniques in a Canadian dealership, which provided a greater understanding of the
role of a dealer salesperson.
The advantage of this kind of approach is that it enables the reality of different practices
and behavior to be observed in greater detail than is possible with a quantitative survey.
Observing consumer and dealer behavior, which can be both consciously and unconsciously
played out, reveals attitudes and representations that are difficult, sometimes even impossible,
to put into survey responses.
The combination of observation and interviews takes into account both what was said
and what was done, thus revealing any discrepancies or contradictions, which are in
themselves rich in meaning. Being immersed in the field also makes it possible to decode
and understand non-verbal communication. The analysis contained in this report focuses
on these “human” elements more than the influence of macro sociological factors like
age, gender or employment. The aim was not to determine consumer profiles, but rather
to outline behavioral trends and types of practices. From a methodology standpoint, the
objective was not to quantify these practices, but to spot their possible range, from the
most ordinary to the most unusual, without taking into account the number of times they
occurred. Information obtained in this manner is of a different nature than that which a
statistical survey can provide.
6

9. Automotive the way we see it
The Initial Search for Information
In this new era, where customers can get nearly all the information they
need without even having to visit a dealership, dealer salespeople must
view customers as partners on an equal footing.
How does the decision-making process perceived as more tiring for the
unfold, from the initial idea of buying eyes, and a magazine is easier
a car to going to visit a dealership? to carry around and therefore
Three primary sources of information to dip into more frequently for
come into play: word-of-mouth, written information. Lastly, because buying
and visual marketing material, and a vehicle can sometimes involve more
the Internet. Customers either focus than one person, an Internet-based
on one particular source or use them approach can be seen as limiting in
in conjunction. the sense that it does not allow for
simultaneous shared access for all
These sources allow customers to those involved.
obtain a wide variety of information,
including “official” data (for example, Said one vehicle customer, “A lot
options or technical specifications) of big purchases are made with a wider
and “alternative” data, including the decision-making unit, such as children
real prices that car dealers charge or and partners, who are interested and
technical problems that can arise with who take part in various stages of the
a particular vehicle. Since traditional buyingbox is for the the Net that’s very
This
process. With
media sources and car manufacturers’ difficult to replicate, because if there are
placement of a
websites provide only official twoperson’s sitting it doesn’t quite work;
people photo.
Right-click
information, customers who wish to what would they do, bring up a chair,
on this box and
obtain different types of information and then content to all go pointing at
change they will
picture and place the
will turn to alternative sources, like the screen ‘Oh, look at that.’”
appropriate image.
word-of-mouth and third-party websites
(for example, a discussion forum). Others point to the amount of
information available on the Internet
Paper-Based vs. as outweighing any disadvantages. The
Internet-Based Approach Internet has encouraged consumers to
Although websites offer a variety demand—and automotive companies
of three-dimensional animation and to provide—higher levels of
means of visualizing cars, paper-based transparency. Furthermore, the
brochures and magazines are “more possibility that the Internet offers of
focused on the object itself,” noted accessing third-party information is
one consumer. “Sometimes, websites particularly useful to those who might
are not very well designed, you can’t be at a disadvantage in the negotiating
find all the information. Whereas in process,4 for example women, who
a 20-page brochure, you can be sure may feel less empowered in this
to have everything. I’m always worried traditionally male-dominated arena.
I’ll miss a page on the Internet, because
sometimes websites are very nice to look Consider this comment by one
at, but very impractical.” web forum manager: “A few possible
reasons why 65% of our visitors are female
Additional reasons were given for could include our commitment to being
preferring a paper-based approach. exclusively third party. In addition, we
For example, reading on screen is offer a lot of resources that allow you
4
Scott Morton, Zettelmeyer and Silva-Risso.
