What Attracts Customers to Tesla?

Tesla has gained widespread recognition during the previous ten years. An acknowledged powerhouse, the business has seen exponential expansion while dominating the automobile sector. How does Tesla draw in clients? Let’s examine the company’s history to date. There is plenty to be learned from both the brand’s successes and failures.


Tesla’s Ascendancy


Tesla first appeared in 2003, but the company didn’t immediately become well-known. It took a decade of hardships, leadership disputes, and modest accomplishments before the current Tesla really entered the public eye in 2011.


The business only sold 2,500 roadsters back then; today, each is worth millions of dollars. However, in the ten years that have passed, Tesla has expanded into a $688+ billion company as of the date of this writing.


What exactly lies at the heart of this achievement? The competitive advantages of the firm may be divided into five main categories:


1. Electric Attraction


Right now, electric cars (EVs) are in the spotlight for consumers. Whether the goal is to save the environment or save money at the petrol pump, many people see them as the way to reduce our reliance on fossil fuels. Speaking of financial savings, EVs are supported by a federal tax credit of up to $7,500 in the US because of their environmental credentials, which serves as yet another incentive for customers watching their spending.


2. Business Leadership


What makes many firms so successful is in large part the presence of a visionary CEO. The best illustration of this is Tesla. Regardless of what you think of him, Elon Musk is one of the most well-known CEOs in the world right now. For better or worse, his direction and approach have physically and symbolically launched the company into orbit.


3. Franchised Dealers versus Direct Sales


As you probably already know, the great majority of automakers sell their cars through franchised dealers. Tesla, however, has altered the conventional dealership business model by utilizing direct sales. The firm has spent billions of dollars opening storefronts exclusively for Tesla products and increasing the number of “advisors” (also known as salespeople).


Tesla presents the advantages of the direct sales strategy to prospective consumers together with its electric vehicles. The business argues that because the Tesla customer experience is simplified and unique, conventional dealers are just not able to sell EVs properly. Tesla handles every client as an individual and is wholly committed to their needs.


Additionally, salaries rather than commissions are used to pay the company’s employees. The purpose of this is to avoid forceful sales tactics. In the 1990s, Saturn adopted a comparable strategy, educating workers in low-pressure sales tactics and ensuring that clients only encountered one Saturn staffer at a time.


4. Innovations in Customer Experience


One of the greatest retail automobile shopping and purchase experiences is what Tesla is known for. Tesla still claims a U.S. inventory of 217+ shops and counting, despite the company’s ambitions to transfer many of its physical stores out of upscale shopping malls and into more affordable-to-lease areas like parking lots and warehouses.


The company’s management is aware of the importance of in-person service, product demonstrations, and fostering an environment that enhances its brand image. When done properly, having a physical store may increase customer loyalty by providing unique experiences that cannot be duplicated online.


The majority of consumers still need a satisfying in-person experience that is consistent with what they get online, even if many consumers want the car-buying process to be digital first. Dealerships nowadays need to establish a solid rapport with customers both in-person and online.


Supercharger Network 5.


Many people express worries about the accessibility of charging stations as the reason they’re waiting to make the conversion to an EV. People frequently wonder whether one is available close to their place of residence or place of employment and whether they can use it frequently enough when traveling longer distances.


Tesla engineers overcame this challenge by building the most effective and extensive charging network in the world thanks to its early entry into the EV market.


Tesla’s Errors


There is no denying that Tesla is the most important manufacturer in the EV business. Even though the company may not have created EVs, the Model S convinced Western consumers that EVs were a desirable option. Only when other manufacturers became aware of the extent of Tesla’s monopoly did they begin to make significant investments in their own EV platforms?


However, this does not imply that Tesla has been fault-free up until this point. The company has made significant errors that have contributed to the current market change. While this was going on, other manufacturers entered the EV market and started to make themselves known.


Tesla’s market share weakness has now started to show up, which was previously unimaginable. Where, therefore, has Tesla gone wrong?


Increase in Price


Elon Musk has revealed his intention to make high-end EVs accessible to the general public, promising a $25,000 model by 2023. However, almost all models have experienced consistent price rises in the U.S. market. Prices have increased by as much as $6,000 in some cases, and the increase is being blamed on factors including inflation, supply-chain issues, and a rise in the cost of raw materials. In the middle of this, Musk has issued a warning that he may need to lay off 10% of his staff, which has added to the pandemonium.


The $25,000 model pricing seems a long way off with the price hikes and the problems that led to them.


