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Wards Auto What Do Customers Know?

Wards Auto
What Do Customers Know?

August 2013

Ask car shoppers how a dealership salesperson should act, and they'll tell you this and that. Trouble is, they might not really know what makes for good salesmanship.

Henry Ford said if he had asked his original customers what they wanted, they would have requested a faster horse. “The same could be said of asking people about their car-buying experience,” says Fran O'Hagan, CEO of Pied Piper Management.

His consultancy recently completed its seventh-annual prospect-satisfaction index. It uses mystery shopping to rank by brand how effectively dealerships handle customers and convert shoppers into buyers.

Pied Piper has learned a lot about dealerships in seven years. It also has discovered it needed to adjust its approach to better tie mystery-shopping measurements to actual sales success.

Smart salespeople build rapport and ask fact-finding questions to understand customer needs. But real customers are focused less on the sales process and more on other things.

“We learned people are thinking about what color car to buy, if they should lease or buy, what they'll get on a trade-in, what option package to get and if this is the right dealership,” O'Hagan says.

“They aren't thinking about whether the salesperson smiled or if the restrooms were clean,” he says. Yet, mystery shoppers often score high for friendliness and cleanliness.

Although real customers are vague in their ability to gauge salesperson performance, they are precise when measuring time spent (or wasted) at a dealership.

“If a salesperson says it will take 20 minutes to finish up, and you are still there two hours later, you will be very aware of that and tell me all about it,” O'Hagan tells me.

Several auto makers lately have prodded their dealers to upgrade facilities. That's prompted some dealers to wonder whether constructing new and elaborate stores actually sells more cars. Facilities can make a difference, but perhaps not in the way auto makers think, O'Hagan says.

“It is not that the facility is unimportant,” he says. “But if a person already is at the dealership and it has the right vehicle in stock and the salesperson is brilliant, then the sale has almost nothing to do with the facility. A nice-looking dealership has more to do with keeping good employees.”

Pied Piper has toned done some parts of its evaluation and expanded others. It no longer poses some questions it once asked.

Among specific questions it asks of its mystery shoppers is this one: “Was the first thing the salesperson said was: ‘May I help you?'” If the answer is “yes,” the dealership loses points.

“We know that is the wrong thing to say because half the time the customer response is, ‘I'm just looking,'” O'Hagan says.

Good salespeople avoid that trap by instead striking up a conversation. They say something like: “I saw you pull up in a ‘dualie' pickup truck. Does that mean you tow a lot?” That gets the selling started.

Mercedes-Benz, Infiniti, Lexus, Audi and GMC respectively occupy the top five spots of Pied Piper's 2013 dealership performance index. Scoring low are Chrysler, Mazda and Mitsubishi. Scion is in the cellar.

Dealers in the top quarter sell 16% more vehicles than dealerships in the bottom quarter, O'Hagan says.

Jaguar, Volvo and Audi salespeople were more likely to discuss vehicle features unique from the competition. Infiniti, Land Rover and Smart salespeople scored high for more often doing walk-around demonstrations.

Kia, Fiat and Hyundai salespeople were most apt to cite compelling buy-now reasons.

Mercedes capturing the top spot is no coincidence. The win reflects a concerted Mercedes-Benz USA effort of the last few years for its dealerships to sell more effectively and follow a defined process, O'Hagan says.

“In 2007, visiting a Mercedes dealership was like visiting a museum,” he says. “Salespeople were friendly and answered questions but they did not take the next step of actually selling the car. They stopped short of saying, ‘I know you want to buy a car, and I want to work with you on figuring out how to make that happen.'”

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Washington Post Study: Mercedes-Benz, Infiniti Dealerships Treat Shoppers Best

Washington Post
Study: Mercedes-Benz, Infiniti Dealerships Treat Shoppers Best

July 2013

Mercedes-Benz, Infiniti, and Lexus dealerships treat car shoppers the best, while at least some Scion and Mitsubishi dealerships have a lot to work on.

These results are some of the top-level findings of the new 2013 Prospect Satisfaction Index (PSI), from the California sales and service consulting firm Pied Piper.

This is the seventh consecutive year that Pied Piper has conducted the PSI studies, and for 2013 it's reset the industry-average score to 100. That leaves an industry low of 88 and 89, for Scion and Mitsubishi, respectively, while Mercedes-Benz stands at the top at 113.

Other top-performing brands included Audi, GMC, Hyundai, Jaguar, and Kia. And according to the firm, 19 of the 33 brands led in at least one PSI sales process. For instance, Infiniti, Land Rover, and Smart were most likely to give a walk-around demo.