7

10. “Sometimes, websites are not to take more control in automotive version of the car to come out,
very well designed, you can’t matters such as knowing the ins and because the engine seemed to be
find all the information. Whereas outs of buying a vehicle without getting better,” commented one consumer.
in a 20-page brochure, you can potentially cheated from a salesperson, ■ How much a vehicle price might be
be sure to have everything.” and maintenance articles that allow the reduced, and by which dealership.
individual to take a more active role in ■ “Tips and tricks” used by salespeople
– Vehicle customer the life of their vehicle. A lot of what
to try to “catch” the customer. Noted
we focus on is empowerment within
one customer, “The web is making the
the automotive world, which I believe
consumer much more aware of how the
most women appreciate.”
motor industry works and all the tricks
of the trade, so companies have to clean
Furthermore, the Internet enables
up their act and become more
customers to make the most of other
transparent, more accountable.”
people’s experiences through the use
of tools such as web forums and
Stereotypes Prevail Among
discussion groups. These forums
Consumers and Dealers
encourage sharing of many kinds
Doing research entirely online can
of information, including highly
help consumers secure the lowest
technical data, since the participants
price on a vehicle and save time.
are often passionate about cars and
Not surprisingly, dealers would
might also be employees of vehicle
rather establish face-to-face contact
manufacturers. The types of themes
with customers rather than
covered include:
communicating electronically.
■ Technical problems that are rarely
Said one dealer salesperson:
dealt with in car magazines. Said “As the product is expensive, we’re
one car buyer, “You can access there to reassure the customer, who in
incredibly specific information in any case is anxious by nature. You’ve
a forum. For example, I was able to got to pamper and mollycoddle them.”
find out, in the case of car electronics,
which systems to avoid because of the A web forum leader had a different
bugs they contain.” perspective: “I strongly believe that
■ Specifications for new car models consumers prefer the Internet with
before they are actually out on the regards to the car market due to the
market. “I was able to decide that it non-pressurized environment. There
would be better to wait for the next are no salespeople hassling you and
you have the freedom of making a
more independent decision.”
For many customers, the golden rule
is that the price that is advertised is
not the price you end up paying, and
some even develop an analysis grid
by which to test a given salesperson
and measure his flexibility before
negotiation. For their part, some
salespeople express annoyance
regarding customers’ use of the
Internet and the new knowledge
buyers possess. They now have to
deal with customers who sometimes
actually have a better technical
knowledge of a particular feature
or model than that of the dealers.
8

11. Automotive the way we see it
The Internet’s Limitations and
the Role of the Salesperson
If consumers can become highly
knowledgeable through word-of-mouth,
traditional media and the Internet, and
if on top of that they prefer avoiding
a potentially unpleasant meeting with
a salesperson, what could motivate
them—during the process of information
seeking—to take the next step to visit
a dealership? Engaging directly with a person
is seen in principle as allowing for
Two sets of explanatory factors emerged more flexibility of interaction than
during our research. The first involves with a machine such as the Internet.
customers who go because they do For example, if a customer wishes
want to interact with a salesperson. to change an order after it has been
For those who do not know how transferred to a manufacturer, this
to go about obtaining alternative could be accomplished more readily
information, meeting a dealer becomes by dealing with a person.
a critical stage in the research process.
Said one buyer: “You can’t really get a The second set of explanatory
good idea of the prices by visiting a car factors for visiting a dealership is
dealer’s or manufacturer’s website. Also, linked directly to the vehicle itself.
I wanted to be able to draw up a payment One of the obvious limitations of the
plan and I couldn’t take that any further Internet is that you cannot physically
without a sales rep’s help.” appraise a car, let alone try it out.
Those consumers who get information During the information-gathering
from alternative sources sometimes stage, some consumers have already
wish to cross-cut their data with developed a “salesperson avoidance
information provided by a dealer, strategy.” These buyers typically gather
since they are not able to objectively a significant amount of information
assess the reliability of their sources. online and limit their choice to a
pre-selection of vehicles to try out
Some buyers prefer interacting at the dealership, even though their
with another human being. The intention may be to buy from another
salesperson may be perceived as dealer. Noted an employee of a sales
having the capacity for empathizing website: “I think that people are quite
with a customer’s needs and being sly. I don’t think anybody would ever say
able to answer questions. At best, to a dealer ‘I’m not going to buy it through
some customers believe a salesperson you.’ I think if the dealers realize quite how
may provide personalized advice many people did it, they wouldn’t be so
to buyers that they can’t get on happy. But you can go into a dealership
the Internet. and say ‘I’m really interested in this car’
Inside the Customer/Dealer Relationship | The Initial Search for Information 9

12. and they will court you. They are Indeed, this observation is crucial to salespeople. This ultimately reduces
salespeople so they will try to sell the this report: The more knowledgeable the latter’s influence. Often the dealer’s
cars to you. They will give you a lot of consumers become about the vehicle response is to develop counter strategies,
information—‘This is how much money buying process, the more the balance thus maintaining the power struggle
you will save if you buy it here’— but of power shifts in their favor. between the two parties.
