Study: Retail digital processes could be here to stay
Most vehicle buyers say COVID-19 affected their buying process in ways they didn’t expect.
But as a result, many were more satisfied, according to the J.D. Power 2020 U.S. Sales Satisfaction Index (SSI) Study, released Thursday.
J.D. Power redesigned the study for 2020, placing a much greater emphasis on digital retail and remote buying.
The study also ranked mass market and luxury vehicle brands in the area of sales satisfaction. Ranking highest in sales satisfaction among mass market brands with a score of 824 was MINI, while Lincoln ranked highest in sales satisfaction among luxury brands with a score of 827.
Digital retail activities that J.D. Power measured in the study include:
—The ability to select a vehicle from inventory
—Receive credit approval
—Review F&I products
—Agree on a purchase price
—Complete purchase paperwork
During the onset of the pandemic, all saw a spike. Also, although many declined in the May-June timeframe, all are still up nearly 50% from January.
Following MINI in the area of sales satisfaction among mass market brands were GMC and Buick.
After Lincoln among luxury brands in the ranking of sales satisfaction, Lexus and Mercedes-Benz tied for second.
According to the study, decreased showroom traffic because of COVID-19 shutdowns resulted in the fast-tracking of dealer adoption of remote selling capabilities.
J.D. Power vice president of automotive retail Chris Sutton said the pandemic gave dealers an open path to allow different vehicle-selling approaches outside of their traditional showroom sales process.
“It’s revealing, too, that 44% of online shoppers are now selecting the exact vehicle they want from inventory on a dealer’s website, which is an increase of 13 percentage points from January of this year,” Sutton said in a news release.
Retail digital processes: Here to stay?
Sutton said as more shoppers are exposed to remote communication and actual online buying options, they could in the future prefer these methods over traditional showroom visits so they can wade through inventory and negotiate.
Almost one out of four buyers say their purchase experience during the pandemic will make them less likely to shop in person in the future.
That indicates that digital retail processes are here to stay, Sutton said.
“These lasting effects make it imperative for dealers to step up their digital offerings to remain competitive,” Sutton said.
As dealers implemented and refined digital procedures at the onset of the pandemic in the March-April timeframe, buyer satisfaction among digital customers increased. J.D. Power said it is notable that satisfaction among buyers who finalized a price online was almost the same as those who didn’t finalize a price online before the beginning of the pandemic.
Satisfaction among buyers who agreed to a price online was 42 points higher (on a 1,000-point scale) by the May-June timeframe, than among those who hadn’t.
“This demonstrates how quickly dealers were able to implement and refine processes that resonated with buyers,” J.D. Power said.
Another notable aspect of the survey is that is profiled Tesla for the first time.
Tesla received an SSI score of 804. Because it doesn’t meet ranking criteria, the automaker is not officially ranked among other brands in the study. Unlike other manufacturers, Tesla does not grant J.D. Power permission to survey its owners in 15 states where it is required.
However, J.D. Power calculated Tesla’s score based on a sample of surveys from owners in the other 35 states.
Other satisfaction findings
Another key finding is that buyers who completed most of their paperwork online are the most satisfied, with satisfaction averaging 873.
That is 35 points higher than among those who didn’t complete paperwork online.
Also, satisfaction scores among those who had more virtual communication are 17 points higher than among those who didn’t.
“These activities illustrate why such trends are likely to continue,” J.D. Power said.
Another study finding notes that online F&I review can enhance take rates. Reviewing F&I products online increased after the COVID-19 outbreak. But that is still uncommon, J.D. Power said, noting that only 7% of buyers say they reviewed products online during the March-June timeframe.
However, the take rate among buyers who reviewed products online is higher compared with those who reviewed products in the showroom. That is especially the case for extended warranty (36% vs. 28%); prepaid maintenance (23% vs. 16%); and tire protection (18% vs. 12%).
Another main finding of the study: Brand and dealer advocacy aren’t aligned.
On average, vehicle brands have a higher Net Promoter Score than their dealer base, with nearly a 20-point gap (on a 100-point scale) between the scores. Key performance indicators showing the highest effect on buyer satisfaction index scores include sales consultant completely understood needs (+94); vehicle delivered in perfect condition (+55); and finance staff not too pushy selling additional products (+52).
J.D. Power says those key performance indicators are met nearly 90% of the time. NPS measures customer advocacy for the model they own and can be a strong predictor of future business growth, according to J.D. Power.
The U.S. Sales Satisfaction Index (SSI) Study measures sales experience satisfaction among new-vehicle buyers and rejecters (those who shop a dealership and purchase elsewhere).
The study bases buyer satisfaction on six factors (in order of importance): delivery process (28%); dealer personnel (21%); working out the deal (19%); paperwork completion (19%); dealership facility (10%); and dealership website (4%).
The study bases rejecter satisfaction on five factors: salesperson (28%); price (27%); negotiation (18%); dealership facility (14%); and variety of inventory (13%).
Overall customer satisfaction index ranking