Comparing the 2013 results to those of last year, salespeople are now more likely to mention different finance or leasing options, ask about a trade-in, or ask about factors preventing purchase, while they're less likely to offer a brochure, use visual aids, or discuss features that are unique versus the competition.

The company says that, on an individual dealership basis, the PSI survey is closely correlated to sales success. A good point to remember for some of these dealerships that are struggling is that while products might be relatively slow to change, the sales process can change virtually overnight.

The survey was conducted with 5,203 hired “mystery shoppers,” who visited dealerships through the U.S. between July 2012 and June 2013.



Automotive News First Shift Mystery Win for Benz

Automotive News First Shift
Mystery Win for Benz

July 2013

For the fifth straight year, Mercedes-Benz dealerships ranked first in Pied Piper's annual survey which rates how car dealers treat car-shoppers in person.

Pied Piper's annual study sends thousands of mystery shoppers to dealerships nationwide to see how effectively salespeople sell.



The Car Connection Study: Mercedes-Benz, Infiniti Dealerships Treat Shoppers Best

The Car Connection
Study: Mercedes-Benz, Infiniti Dealerships Treat Shoppers Best

July 2013

Mercedes-Benz, Infiniti, and Lexus dealerships treat car shoppers the best, while at least some Scion and Mitsubishi dealerships have a lot to work on.
These results are some of the top-level findings of the new 2013 Prospect Satisfaction Index (PSI), from the California sales and service consulting firm Pied Piper.

This is the seventh consecutive year that Pied Piper has conducted the PSI studies, and for 2013 it's reset the industry-average score to 100. That leaves an industry low of 88 and 89, for Scion and Mitsubishi, respectively, while Mercedes-Benz stands at the top at 113.

Other top-performing brands included Audi, GMC, Hyundai, Jaguar, and Kia. And according to the firm, 19 of the 33 brands led in at least one PSI sales process. For instance, Infiniti, Land Rover, and Smart were most likely to give a walk-around demo.

Comparing the 2013 results to those of last year, salespeople are now more likely to mention different finance or leasing options, ask about a trade-in, or ask about factors preventing purchase, while they're less likely to offer a brochure, use visual aids, or discuss features that are unique versus the competition.

The company says that, on an individual dealership basis, the PSI survey is closely correlated to sales success. A good point to remember for some of these dealerships that are struggling is that while products might be relatively slow to change, the sales process can change virtually overnight.

The survey was conducted with 5,203 hired “mystery shoppers,” who visited dealerships through the U.S. between July 2012 and June 2013.



The Detroit Bureau Mercedes-Benz Tops New Car Shopper Satisfaction Survey

The Detroit Bureau
Mercedes-Benz Tops New Car Shopper Satisfaction Survey

July 2013

Showroom policies likely to close – or lose – deals.

When she began looking for a new car, Chris Anderson had her heart set on a midsize Ford sedan. But in the end, she wound up buying from the Detroit maker's cross-town rival General Motors. It wasn't that she liked her new car better. It was the dealer she liked – or more precisely, the Ford dealer she didn't want to buy from.

And the Detroit saleswoman is not alone. What happens when a customer walks into the showroom can have a big impact on what they buy – or where they buy – says Fran O'Hagan, an automotive analyst whose annual Pied Piper Prospect Satisfaction Index is aimed at measuring which dealers and brands do the best job in treating prospective car shoppers. And this year, the study found Mercedes-Benz repeating as the industry leader.

The Pied Piper study relies on so-called “mystery shoppers” who go through the car buying process at thousands of U.S. showrooms each year subtly notating how well salespeople handle such basics as providing buyers with a vehicle walk-around, brochures and test drives, things O'Hagan explains “correlate highly with whether a customer buys.”

Not surprisingly, he adds, manufacturers who have carefully defined the sales process and who have convinced dealers to consistently adopt those practices tend to have a significantly higher closing rate – the percentage of customers who walk into a showroom who actually drive off with a new vehicle. For the industry, as a whole, the figure is a mere 15 to 20%.

The good news, contends California-based O'Hagan, is that, on the whole, “dealerships all over the U.S. do a better job selling cars today” than they did when the first Pied Piper Satisfaction Index, or PPSI, was released in 2007. That said, there's a big gap between the best and worst brands and showrooms and, the analyst cautions, there have actually been some setbacks in recent years.

O'Hagan revised the study this year but found those brands that have traditional done well continued to lead the pack, while marques that previously fell to the bottom continued to lag. Mercedes-Benz came in at the top with a score of 113, followed by Infiniti at 110, Lexus at 106, and Audi and GMC tied at 104.