obviously the customers have researched
it thoroughly and they know that they can Although the Internet does not However, not all salespeople react
buy it cheaper online or at another dealer.” exclude traditional dealership visits, in this way. We found that in some
the salesperson is justified in evaluating cases, the customer’s higher degree of
Moving the Relationship the growing use of this tool in the self-reliance is seen as being beneficial
to a Higher Plane information-gathering process. Our to both parties, moving their interaction
Many dealer salespeople are wary of research made it clear that the Internet to a higher plane. This requires that dealer
customers’ increasing independence. has an impact on the overall approach salespeople hone new interpersonal
Rather than viewing this form of of the consumer. During individual skills to improve their relationship
empowerment as a positive research, customers can build up with customers.
development that might enable sound background knowledge,
them to cut down on their work, which can make them more nimble In this new era, where customers
salespeople feel put to the test. and strategic in their interaction with can get nearly all the information
they need without even having to
visit a dealership, dealer salespeople
must view customers as partners on
Figure 1. Rethinking the Customer/Dealer Relationship
an equal footing. Their collaboration
should be based on a transparent
attitude and information sharing—in
New model = other words, a relationship based on
Rich Transparency
of information trust. Their interaction should turn
into a co-production, where both
Deale
rs can obtain satisfaction.
Level of Information
s
er
Old model= s um
Asymmetry of C on
information
Poor Time
1960 2006
Source: CIRP, Capgemini
Thanks to the Internet, some customers today may have greater technical knowledge than the dealer about the
car they’re interested in buying. This has led to a shift in the balance of power, with customers demanding higher
levels of transparency. Thus, the new customer/dealer relationship model should be viewed as the result of an
interaction between two equal parties. In this case, there is transparency of information, with the same or similar
information residing with both players.
10

13. Automotive the way we see it
Key Dimensions of the Buying Process
Each prospective customer who enters the showroom is the “product” of a long
history that must be understood.
Why and how do consumers process, prospects engage in many
decide to buy a certain car of a activities (gathering information,
certain brand at a certain dealer? choosing, negotiating, establishing
Which steps, which buying process the resale value of and reselling the
does the prospect follow? What is used vehicle if necessary, financing,
the length of this process? At which insurance, delivery, etc.) to choose,
moment do they choose to eliminate by successive eliminations, among the
one model of a given brand? Using subset of vehicles potentially satisfying
what criteria? Which of its product their expectations and needs, the
attributes can an automotive company vehicle that best suits them.
use to influence the decision-making
process in its favor? These questions Figure 2 on page 13 (from CNW
are at the heart of every marketing Marketing Research, Inc.) shows five
decision made by automotive dealers variables essential to understanding
and manufacturers. They are also at the buying process. The table is
the heart of many research projects.5 constructed as follows:
Line 1. The sequence, in months and
The qualitative research data weeks, of the purchasing period of
presented in this report were obtained a vehicle (in this case, in Canada
in the dealer showroom. However, the and the U.S.), of all brands and
majority of visits to the showroom all models. CNW established that
occur during the final two weeks the buying process lasts an average
of a six-month purchasing process. of six months. The Internet acts as
In short, by the time prospective an accelerator, and intensive Internet
customers enter the showroom, users sweep through this process
their mood, intention, willingness in three to four months.
to negotiate and feelings for a vehicle
have largely been determined already, Line 2. The number of models
outside the showroom. Each prospective considered by a prospective buyer
customer who enters the showroom is at different points in the buying
thus the “product” of a long history sequence (shopping list). It is well
that must be understood. confirmed that this shopping list is
reduced throughout the six-month
Research has found that the vehicle process. The profile of this funnel will
purchasing process progresses over vary by brand. For example, Mercedes
a period of approximately six months. has a flat funnel: Six months before
Even compared with the purchase purchasing a Mercedes (2003, U.S.), the
of expensive equipment such as a customer only considers approximately
TV (about two weeks), it is one of two vehicles in their shopping list,
the longest, most stressful and riskiest whereas a Nissan buyer considers
purchasing processes. Throughout the slightly over four.
