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Tesla Wheel and Hub Sales Model - Can it be made to work?

Discussion in 'Model S: Ordering, Production, Delivery' started by lolachampcar, Jan 21, 2013.

  1. lolachampcar

    lolachampcar Active Member

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    Normally when I beat my head twice on the same wall it is time to figure out what I am doing wrong. Bad faith has seldom been an issue in my business dealings so most of my solutions are found in mismatched expectations. I think this might be the case with my Tesla sales experience. If so, where am I going wrong?

    Tesla is using a direct sales approach. As a starting point, let's assume 20k a year in volume and a three month time from finalize (customer commits funds) to delivery and payment. This would yield 5000 sales in play at any one time.

    The "Apple Store" model of sales places a reasonable number of bright, motivated and intelligent young people deployed at store fronts, service centers and Tesla call centers to interact with the buyer. I think of these people as populating a wheel with spokes going back to a central hub at the factory. Those on the wheel can handle a lot of the customer interface and even some of the sales related issues but the hub is where the decisions are made and it is here that I think the process is breaking down.

    Eighty thousand dollar capital expenditures are not IPhone purchases. Tesla is aiming for the customer laying hands on the product at the store front then placing an order over the internet with the factory. Early adopters are more likely to blend in with this idea but most car buying customers are going to require some level of interaction to complete a sale; a function the typical dealer sales manager performs. Financing, trade ins and title requirements are but a few of the issues dealers deal with day in and day out. The nuances of these interactions will vary state to state. Add Tesla's dealer issues and production scheduling/commitments to the normal sales manager work load and you are going to need some creative decision makers playing a very active roll if the sales cycle is to go smoothly. These people carry the added burden of needing to be better than their Dealer Sales Manager brethren if Tesla is to meet its own goal of a better customer experience.

    My expectations on a $100K capital purchase are that I am going to deal with an entity that is capable of, and willing to take the time to, understand my concerns and will work with me to find a solution that meets both parties needs. The entity should expect the same of me although the onus to be flexible normally falls more on the vendor in a vendor/customer relationship. I am now working my second issue with sales and I am getting the feeling that the wheel is functional but there is no one at home at the hub. Judging by some of the posts I have read, I may not be the only one.

    So, how many engaged decision makers does it take at the hub of a management group to properly manage 5,000 active end user sales? Does Tesla seem to have anywhere near this level of support in place? Are they exhibiting the regional expertise required to sell in fifty states and abroad? I would love to hear what other forum members are thinking.
     
  2. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    You mean where the salesman has to check with the manager to see if you can get blue since there isn't one in the lot and comes back saying if you will take the red one today we'll throw in floor mats? The only interaction the sales manager performs is to maximize revenue by making the customer settle.

    Like sitting in the finance office for nine hours while the finance person tries to sell you everything under the sun and offering 20% of the car's value as a trade in.

    Translation: Take the customer for all they're worth.

    Just about any amount of inconvenience is better than the dealer experience. Not going through a dealer is probably worth $5000 to $10000 of the car's price. Are you really trying to say that people enjoy buying a car from a dealer where every car is priced differently based on what the dealer thinks they can get out of you? Or when going for service if you don't bring a measured amount of oil, they overfill? And the car goes in the back where you never get to interface with the person doing the work, who might be a high school kid or an illegal, and who's under pressure to get X cars per day done and will likely lose his job if he doesn't?

    The dealer model is horribly broken and the sooner it's gone for good, the better. (end of rant)
     
  3. Cattledog

    Cattledog Active Member

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    lolachampcar - Excellent question. Logistics is not my area of expertise, but here are some random thoughts.

    1. 20,000 is out the window. They could probably sell 40,000 this year if they could only deliver them. Then Model X. Then Gen3. If I were Tesla, I wouldn't be solving for 20,000 in 2013, I'd be solving for 100,000+ in 2016. They need a paradigm shift. White glove delivery should be part of what you get when you pay for a Signature, period. Really. It hardly gets you anything else except a cool logo and more glitches.

    2. If by March 1st 90% of all owners will be within 100 miles of a service center, then 90% of all deliveries should be through those service centers. If they aren't acquiring enough real estate to do this, now's the time to start.