Mercedes, O'Hagan notes, has been the industry leader for four years running – after long being a mid-pack brand. That reflects a conscious corporate decision to improve the way the German maker's U.S. dealers treated customers – and it was reflected in not only improve PPSI scores but improved closing rates.

“The way your salespeople sell is relatively simple to change,” the analyst suggests, “and the payoff is more sales.”

So, perhaps, it's not surprising that some of the market's poorer-performing brands lag in the dealer survey, Scion at the bottom with a score of 88, Mitsubishi at 89, and Mazda and Chrysler following with scores tied at 94. It's perhaps less of a surprise that Lincoln, rounding out the bottom five with a score of 96, has said it wants to transform the sales experience at its showrooms as it rebuilds the brand.

Part of the challenge, however, is to not just lay out a better sales process on paper, O'Hagan stresses, but actually to get dealers to buy in – consistently.

“There are some Scion and Mitsubishi dealers who perform brilliantly,” he explains, but they don't do so consistently.”

Some of the things that distinguish a good dealer from a bad appear unexpectedly simple. It starts with the way shoppers are greeted when they walk into a showroom. Pied Piper's mystery shoppers are told to record whether they are given brochures and offered test drives. Putting a shopper behind the wheel, O'Hagan notes, is one of the most effective ways to clinch a deal. Yet, one of the biggest surprises is how often sales people fail to ask the most basic question: “Are you ready to buy?”

While the PPSI suggests the car buying process has, on the whole, improved, there were some setbacks and weak points. O'Hagan says the biggest problem is the Internet. About 80% of U.S. car shoppers now begin the buying process online, he notes. But there's a big difference between the way good and bad dealers respond. Among those in the top quartile of the 2013 survey, 93% will respond to a customer's online query within 24 hours. Among dealers in the bottom quartile, only 16% respond.

“The internet side of the business is the wild west,” O'Hagan says. “There's a huge difference between dealers that do a good job and a bad job selling online,” and in the long run, that can make the difference between not only success or failure for a showroom but for the brand it represents.



Automotive News Survey: Mercedes stores have the most effective salespeople

Automotive News
Survey: Mercedes stores have the most effective salespeople

July 2013

LOS ANGELES -- A study of car dealership sales techniques shows that luxury brands often are the most effective deal-closers and also are best at making customers happy. Among mass-market brands, Hyundai, Kia, Ford and Toyota were the leaders.

Among all brands, Mercedes-Benz dealers finished atop the 11-month mystery shopping study by Pied Piper Management Co. of Monterey, Calif. Infiniti finished second, while last year's winner, Lexus, finished third.

Using 5,203 mystery shoppers, Pied Piper repeatedly visited dealerships to analyze their processes and techniques to create the Prospect Satisfaction Index.

Pied Piper CEO Fran O'Hagan said his survey is different from J.D. Power and Associates' Sales Satisfaction Index because Power "only measures everything after the customer says, 'I'll take it.'

"It's all the stuff before then that matters. We're measuring how effectively the sales team sells," O'Hagan said.

Tactics for all brands

Some tactics seem to work best across all brands. Offering a test drive, as well as trying to get the customers to the negotiating table, are more effective at closing a deal. Yet a small percentage of dealerships do neither.

If a salesman is empowered to talk about leasing or financing options — instead of making the customer wait to talk to the F&I department — that's even better at closing the deal. And while being a "friendly museum curator" is seen as an essential tactic for a genteel luxury brands, it doesn't sell cars, O'Hagan said.

Not that everything has improved on the showroom floor, though. While many salespeople sell themselves and the car, fewer salespeople are giving customers a compelling reason to buy from their specific dealership

"The best dealerships have a process. It's not the Wild West where you get to sell the way you want to," O'Hagan said.



Press Release: MERCEDES-BENZ, INFINITI AND LEXUS DEALERS RANKED HIGHEST BY 2013 PIED PIPER PSI(R)

Press Release: MERCEDES-BENZ, INFINITI AND LEXUS DEALERS RANKED HIGHEST BY 2013 PIED PIPER PSI(R)

July 2013

MONTEREY, CALIFORNIA – July 8, 2013 – Mercedes-Benz dealerships ranked highest in the newly released 2013 Pied Piper Prospect Satisfaction Index(R) (PSI(R)) U.S. Auto Industry Benchmarking Study, which measured dealership treatment of car-shoppers. Study rankings by brand were determined by the patent-pending Pied Piper PSI process, which ties “mystery shopping” measurement and scoring to industry sales success. Infiniti and Lexus dealerships, the luxury brands from Nissan and Toyota respectively, finished ranked second and third.

