Monday, June 01, 2009

How the Buying Process Has Changed, and How It Hasn't: Notes from the Field

Summary: The Internet has given more power to buyers and changed the buying process. But product and responsive salesmanship still make the difference.

The deer that ran into my car on May 21 provided still more posthumous marketing insights when the insurance company declared my car a total loss and I had to buy a new one on short notice. My latest pass through the quintessential American purchase experience confirmed one obvious truth and recalled two others that are easily forgotten.

- The obvious truth was that information, and therefore power, have shifted to buyers from sellers due to the Internet. Everyone knows this, but, for the record, I was able to do nearly all my research online and even get price quotes without setting foot in a dealer. This almost completely eliminated any personal relationship from the equation, as well as blocking traditional dealer tactics like the indirect negotiation with the sales manager.

- A less obvious truth was that, whatever the pundits say, products are not fully commoditized. My online research and preexisting preferences quickly narrowed the field to Honda and Subaru models with virtually identical specifications. The Honda has better reviews and a lower price, so I was all set to purchase it. But then I actually drove both vehicles and found I had a small but definite preference for the Subaru. Lesson learned: product really does count. This is something we all know but tend, as marketers, to disregard when we focus on decisions we control.

- The other easily-overlooked truth is that execution really matters. I put out online requests for price quotes to three Honda dealers and four Subaru dealers. I had responses with pricing from two Honda dealers in just over one hour, and from the third within three hours. In contrast, it was twenty-four hours before I got my first nebulous price from Subaru. More specifically, one Subaru dealer responded immediately but wouldn't discuss price except in person, one called me on phone even though I had requested an online reply, one responded twenty-three hours later, and one responded after four days.

In short, based on ease of doing business, Honda won hands-down. On the other hand, Subaru corporate sent me an email checking up on its dealer responses about two days after my original inquiry. So we can at least hope that Subaru dealers, as well as their cars, will eventually match the performance of Honda.

There were also clear examples of poor coordination within the dealers. The dealer that took four days to answer my email was very responsive in other channels: they published detailed prices on their Web site and gave me a price immediately over the telephone when I called. The phone and Internet prices differed slightly, but were both quite competitive. When I finally got their email, the price matched the one I had been offered on the phone. Of course, by that time I had already made my purchase and told the salesman.

The Subaru dealer who telephoned me also sent an email response three days later, but the email system was clearly unaware of our telephone interactions. That dealer proved particularly inept: they played the “let me talk to my manager” game on the phone for two days running, taking so long that I had already purchased the car elsewhere by the time they got back with a realistic quote. Ironically, I had recently purchased another vehicle from this dealer and had no particular complaints about my treatment, so the business was theirs to lose. They lost it by moving too slowly and playing old-style negotiating games.

For the enjoyment of anyone who really cares about the details, here is a log of my contacts during the buying process. Dealer names are changed to those of the Seven Dwarfs for no particular reason.

11:22 a.m. Subaru quote request via to Doc, Dopey, Grumpy and Bashful
11:33 a.m. auto response – Doc Subaru
11:33 a.m. auto response – Dopey Subaru

11:37 a.m. Honda quote request via to Sleepy, Sneezy and Happy
11:41 a.m. personal response – Dopey Subaru
11:46 a.m. auto response – (Honda service company)
11:46 a.m. auto response – Sleepy Honda
11:46 a.m. auto response – Sneezy Honda
11:46 a.m. auto response – Happy Honda
11:52 a.m. price – Sleepy Honda
12:00 p.m. (?) phone from Grumpy Subaru (sales manager)
12:47 price – Sneezy Honda
1:12 p.m. price details – Sneezy Honda
2:00 p.m. phone from Happy Honda (apologized; said system often doesn’t show whether requested email response)
2:20 p.m. price Happy Honda
3:00 p.m. (?) phone from Grumpy (my previous salesperson; gave him target price

3:30 – 5:00: test drove vehicles at Dopey Subaru and Happy Honda. Offered uncompetitive price from Dopey Subaru.

10:08 p.m. email w/other vehicles – Sleepy Honda

12:03 a.m. auto response – Sleepy Honda
9:50 a.m. personal response – Doc Subaru
11:26 a.m. price - Doc Subaru (details not stated – actually about $800 higher)
12:00 a,m. (?) phone from Grumpy Subaru
12:03 a.m. clarification – Sneezy Honda
12:16 a.m. details - Doc Subaru
12:41 a.m. note – Sneezy Honda
1:39 p.m. note from Doc Subaru (prices are ‘all in’)
3:00 p.m. (?) – phone price from Grumpy Subaru; told to get lower; said will talk w/manager
5:25 p.m. – price clarification from Doc Subaru

9:27 a.m. note from Sneezy Honda (can I come in?)
9:30 a.m. called Grumpy Subaru (salesperson; gave him target price)
9:30 a.m. called Bashful Subaru; got price (about $300 higher than on Web, but w/$500 gas card)
9:47 a.m. note from Sneezy Honda (thanks)
9:58 a.m. offer to negotiate price from Doc Subaru
10:43 a.m. price agreement from Doc Subaru
12:00 a.m. signed papers at Doc Subaru
12:30 p.m. phone from Grumpy Subaru w price; told had already purchased
3:00 p.m. (?) phone from Bashful Subaru; told had already purchased
4:03 p.m. email from corporate Subaru checking on dealer response

6:14 a.m. auto response from Sneezy Honda (had already informed dealer would not make purchase)

3:11 a.m. opt-out form from (Honda)
3:13 a.m. auto response from Grumpy Subaru
11:03 a.m. email w/price from Bashful Subaru Internet division

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