5
In North America (U.S. and Canada), the automotive buying process was the object of a major research study by CNW
Marketing Research, Inc. (http://www.cnwbyweb.net/). The collected data, gathered from customers who had actually
purchased a vehicle of a given brand, make it possible to determine, for each brand and type of vehicle, the number of
vehicles taken into account at various points in the purchase process over a six-month period. Since the summer of 2003,
these data are available for Canada. The data are regularly updated. CIRP (http://www.cirp.uottawa.ca) has also carried out
numerous surveys of consumers and dealers (in the United States, Canada, United Kingdom, France and Spain), which
supplement the results of CNW.
11

14. Line 3. The proportion of prospective On the whole, today the actual
customers who visit the showroom. function of the showroom is to be
It is observed that the trip to the dealer visited during the last two to three
generally occurs very late in the buying weeks of the purchasing process for
process, most often during the last two negotiating the price of the almost-
weeks. It has also been established that chosen vehicle and for putting into
Internet users, at least in North America, competition dealers of the same
are willing to travel up to 100 km/62 brand. The showroom is thus a
miles (in Canada, see CIRP study) to battlefield for price.
buy the car that exactly corresponds
to their expectations, with the A prospective customer at the end
consequence of transforming the of the buying process is already well
limits of exclusive dealer territories. equipped to negotiate, probably better
than many sales representatives.6 Faced
Lines 4 to 9. The focus of the with such a prospective customer,
consumer at various points of salespeople (often inadequately
the buying process is described. compensated with commission)
It is observed that, during the first have to:
three months, consumers clarify their 1. Sort through the customers in
needs and choose the type and style the showroom—those who are
of the vehicle. They then reduce the in the beginning of the process
size of the shopping list to examine and to whom, in principle, they
a small number of vehicles in detail, would have to deliver a speech
studying their features. During the last centered on their needs, the brand,
month and especially during the final etc., an exercise often perceived as
weeks, consumers concentrate on the a waste of time—from those who
prices of the vehicles that remain on are at the end of the process and
the shopping list, which has now are essentially seeking the best
become very short, not even two price and, overall, the best deal.
vehicles long on average.
2. Lead the negotiation to its
conclusion, according to a
Lines 10 to end. The primary sources
script narrowly controlled by the
of information used by the prospective
supervisor. However, two times out
customer are described. Word-of-mouth
of three, this negotiation will fail
is observed to be a permanent source
(calculation is based on the average
of information present throughout the
closing ratio calculated by CNW
process. Prospective customers view
for the United States). Moreover,
advertising (from six months to two
negotiating through the Internet
months prior to purchase) to choose
gives significant power to the
and configure their vehicle, read
consumer, as we’ll see in the
specialized magazines, talk to their
next section of this report.
friends from the very beginning to the
end, consult the Internet, and read ads
in local newspapers to negotiate prices
during the final two weeks. In short,
for four to five months the sale of
a car progresses mainly outside the
showroom, and to some extent in the
realm of advertising, representations and
word-of-mouth—essentially, in a virtual
space as opposed to the very real world
of the showroom.
6
In the U.S., prospective customers may even obtain the knowledge, if they want, of the price paid by the dealer to the
producer, including hold-backs.
