Paradigm Shift

Slowly but surely, Lexus Plus is fundamentally transforming the way the luxury brand sells cars

February 13, 2018


Talk with Peter Cooper about Lexus Plus and it soon becomes clear that it’s nothing less than a highly disruptive, yet ultimately necessary, paradigm shift.
 
“I’ve been in this business 35 years, my entire adult life,” says the dealer principal of Lexus of Lehigh Valley in Allentown, Pennsylvania. “And then one day I woke up and said, ‘Game over!’ I’m no longer in the car business. I’m in the transaction/hospitality business. I have to reimagine what the future will look like.”
 
Perhaps that’s why Cooper is the co-chair of the Lexus Plus Performance Group. The group was formed in 2017 by the pioneering Lexus Plus dealers who began embracing fundamental changes to the retail process. Today, 12 of the luxury brand’s 238 stores have followed Cooper’s lead. That includes JM Lexus in Margate, Florida — one of the world’s largest Lexus dealership based on sales volume — that just joined the Lexus Plus club in December.
 
Each of these already successful dealerships are reconfiguring their operations around two key tenets:
 
  • Upfront pricing — Lexus Plus dealers provide negotiation-free, market-value prices for everything they offer for purchase. This includes new and pre-owned vehicles, service packages, accessories and more.
  • Dedicated consultants — A personal consultant accompanies customers throughout the sales experience, from initial introduction through the vehicle delivery. Customers also have a single point of contact for their service visits.
Sounds simple enough at first blush. But the devil, as they say, is in the details. Tim Medeiros, Senior Manager of Future Retailing & Incentives in Lexus Marketing, heads up a small team at TMNA that’s been tasked with helping dealers make the transition.
 
“One thing we’ve learned is that our job is as much about preparing a dealer for the change as it is launching it,” he says. “And, yet, regardless of how well we prepare, there still tends to be an initial dip in sales before the dealer returns to pre-launch levels. Many dealers, like Lexus of Lehigh Valley, have completed their transformation process and are experiencing great success.”
 
What Lexus Customers Want
 
Why are forward-thinkers like Cooper and Medeiros so confident that Lexus Plus will eventually win out? Because it’s what most customers want. Market studies suggest that’s especially true of:
 
  • Women, who directly influence 85 percent of all car purchases, feel more in control versus the traditional process.
  • Conquest customers, who are new to Lexus, appreciate the pricing transparency.
  • Millennials, who prefer to shift much of the process online.
  • “Experiential masters,” an emerging group of consumers who share a new attitude toward luxury — where experiences matter more than just ownership.
Lexus Plus caters to these luxury customers’ expectations by eliminating the “pinch points” in the traditional retail process. That includes a lack of transparency on price and a confusing and often time-consuming purchase process where customers get handed off from one dealership representative to another.
 
Instead, Lexus Plus customers can focus on what really brought them to Lexus — its exceptional vehicles — and proceed from making a purchase decision to completing the transaction as efficiently as possible.
 
“People say our customers’ biggest asset is time, and there’s some truth in that. After all, no one can buy more of it,” says Cooper. “But the longer we’ve worked with and refined the Lexus Plus process, the more we’ve come to understand that it’s not just time but the emotional energy a customer has to expend during that time. Some people have already made a decision and want to buy the car in 15 minutes. Others are still making up their minds and might want to drive five different cars. We have to understand both types of customers and make it fun, easy and simple for all of them.”
 
Meanwhile, Lexus Plus appears to be a win for dealership employees, too. Medeiros says his team conducted a survey of the early adopters and found that, after an initial adjustment period, employee engagement is on the rise. And dealership managers have reported that they’ve begun casting a wider net when recruiting new hires. They’re now better able to attract people, especially Millenials, who prefer to work in a negotiation-free environment.


 
Taking the Long View
 
All of which begs the question: If Lexus Plus’ performance indicators are pointing positive, why hasn’t every Lexus dealership made the move?
 
“Because we’re talking about making a cultural change, and that’s never easy,” says Cooper. “Look, we definitely took some steps backwards when we first implemented it. Every dealer is going to go through that. But the market is changing. Everyone knows there is a need to do something different. But what? When? Those are questions that can create a certain paralysis. I applaud any and all initiatives. I don’t think Lexus Plus is the only answer. But it’s definitely one answer.”
 
“This isn’t going to happen overnight,” says Medeiros. “As a group, Lexus dealers are extremely strong. To improve on their already outstanding ownership experience is a large task. But that's what we aim to do. In the long run, the best way we can ensure success is to always evaluate what we are doing through the eyes of our customers. And, more and more, this is what our customers expect of a luxury ownership experience.”
 
By Dan Miller
 

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