I was halfway through a to-die-for eggs benedict at an adorable brunch spot in Austin when my phone buzzed with the headline…
“Tesla Motors announces plan to shut down 100% of brick and mortar stores.“
… and a piece of English muffin tumbled right out of my mouth.
Four Phases to Evaluating Marketing Moves
I had the same series of reactions I’m sure most digital marketers did upon hearing the news:
Phase 1, shock: “Whoa. Ballsy.”
Phase 2, denial: “This can never work though, something as high ticket as a car requires a high-touch experience. People have to test drive, get a feel for it, etc…”
Phase 3, possibility?: “But wait. People have said that about SO many industries who now do the majority of their business online — fashion, makeup, etc. Could this just be the natural next step for the car industry?”
Phase 4, curiosity: “OK. So what exactly are they doing on their website to make it an easy “yes” to hit the buy button online? Is there some magical direct response wizardry I’ve never seen…?”
Then I immediately texted Margo the screenshot and the words: “We gotta do a #HAMYAW on this.“
Tesla’s Move to Online-only Sales: Idiocy or Innovation?
Within a week we jumped on to film, and got busy digging into all sides of the debate — which also happens to now be my all-time favorite #HAMYAW episode to date.
We span all sides of the debate — and what this could mean for the world of high-ticket sales.
So catch today’s video and find out: was Tesla’s big move idiocy… or innovation?
02:10: We all know the rules of high-touch, high-ticket sales. Are they made to be broken?!
3:58: These stats on online TESLA sales will blow your mind
4:40: How other industries have evolved to solve the “People won’t buy online!” problem — and why this might just make Tesla’s idea crazy enough to work.
05:39: A side-by-side of TESLA vs. Ford car “sales pages”. Has TESLA discovered some kind of new, magic strategy…?
9:38: How Tesla can ride on brand + status… and whether or not the will last
12:00: Why it’s so hard to cancel Elon Musk
12:47: Does brand matter more than your web strategy? (It’s possible.)
All this and MORE on today’s #HAMYAW.
Would you buy a car without testing it IRL? Let us know…
And while you’re over there, drop your thoughts in the comments. How do you think this is gonna shape the future of the car world? Or will it just be a blip on the dashcam?
Would love to hear your thoughts.
Trying to rock the textured look, when in reality I’m just a little hungover.
(bass drums and clapping)
Welcome back, guys, for another episode of HAMYAW, and today, I wanna talk about something that’s been making some pretty big waves in the car world, especially in the last month or so. And this is something that is disrupting an entire industry, even though it got walked back a little bit and is also a really great example of the crazy power branding can have.
Some of you might be familiar with the perpetrator of this shift, Grimes’s ex-boyfriend, Elon Musk, some billionaire guy, I dunno if you’ve heard of him. Anyway, sometime during last March, Elon Musk announced that Tesla Motors, his car company, was going to be closing all retail stores, stopping test drives, and moving 100% of their car purchases online.
Now, apparently this logic was in order to create more financial stability for the launch of the Tesla Model 3, which is their $35,000 “affordable model”. However, a little bit after that news broke, Tesla, in a characteristically typical move, walked back the statement, saying that they were going to close perhaps 10% of stores instead and raise their pricing by 3%, no small change when it comes to a $79,000 car.
But the most interesting thing about it, it sparked in my brain when I heard the news, was whether it’s possible to run a lucrative, profitable car company by moving sales exclusively online. Are people going to buy cars exclusively from a website? Are we at the level of consumer sophistication where that is possible?
Margo, what do you think? And I’ve got something I wanna show you guys a side by side, but, Margo, I wanna hear your thoughts first.
Yeah, I’m fascinated by this because I have the same question. ‘Cause we talk about this a lot on the online business space. At what price point do you need to start doing more high touch sales?
And where can you not just sell to your list and send them to the sales page? And we also talk about it from the frame of how long and in depth your sales page needs to be, and it has to do with how big the price point is. So if you’re talking, usually we’re talking the $2,000 to $5,000 range.
And that’s always a big thing. The second you jump to the $10,000 range, people are like mm-mm. You need to do some one-on-one zoom calls, You need to do some voice.
Sales calls, yup.
Yeah, that’s when it jumps from marketing to sales, in my mind. And then there’s the trope that everyone says, which is once you get to those higher level, multiple tens of thousands of dollars, that’s just in person.