12

15. Automotive the way we see it
Figure 2. Key Dimensions of the Buying Process
6 5 4 3 2 1 2
Steps of the buying process
months months months months months month weeks
Number of models considered in the shopping list
Canada (2002) 3.8 3.6 3.1 3.4 2.5 1.3 1.2
U.S. (2003) 4.1 3.8 3.5 3.3 2.9 2.3 1.9
Dealer visits by planned time of acquisition
(visited a dealership within past 2 weeks)
Canada (2002) 6.1% 6.5% 7.2% 11.1% 18.3% 29.8% 32.9% (93.5%, last week)
U.S. (2003) 1.9% 4.2% 4.8% 6.8% 14.3% 19.7% 19.6% (85.4%, last week)
Question: At this time, what is most important to you when deciding to purchase/lease a new vehicle? (scale: 1-5, 1=lowest, 5=highest)
My needs
Canada (2002) 4.6 4.5 3.9 3.1 2.5 1.9 1.7
U.S. (2003) 4.3 4.2 3.7 3.2 2.6 2.0 1.6
Models available
Canada (2002) 3.2 3.5 3.8 3.7 3.3 2.4 1.5
U.S. (2003) 3.7 4.0 4.3 3.9 3.3 2.5 1.9
Styling
Canada (2002) 3.1 3.3 3.5 3.2 3.1 1.9 1.3
U.S. (2003) 3.6 3.3 3.5 3.1 2.3 1.9 1.4
Features
Canada (2002) 2.1 2.2 3.1 3.6 4.0 4.1 3.5
U.S. (2003) 1.9 2.4 3.0 3.8 4.2 4.0 3.2
Price
Canada (2002) 2.4 2.6 3.1 3.2 3.2 4.5 4.8
U.S. (2003) 2.6 2.9 3.2 3.4 2.8 4.3 4.5
Primary Source of Auto Information by Intended Purchase Date Sources of Information All Intenders—Canada and U.S. (%)
TV ad
Canada (2002) 16.6 17.1 18.2 14.6 10.4 8.4 6.9
U.S. (2003) 16.7 17.2 17.9 13.1 8.9 7.6 6.1
Consumer magazine ad
Canada (2002) 15.0 19.0 19.2 18.6 15.7 10.7 8.6
U.S. (2003) 13.8 18.7 18.4 17.7 12.4 8.4 5.9
Friend/relative
Canada (2002) 14.5 10.8 8.3 8.2 10.0 12.9 6.9
U.S. (2003) 13.6 11.9 8.4 5.5 10.3 13.8 4.2
Business associate
Canada (2002) 10.0 9.2 7.6 7.0 7.5 8.4 8.3
U.S. (2003) 11.7 8.8 6.5 6.4 5.7 6.5 8.2
Dealer brochure
Canada (2002) 7.8 7.4 7.6 7.6 7.7 7.3 6.6
U.S. (2003) 7.1 6.7 7.2 7.1 7.4 6.4 6.2
Consumer Rpt/lemon aide
Canada (2002) 6.0 6.3 6.9 8.3 9.2 8.7 6.7
U.S. (2003) 6.9 6.8 7.4 11.1 11.4 10.3 8.3
Newspaper ad (local)
Canada (2002) 4.5 4.8 5.3 5.9 7.3 8.7 19.0
U.S. (2003) 3.9 4.1 4.9 6.6 6.9 8.8 18.4
Auto article (any source)
Canada (2002) 3.4 3.4 3.3 3.9 4.5 5.6 6.0
U.S. (2003) 4.1 3.7 4.2 5.5 4.9 7.6 7.9
Radio ad
Canada (2002 1.6 1.8 2.0 2.2 2.5 2.6 3.5
U.S. (2003) 1.1 1.5 1.7 1.8 2.1 2.1 3.4
Internet
Canada (2002) 8.9 9.2 1.1 11.2 12.0 13.0 13.5
U.S. (2003) 8.5 8.9 9.1 9.6 10.9 10.2 12.3
Auto magazine ad
Canada (2002) 1.4 1.5 1.5 1.7 1.8 1.7 1.7
U.S. (2003) 1.7 1.5 1.7 2.5 2.4 2.1 1.8
Auto buyers’ guide
Canada (2002) 4.4 4.4 4.3 4.4 4.5 4.8 5.3
U.S. (2003) 4.9 5.1 5.8 5.1 6.2 6.1 7.3
Company store/mall display
Canada (2002) 0.1 0.1 0.2 0.1 0.1 0.1 0.2
U.S. (2003) 0.2 0.2 0.4 0.3 0.2 0.3 0.2
Auto show
Canada (2002) 2.0 2.1 2.0 2.4 2.7 2.7 2.6
National newspapers
U.S. (2003) 2.6 2.8 3.5 3.7 4.4 4.9 4.8
Other
Canada (2002) 3.6 2.9 3.4 4.1 4.3 4.3 4.3
U.S. (2003) 2.6 1.6 2.3 3.2 4.7 3.7 4.1
Source: Adapted from CNW Marketing Research, Inc. (http://www.cnwmr.com/) (1) Purchase Path Wave VIII—U.S. 2003 and (2) Purchase Path Study—Canada 2002
Inside the Customer/Dealer Relationship | Key Dimensions of the Buying Process 13

16. What Happens Inside the Dealership
The customer/dealer relationship varies considerably depending on a consumer’s
degree of advance knowledge as well as existing preconceptions on the part of
both the customer and dealer.