    3. If they are doing #2, then the sequence of ordering is approximately thus:
    a. A customer gets familiar with Tesla any number of ways - referrals, internet, mall store, getting blitzed by one on the freeway, whatever.
    b. That customer gets info they need to make a decision - referrals, internet, mall store, getting blitzed by one on the freeway, whatever - then orders by computer, at home where necessary, through stores if allowed.
    c. At this point, the customer gets a delivery specialist from Tesla HQ, whose job is to treat that new reservation holder like a 6-week old baby. Along with all the other babies he/she's nurturing.
    d. That delivery specialist is the point of contact until delivery, whereby it switches to the service center manager. First point of contact, closest geographically, not another random voice from an 800# at HQ.
    e. I want a relationship with a person at this point, cause we have all become accustomed to things being perfect and when they are not, I want an advocate working with me to get it back there.

    4. Here are reasonable numbers:
    a. In 2016 they will deliver 50,000 cars in US, 50,000 overseas (don't ask me about that)
    b. In 2016 they will have 50 service centers (guess)
    c. Each service center will have 1,000 cars to deliver, or 20/week.
    d. Most reservations will be within a 1-2 hour drive of service center - I would have taken a day off to get my car if necessary. Deliveries from over 2 hours will probably migrate to Saturdays.
    e. The average car carrier carries 7 cars (I did exactly 20 seconds of google research to come to that conclusion) so 3 carriers/week to each service center, but 30 a day leaving factory.

    5. At some moment they are putting east coast and gulf coast cars on a boat and sending them through the Panama Canal. Seriously.

    Lots of logistics. Their weakness right now.
     
  4. lolachampcar

    lolachampcar Active Member

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    I think what I am missing is that one to one channel of communication with someone that can make a decision. Communication is good with the DS and he is great but he is not being supported on the back end. Simple questions are going unanswered. When they are resolved, I've provided the solution.
     
  5. Cattledog

    Cattledog Active Member

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    lola - Agree. They are young, as a company but literally I bet most of their DS and help people are as well. They will gain confidence after encountering the same situation multiple times and having executed solutions.

    That's why I propose a two-person process - someone who has your back at HQ up to and while your car is being manufactured/delivered, and someone who has it who is close by (service center) for the rest of the time you own your car.
     
  6. Al Sherman

    Al Sherman It's about THIS car.

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    I think Cattledog is on the right track. I also think Tesla will figure it out and make it right sooner than anyone expects. What can I say? I just believe. Jerry is accurate as well. I don't consider his post a rant. I'm guessing we've all had the exact same, or similar dealership experiences. I know I related to every example he gave. My absolute best car buying experience was at the horrible level. I wont go into details but I've been lied to, cheated, and annoyed at incredibly high levels by many different dealers representing many different companies. I've even been held hostage (OK maybe that's a little extreme) by a dealer that insisted I listen to the leasing briefing even though I insisted that I wasn't interested and would never lease the car no matter what the guy told me.
    When Tesla works out the kinks people are going to love it so much that others will be forced to follow.
     
  7. bonnie

    bonnie Oil is for sissies.

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  8. lolachampcar

    lolachampcar Active Member

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    #8 lolachampcar, Jan 22, 2013
    Last edited: Jan 22, 2013
    jerry33,
    I too have had some horrific dealership experiences and in no way wanted to equate the two models of doing business. It was how the necessary and useful functions of the Dealer Sales Manager were being handled by Tesla that got me thinking and, frankly, readjusting my expectations so I will not be disappointed moving forward.
     
  9. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    Right. Nothing is ever as good as the sales brochure makes it out to be. Still, if it's even half as good it will be an improvement.
     
  10. johnnyS

    johnnyS Member

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    Cattledog: What you are suggesting is the way our delivery went. We picked our car up at the Costa Mesa service center. A manager there was overseeing the process. We had two delivery specialists, both very young. One handled the paperwork and the other went over the car. They delivered over 10 cars the Saturday before Christmas. The one DS had just graduated from college. The other spent most of her time in a retail store, so she knew how to show the car. If we were willing to wait we could have had home delivery, but it was fun to see the service center and to see other model Ss being delivered.
     
  11. GeekGirls

    GeekGirls Kid in Candy Store

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    I couldn't agree more. Our previous two cars were exactly the vehicles we wanted at the time, meticulously researched, with the options and in the colors we wanted. The only thing that soured the purchase experience for us in both cases was putting up with the sales process. Laughable attempts to connect with their female clientele by highlighting the vanity mirrors, hours of paperwork and stupid gamesmanship all put us in predictably foul mood lightened only by finally getting to drive away in a new vehicle.

