CarMax Says That People Want To Buy, Finance, And Sell Cars Online
Online car shopping, where digital tools take care of the boring stuff, is changing the way people buy cars.
This is what I learned from a talk between CarMax’s Assistant Vice President of Product Ann Yauger and Assistant Vice President of User Experience Design Eric Martin for PYMNTS’ Commerce Voices Series, which was sponsored by Checkout.com.
Its redesign of the omnichannel experience came at a good time, since the prices of used cars went through the roof after COVID-related supply chain problems in 2020 and 2021 cut the number of new cars that could be shipped.
“Used car prices are high right now. Interest rates are high right now,” Yauger said. “We’re thrilled that our new product is timed for this moment because we think it’s particularly helpful. Customers want help understanding affordability or how to find the right car for their budget, not just for their needs.”
The two executives agreed that digital takes away many of the problems that used to happen when you went to a used car lot and had to deal with paperwork, prices, and pain.
Martin mentioned CarMax’s “Instant Offer” solution for trading in cars, which lets you find out how much the car is worth online before you go to the store. “That powerful unlock allows us to think about our digital tools as not just digital progression tools in a remote way, but it also allows us to unlock value for customers that come into the store,” he said.
The online pre-qualification process at CarMax is another way to make the customer’s experience better before they even get there. He said that giving customers that “as a digital-first experience” gives them a powerful way to look through a digital lot.
Conceding that “customers don’t have a lot of trust in cars salespeople,” Yauger added that “our brand differentiation from the very first day has been to give customers full transparency and bring honesty, transparency and ethics into an industry that hasn’t been known for that.”
Self-Improvement
CarMax is trying to get rid of the old problems of haggling and uncertainty that come with used cars and the people who sell them. About 53% of its retail sales follow an omnichannel path, which the company said on its second-quarter fiscal 2023 earnings call in September.
Yauger said that online prequalification and Instant Offer are examples of how car dealers can use “that digital part of the experience to reinforce our brand values of transparency.”
She added that prequalification “is a relatively new product. We’ve just scaled it nationwide. We’ve been testing it over the year, and it’s been a positive contributor to conversion. We wouldn’t give out the exact data on conversion numbers, but we wouldn’t have scaled it if it wasn’t [performing].”
This process also looks through the whole CarMax inventory to give the customer other options if they can’t afford the car they want.
“This takes your credit scenario [and] runs it on every car that you would be approved for,” she said.
Also, it gives shoppers not just an estimated monthly payment, but the actual monthly payment.
This keeps shoppers from getting sticker shock and being disappointed, which could happen if all the math was done in the store while they paced around nervously. “At CarMax, we have no vested interest in you buying a car that’s more expensive than you can afford,” she said. “We’d much rather get you into a car that fits your budget.”
Martin added some context, saying, “it allows that customer to understand their budget as a part of the digital shopping experience, not something separate, not something downstream. That is an incredibly empowering part of the experience for the customer. We turn that experience into a dashboard for the customer.”
Fixing COVID-19 Used Cars
Martin said that customers and salespeople are “empowered” to have a conversation instead of a hard-sell stare-down because of the digital dashboard that shows pre-qualification for financing and preferences. This is done before a customer goes to a lot or talks to a salesperson. It’s not just about what you can afford, but also about how we can match what you can afford with what we have.
At that point, bothersome steps have happened online, creating a checkout experience where “they’ve gone through their vehicle-specific application for financing, they’ve gone through taxes and fees, and they’ve done that work through checkout. Now their experience … is that moment of getting to celebrate the purchase rather than focus on the paperwork.”
Yauger agreed, pointing out that one of the most common complaints in CarMax polls is having to spend hours or even a whole day at a dealership filling out forms. “Now digital can take that pain point away … before you come in or even after, and just make the time you spend in the store itself all about the reason you’re there: to see the car, to get the car, all the positive things.”