No question, that’s when you fly to look at the car, that’s when you go into the show room, that’s when you do the song and dance of sales.
To really test drive what you’re putting on, and so, I hope this works. I don’t know if I have an opinion either way. Part of me thinks that we are getting there. This is the brand to lead us there because there is so much status built into this brand, and people who want it already know, like I know I want it.
So if someone was like, you can have a Tesla, I’d probably be like, I don’t need to drive it, I know it’s great! (laughter) But am I actually the market? Because I’m not sure, my husband’s the one who buys all the cars in our family.
He’d probably be like, that’s stupid. (laughter) I wanna drive the car, I need to see how it feels, I have all these questions, so I would be interested to know what their funnel looks like, and if they’re taking you through, do you get to test drive, are they anticipating the questions that you already have, in a purchase like this?
So I had the same questions, and first of all, to whether or not this works, these were stats on an article on CNN I found when I was doing my HAMYAW research. CEO Elon Musk said that the last year, 78% of all orders for its Model 3 were placed online rather than in store, and 82% of customers bought their Model 3 without ever having taken a test drive.
And that, I think, is absolutely remarkable. And this is the position, I’m sure, ’cause both of us were pretty young when clothing started getting moved online, but there had to have been that discussion with things like the retail space, clothing space, shoes, people wanna try it on, people need to make sure it fits, this isn’t gonna work, this isn’t something you can do online, it’s gotta be in person, not true!
I do 99% of my shopping online. Every time I go to the mall, it’s like a special treat. I’m like, oh my God, I can just look around, go into all these stores and touch things, that’s amazing. But it’s not necessary, and I’m wondering if that’s where everything, even high ticket purchases, is heading, but go ahead.
Yes. The way that online companies have addressed this problem has also been fascinating ’cause you see, like on Rent the Runway, you can actually look at people who have your frame and look at pictures of them in your outfit that you wanna rent.
So where people who were really hating on this, saying no one would ever do it, we have now taken technology, and adapted it to our buying style.
You see the same thing with, what put Warby Parker on the map is that you could put your face, and they’d show you what the frames look like. And we’re getting better and better at that, so I think, like 3D animation is gonna be a part of this, I think AI is gonna be a part of this,
And there will come a point where you’ll feel like you’re trying these things on.
And also, by the way, caveat, Tesla has a 7 day return policy, and it’s really liberal. So you can get the car, take it on a test drive, go on a road trip, and then if you don’t like it, you can give it back. I’m sure it is a hassle and a half, but allegedly, that is the structure of the model, which I think is fucking smart. I think it’s really smart.
That’s not a long time, seven days?
Yeah, also true. Also true, I’ll love anything for 7 days. That’s the thing, I have outfits I’ve worn for 7 days and then never again. And it might be it’s a sales tactic in the disguise of serving the consumer. It is in many ways.
It’s a money back guarantee.
We always talk about, on the sales page, you gotta have one.
Inspires confidence. By the way, Tesla, only company that sells their cars online. There’s a buy button for a car. It’s mind-blowing, but I was like, okay, maybe they have some sort of superior idea about how to talk about cars online and how to sell them online that hasn’t occurred to other people, so I’m gonna show you side by side, Tesla and Ford, and we’ll start with Ford.
And this is the page for the Ford Focus Sedan, and may I note that you cannot purchase a Sedan off of this page, however, we see we’ve got the pictures.
Hold the phone. Are these the brand colors?
I know, right? They’re my brand colors, I told you, I’m seeing them everywhere! I am a trendsetter, you heard it here first, HAMYAW.
So built for those who love driving, this is the price point. By the way, half of what the Tesla Model 3 is. Those who love driving, and we got some nice pictures here.
So the CTAs are all like Explore.
Yeah, exactly, you can look at the car a little bit, just check out its butt, make it twerk. You can check out the different colors, so fun. And they’ve got videos about the technology and the engine and how everything works. It’s very detailed.
Yeah, exactly, you can explore their design, you can explore details about the performance, you get details on the craftsmanship, all this stuff. But craftsmanship, and then details about the audio, basically all the details about the car.
So I was like, okay, this is interesting. Tesla has to be doing something different, right?