The more dealers can demonstrate ■ Stage 3: negotiation in the
that they are trying to build a salesperson’s office (vehicle
relationship based on trust, the better availability, extra options,
their chances of staying in the delivery, terms of payment)
consideration set as customers narrow
down their vehicle choices. What Throughout these stages, the
happens once the customer is inside customer/salesperson relationship
the dealer showroom is critical to is put to the test, with the possibility
ensuring a positive outcome. that it could break down completely
at any time. All it takes is the wrong
We identified three key stages move or a clumsy word, and the fragile
of a customer’s visit: edifice of trust, which has been slowly
■ Stage 1: entering the dealership built, can collapse entirely. A substantial
and initial interaction with on-site challenge for those who wish to see a
personnel (receptionist, salespeople) sale through to the end.
■ Stage 2: interaction with a
In general, certain practices should be
salesperson over a particular
maintained regardless of the customer’s
vehicle (request for information,
stage during the showroom visit. For
examining the car, potential
example, we found that customers
test drive)
Figure 3. Do’s and Don’ts in the Showroom
Bad Practices Best Practices
Stage 1: entering the ■ Walk up to customers as soon as they ■ Let the customer walk around on their
dealership and initial enter the showroom. own for five to 10 minutes.
interaction ■ Use standard tricks such as “happening ■ Then walk straight up to welcome the
to walk by” just as the customer enters. customer—possibly introduce oneself by
■ Ask too quickly how to help the customer. name (but not necessarily)—and simply
say “If you need me/if I can do anything
■ Insist, even when the customer answers
for you I’m over there at my desk”
“No thank you, just browsing.”
(indicating where that is).
■ Unless they have questions, leave
customers alone.
Stage 2: interaction ■ If the customer expresses the desire ■ If the customer expresses the desire
with a salesperson over to be left alone: Stick to them and keep to be left alone: Walk away after having
a particular vehicle asking questions; follow them around reminded them that you are available to
the showroom; don’t respect the personal help if needed. Come back 10 to 15 minutes
“bubble” they might try to establish inside later (at least) to ask if everything is all right.
a vehicle. ■ If the customer accepts the presence
■ If the customer accepts the presence of of the salesperson: Open up the space
the salesperson: Block the space between between the customer and the vehicle,
the customer and the vehicle by standing respect the customer’s attempts to
in between, by showing the vehicle off, by examine the vehicle. Maintain an attitude
encouraging the customer to have a seat. of politeness, allowing the customer to
go first.
Stage 3 : negotiation in ■ If the situation is tense: Show that one is ■ If the situation is tense: Do “the little things”
the salesperson’s office suspicious, in a defensive mode, answer that reassure the customer (suggest a cup
the customer’s attacks. Use sales tricks of coffee, adapt a soothing tone, in some
such as pretending to make very special cases take a seat next to the customer).
offers. Establish transparency, lay cards on the
■ If the situation is easy-going: Adopt a cool table when the negotiation starts.
attitude and behave as if customer and ■ If the situation is easy-going: Keep some
seller were “pals.” distance without becoming formal; do not
mix up statuses.
14

17. Automotive the way we see it
Figure 4. Scenarios Inside the Showroom
Positive
Scenario 3: Open to Buy/Dealer as Partner
Consumer has no negative stereotypes about dealer
and is looking for knowledge. Dealer has no negative
stereotypes about customer, builds trust-based
relationship, resulting in positive outcome.
Scenario 2: Open to Buy/Wary of Dealer
Consumer has fewer negative stereotypes about
Customer dealer, brings some knowledge, is open to buy.
Stereotypes Dealer needs to adapt to customer’s behavior
to ensure positive outcome.
Scenario 1: Internet Savvy/Dealer Averse
Consumer has negative preconceptions about
dealer, expects unpleasant experience, brings
wealth of knowledge. Dealer has negative
preconceptions about consumer, expects
difficult negotiations.