Building Quality Issues


Despite price fluctuations, Tesla EVs are still regarded as the ideal luxury vehicles, right? Not exactly. Along with the cost debate, there are rising doubts about the overall build quality of Tesla’s portfolio. The manufacturer’s formerly positive media image has been slightly marred by this.


Drivers have posted about their problems on social media, expressing their dissatisfaction with the quality concessions. This also occurred during a production scale-up, emphasizing the drawbacks of mass-producing Tesla cars.


While well-known automakers seldom, if ever, struggle with consistency, Tesla’s problems have come to light, leaving customers feeling misled once more.


Why Market Share in Automobile Dealers Alters


Lesson learned from Tesla’s disruption of the car sector: if you don’t innovate, someone else will. No matter how well-established the main firms are, if they don’t enhance their offers, they run the danger of losing market share.


Conventional franchised dealers can learn the same lesson. However, in order to properly address the retail automotive side of the issue, it is crucial to thoroughly comprehend the main variables that affect changes in the market share of auto dealerships:


Typical Preferences


Before the Internet, actual product examination and shop visits were crucial steps in the retail consumer purchasing process, especially for expensive items like furniture, electronics, and cars. The Internet communication paradigm is said to have been created by computer scientists Vinton Cerf and Bob Kahn. On January 1, 1983, ARPANET adopted this framework, ushering in the era of the “modern” Internet.


Add in internet shopping, which was first popularized by British businessman Michael Aldrich, Amazon’s eCommerce personalization prowess, and a multi-year global pandemic, and we’ve nearly reached where retail consumer preferences are at right now.


In other words, modern customers choose a highly customized, primarily digital, and technology-enabled retail purchase process, and the vehicle dealerships that cater to these preferences are the ones capturing market share.




However, even the purchase of a Tesla does not perfectly represent automobile digital shopping. There are actual showrooms and galleries located all around the United States, and every new Tesla sale still involves a face-to-face transaction.


A buyer will often visit a Tesla delivery facility, sign some paperwork, and attend a brief orientation. The entire process lasts around 30 minutes.


The choice of home delivery is extended if the customer lives far from a delivery location (or in a state with strict dealership restrictions). In this case, a Tesla representative immediately delivers the vehicle to the buyer’s home.


Short version: No one — not even Elon Musk’s Tesla — provides a fully digital car-purchasing experience. (The Vrooms and Carvanas of the globe are no different!)


As a result, the fight for increasing retail automotive market share is currently being waged on the in-person customer experience. The best way for dealers to stand out from the competition is in person.


Inside-Out Changes


Making internal improvements is the first step in differentiating the in-person client experience at a dealership. It has been demonstrated that adopting a one-price, one-person strategy, like Tesla, where a single point of contact handles the full transaction without haggling (including financing and the presentation of F&I items), increases customer satisfaction and sales.


The conventional dealership business model is difficult to alter, though. The phrase “one price, one person” has been used in the past, and it was effective, but it doesn’t imply dealers should implement it all by themselves.


The process can be more effectively mapped out, there is greater predictability in understanding what to expect, and organizational transformation may be accomplished within targeted timelines to satisfy core business objectives.


Cultures Are Grown, Not Bought, as a Related Read


Three ways to expand or regain market share for a car dealership


How can you use these crucial principles to boost the market share of your auto dealership? Follow five important lessons:


1. Costing


Customers don’t want to haggle over a fair price when they’re buying a new automobile, to reiterate. They are unwilling to barter. What was previously considered essential is now considered an annoyance. And in the modern day, they are aware that finding honest pricing elsewhere is a possibility. You will gain greater loyalty and respect right away if you satisfy this demand. Consider having a one-price, no-bargaining policy to differentiate yourself from other sellers.


2. Method


The same is true for a change to a customer-first company philosophy. Customers are turned off by an emphasis on sales. They desire a single point of contact and a simple procedure that puts their needs first and restores the enjoyment of car purchasing.


Investigate software choices that let you complete transactions swiftly, digitally, and with only one person managing them. With a single point of contact, automotive point-of-sale (POS) software like SimpSocial

Transact gives you everything you need to provide consumers a seamless, frictionless sales experience.


3. The Client Experience


Of course, Tesla has benefited greatly from free promotion thanks to Elon Musk’s fame. There isn’t always an Elon Musk at the dealership, though. One of the best marketing strategies for increasing market share is word-of-mouth marketing, which dealers may use to elevate their profiles.


Word will travel quickly among contented and thrilled customers’ inner circles by offering a distinctive customer experience that surpasses what modern retail shoppers have come to expect from traditional franchised dealerships.

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