Nineteen of the thirty-three different brands led at least one PSI sales process category, and performance varied by brand within each category. For example, Jaguar, Volvo and Audi salespeople were most likely to discuss features unique from the competition. Infiniti, Land Rover and smart salespeople were most likely to conduct a vehicle “walk-around” demonstration. Kia, Fiat and Hyundai salespeople were most likely to give compelling reasons to buy now.

Industry average dealership performance was mixed when comparing 2013 with the previous year.

Salesperson behaviors more likely in 2013 than 2012 include the following:
• Mentioning the availability of different finance or lease options (now 67% of the time)
• Asking about factors preventing purchase (now 71% of the time)
• Asking if the prospect has a trade-in (now 83% of the time)

Salesperson behaviors less likely in 2013 than 2012 include the following:
• Offering a brochure (now 52% of the time)
• Discussing features unique from the competition (now 55% of the time)
• Involving prospect with visual aids (now 38% of the time)

2013 marks the seventh consecutive year of Pied Piper PSI auto industry benchmarking studies. With seven years of data gathered from tens of thousands of auto PSI evaluations nationwide, Pied Piper was able to fine-tune the study questions, weightings and scoring for 2013. As a result, Pied Piper reset the 2013 auto industry average PSI score to “100.”

The resulting “second generation” PSI scoring is now even more closely correlated to auto dealership sales success. Pied Piper has found that on average, when auto dealerships are ranked by their PSI score, dealerships in the top quarter sell 16% more vehicles than the dealerships in the bottom quarter. “Any dealership faces plenty of challenges that are difficult, if not impossible, to change, such as product-line sold or dealership location,” said Fran O'Hagan, President and CEO of Pied Piper Management Company LLC. “In contrast, how a sales team sells is something a dealership can improve immediately.”

» View PDF of Article (211.5 KB) PDF Document



Automotive News First Shift Secret shoppers pick Porsche

Automotive News First Shift
Secret shoppers pick Porsche

March 2013

Porsche and dealerships ranked highest in a study that looked how auto dealers handle internet leads.

Pied Piper's annual study used internet mystery shopping to contact 11,000+ dealerships to see how the U.S. dealer networks for all car brands compare.



NBC News Mercedes aims to oust BMW as top luxury brand

NBC News
Mercedes aims to oust BMW as top luxury brand

July 2012

It's one of the most bitter battles in the American automotive marketplace, and it pits two of Germany's luxury automakers in a grab for the brass ring. But this year, Mercedes-Benz is betting it can topple rival BMW to become the best-selling luxury automotive brand in the world's largest high-end market.

The maker has been staging a series of meetings with dealers across the country aimed at improving customer handling. Dealers, in turn, have spent about $1.5 billion to upgrade more than 90 percent of U.S. showrooms. The results appear to be paying off.

“Mercedes sets the benchmark,” said Fran O'Hagan, whose Pied Piper Prospective survey uses thousands of so-called “mystery shoppers” to measure how manufacturers are handling the sales and service process. Mercedes bested such stalwart competitors as BMW, Lexus and Audi in results released earlier this month.

And that's apparently helped it gain a leg up on BMW. It held a 2,000-unit lead over the Bavarian automaker for the first half of 2012 after narrowly losing the U.S. luxury sales crown in 2011. Anything can happen, especially if rivals BMW or Lexus ramp up incentives spending, Mercedes officials admit. But it's clear they are ready to pull out the big guns to grab the ring this time.

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The Detroit Bureau Mercedes Doing the Best to Close the Deal

The Detroit Bureau
Mercedes Doing the Best to Close the Deal

July 2012

Mercedes-Benz dealers are most likely to deliver customers the sort of shopping experience they want – and then close the deal, according to a new study.

Asian luxury dealers were close behind, along with Jaguar and Cadillac, according to the latest Pied Piper Prospect Satisfaction Index which uses so-called “mystery shoppers” to measure the way potential car buyers are treated.

The study looks at 60 different sales activities, from the simple act of greeting a customer when they walk into the showroom to providing a test drive. Surprisingly, salespeople proved reluctant to take one of the most important steps of all, actually asking a prospect if they're ready to close the deal.

“The world has changed dramatically with the advent of the Internet,” said Pied Piper research chief Fran O'Hagan. Twenty years ago, the dealer was the gatekeeper, controlling every aspect of the car buying process. Today, however, “A customer can go to the showroom knowing as much as you want. So, the role of the salesperson has changed.”

And so has the balance of power. The best dealerships recognize and adapt to this shift, he explained, noting that the pace of change is so rapid – and the best brands have adapted so quickly – that a company that scored third in the Pied Piper study in 2008 would rank near the bottom in 2012 with the same score.

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