Dealer
Negative Positive
Stereotypes
Source: CIRP, Capgemini
During our research, several typical showroom scenarios emerged, demonstrating that the customer/dealer
relationship varies considerably depending on a consumer’s degree of advance knowledge as well as existing
preconceptions on the part of both the customer and dealer. We found that these scenarios can exist on their
own or as phases in a continuum, moving ultimately toward the third scenario.
responded better to less aggressive Customers who realize they are
behavior on the part of salespeople being subjected to standardized
whether they had just entered the treatment, that they are perceived
showroom or had been inside for a by the salesperson as “the average
period of time. However, some practices customer,” are often put off. Success
were more critical to maintaining the inside the dealer showroom rests on
relationship during a specific stage the salesperson’s ability to deploy a
(see Figure 3). formal sales method in a personalized
fashion. However, it is essential that
Personalized Approach the salesperson make an effort to
is Critical to Success learn about the individual customer’s
In our research, a variety of behaviors vehicle wants and needs and factor that
were observed. Salespeople tend to use information into their approach. The
certain tried-and-true sales techniques move toward greater personalization
in their approach to dealing with and customization is an increasingly
customers. Although these methods important element in the entire
are empirically developed and produce vehicle buying process, from the
a degree of success, they are more often features offered on manufacturer
than not insufficient to satisfy today’s and dealer websites, to advertising
demanding customers and do not and promotional programs,7 to the
always lead to the desired outcome. approach taken by a salesperson
inside the showroom.
7
Capgemini’s Cars Online 05/06 research found that targeted, relevant, personalized direct-mail offers from manufacturers
and dealers were influential in the vehicle selection process. Nearly 80% of consumers said they would respond immediately
or consider the offer for the future.
Inside the Customer/Dealer Relationship | What Happens Inside the Dealership 15

18. “We’re real human beings. During our research, several typical “There’s a breed of car salesmen who you
You have to remain polite, scenarios emerged, demonstrating that just don’t feel terribly comfortable doing
you never insult. But we’re the customer/dealer relationship varies business with, and this is an almost
not prostitutes either.” considerably depending on a consumer’s universal experience. The research that
degree of advance knowledge as well has been done says that most people hate
– Dealer salesperson as existing preconceptions on the part going to dealerships, it’s one of the worst
of both the customer and dealer (see buying experiences anyone ever has,”
Figure 4). We found that these scenarios said one buyer who fits this scenario.
can exist on their own or as phases in
a continuum, moving ultimately toward In this situation, the customer prepares
the third scenario. However, in each for the fight ahead by developing a
scenario, there were critical points where two-fold arsenal made up of relatively
the potential for a breakdown in the precise technical information on the
relationship was particularly high. chosen model and a firm decision on
the maximum price they are prepared
Scenario 1 Internet Savvy/Dealer Averse to pay and choice of options. Armor
This scenario typically features polished and arrows sharpened, the
customers who have an extremely customer feels able to counter any
negative preconception about car potential attacks by the salesperson
dealers. Their expectation is that the and has also prepared a number of
experience will be unpleasant, during strategies to avoid being “duped.”
which they will be accosted by an
overbearing, potentially arrogant Meanwhile, in the dealership,
salesperson who won’t listen to what the salesperson eagerly awaits a
they want. This type of customer is customer—but often with mixed
likely to avoid the visit to the dealership feelings. On the one hand, a dealer
as long as possible and will arrive needs customers in order to make
with a wealth of knowledge, knowing a living. However, customers also
exactly what they want in order to represent potential “nightmares” in
limit any significant interaction with the words of some dealers and can
the salesperson. turn out to be a waste of their time.
With the aim of maximizing efficiency
and turnover, salespeople will try to
determine as quickly as possible
whether they are dealing with a “hot
dog” customer, a “window-shopper,”
“a tire kicker” or, in contrast, a “lead”
or “prospect.”
The Cat-and-Mouse Game Begins
Inside the dealership salespeople are
standing watch, closely monitoring
from their office the comings and
goings of customers. The receptionist
is on the frontline, welcoming
visitors as they step over the
threshold, immediately asking how
she may be of service to them. The
customer is also on the lookout as
he walks into the battlefield, wary
and ready to counter an attack. The
cat-and-mouse game has begun.
16