    The Tesla experience was a night-and-day improvement in my opinion. Obviously the year-long wait for delivery isn't a sustainable model, but presumably that's not part of the long-term plan.
     
  12. Al Sherman

    Al Sherman It's about THIS car.

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    LOL. My mom worked full time and very hard for her entire life. In the mid '70's she decided she needed a 4WD SUV. She was ahead of her time. She pored over car and truck magazines doing research. The Bronco won with the GMC Jimmy second. She goes down to the Ford dealership to buy the Bronco. The salesman tells her to come back with her husband when he gets home from work. She leaves without saying a word, goes to the GM dealer, buys the Jimmy off the lot for cash. Then she drives it over to the Ford guy and shows it to the sales manager and tells him why. Gotta love THAT woman!
     
  13. lolachampcar

    lolachampcar Active Member

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    I suspect Cattledog has nailed the ultimate solution. Time will season the people on the front lines reducing the need for managers back at the factory to engage. There will just be a few casualties as this process takes root.
     
  14. lolachampcar

    lolachampcar Active Member

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    I did not get any feedback from my initial note last week so I escalated my current issue this morning and immediately got a call from the SE regional sales manager. He was friendly, knowledgeable and we were able to address all open and previous issues in a matter of minutes. I was thoroughly impressed with the quality of person, depth of knowledge and willingness to say "I do not have the authority to make that call" when he could not make a call.

    The call this morning tells me that Tesla does have highly talented sales management in place (at least for the SE) so the breakdown I experienced is in the method in which issues are escalated and tracked. I do not know if the sales managers are overwhelmed or if issues are being dropped. If they are overwhelmed, I fear the problem is only going to get worse with the inevitable added workload of even more customers.

    The good thing that came from this morning's conversation is that Tesla's Sales Management are thoroughly committed to the improved Tesla Customer Experience. They just need to tune the process so that the capable people on the wheel are plugged into the capable people at the hub.
     
  15. neroden

    neroden Happy Model S Owner

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    A lot.
    No. They seem to be trying to staff up.
    No. They seem to be trying to staff up.
    I believe the problem is one of staffing up very quickly, so quickly it's been impossible to properly train everyone. The people at the top seem to know what they're doing when it comes to sales, delivery, and service (not necessarily everything else, but that's another topic) but they're hiring so many people so fast that I think training has not propagated down properly. They're probably still focused on manufacturing, where they're *also* staffing up very quickly and have done so apparently without substantial drops in quality.

    Now, the franchised dealership model would only make the problems worse.

    The other problem I expect Tesla to have is that staffing up this fast is probably going to require more capital. *This* is what the franchised dealership model avoids. I'll betcha when Elon said he thought Tesla had enough capital, he was lowballing the sales, service, and delivery staff requirements, never having dealt with that on a large scale. On the upside, Tesla has a proven ability to raise capital. So they could do that.
     
  16. jstoneman

    jstoneman Member

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    The other problem I expect Tesla to have is that staffing up this fast is probably going to require more capital. *This* is what the franchised dealership model avoids. I'll betcha when Elon said he thought Tesla had enough capital, he was lowballing the sales, service, and delivery staff requirements, never having dealt with that on a large scale. On the upside, Tesla has a proven ability to raise capital. So they could do that.[/QUOTE]

    This is why they charge 900 bucks for delivery. I wonder how much of that actually goes to shipping costs, delivery specialist pay, etc etc. They have gotta be making some kind of cash for every delivery don't they? 900 bucks? Sheesh!
     
  17. ppl

    ppl Member

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    #17 ppl, Jan 24, 2013
    Last edited by a moderator: Jan 24, 2013
    I assume you have purchased ice cars within last ten years. That is typical charge for delivery of all cars out there. I love the documentation fees the dealers charge too. I am surprised they don't add a coffee charge as well. I believe if they added that charge to the price of car and didn't label separately no one would have noticed. In fact it would be good advertising to say totally different buying experience with no dealer prep or delivery charges added
     
  18. JohnQ

    JohnQ Active Member

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    Delivery charges, at least, must be itemized separately from the vehicle cost (see Monroney sticker Wikipedia entry and numerous threads on this site).
     
  19. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    Well, if you've ever drank their coffee...I don't think even a dealer would have the moxie to charge for it :)
     

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