There has to be something sexier. Incorrect! It is basically the same formula. Look at this: we’ve got details on how the model works, we’ve got info on safety
[Margo] There’s a buy button
Yeah, that’s the only difference is there’s a buy button. Safety, acceleration details, information on the engine just like we saw in the Ford site, little video talking about the range, how far it can go, front and back facing cameras, we again saw these details, stuff like this, on the Ford site, pictures of the interior.
So the real deal is there is not much of a difference, which is really interesting. And there’s information on specs, but people who wanna buy a Tesla car, I don’t know if many car fanatics are buying Teslas. It’s more tech fanatics in my experience and understanding.
So this is my question: is this search of these 82% only online Tesla Model 3 buyers, will this trend continue? Because conceivable, these are the hot leads.
These are people who were ready for the Model 3, they’ve been planning it for years, again, typical Musk venture, they were like, it’s gonna be out by the end of the year, 3 years later it’s finally here. So this $35,000 model, people are hyped.
Tesla is a status piece, it is a very sexy looking car. Every time I see one I’m like, ooh, a Tesla, despite myself. But I have to wonder if this is hype, or whether this is the future of car buying,
Or if this the future of retail at this high a level. $35,000 car, buying it with a buy button. Maybe it’s a Shopify store, we don’t even know. And then making that kind of investment without ever having seen it, like it blows my mind. I just…
So wait, but what if it’s like a Birkin? I mean, that is still how people buy Birkins, and Birkins are almost a higher price point than a Tesla.
Don’t you have to get on a wait list to buy a Birkin?
You need to get on a wait list, and had to do that when Tesla first came out, too. You couldn’t just buy one, you had to get on the list. I wonder if that was their first CTA, get on the list. It doesn’t say “buy now,” it says “order.”
Order, I mean, well yeah, that’s true.
Which I love, I love that.
It’s very likely that they took cues from the luxury industry ’cause it is a luxury electric car brand. Originally with the Model 3, they had people putting down thousand dollar deposits before the car was even out.
Ugh, I love that.
That is wild to me. I’ll be interested to see what happens because I think, in a way, it almost might be too early to put car purchases online, but at the same time, for the target market for Tesla, it might be reasonable. Like it might be the thing to do because Tesla purchases are typically people who trust and understand technology and don’t have that, well if I’m buying it online is it a scam kind of thing.
Yeah, listen, how differences get made in the market is when a market leader is bold enough to change the paradigm, and I think that’s what we’re seeing here. I think it will stick for Tesla because this is a brand play.
There’s no way they could have done this without the status that they have and without Elon Musk’s brand preceding him in the way that it does, without the tech innovation piece of it, all the things that make it something people really really want, and a symbol of something bigger than just a car.
This is how they’re going to keep selling, and I can see them not having a problem with it, but I can see how it will take the market a really long time to catch up because I cannot imagine, if you’re at a $17,000 price point
maybe you’re a PITA buyer. Maybe this is that next level where we talk about this all the time in online business space, that the lower the price point, sometimes you get higher pain in the ass clients, whereas when you have a higher price point, you attract people who want to be there and are making the investment are a lot more thoughtful about what they’re doing.
So they’re not bothering you with pontificating over minutia.
I do like to pontificate, though, I’ll be honest. One other thing, and this was my first thought, because you remember all that Elon, excuse me, all that Grimes’s boyfriend drama on Twitter over the summer where Musk tweeted that he was going to take Tesla private once shares hit 420, which is a weed joke for the uninitiated.
And he was apparently really high on Ambien and didn’t remember it, and it caused this huge thing. He had to step down as CEO, I believe, and is not chief advisor or something?
And the company took a huge hit, I think he had to pay $20 million in fines? Which is crazy, yeah, don’t, I gotta double check that.
But I’m wondering if this is also a move to try and save the company disguised as innovation. That’s what I’m wondering because I know for a fact that Tesla, because I did my research, had 2 profitable quarters before this one.
Q1 of 2019, not profitable, was not expected to be profitable at all. So they’re still struggling to make this brand happen and make it viable, so while it’s like, oh amazing, we’re gonna close all our stores, we’re gonna go green, whatever, I don’t know if that’s even part of the marketing.
I mean, I support it if that is the strategy they’re taking, it is a smart strategy because it’s scarcity, it’s urgency, it’s scarcity, it’s making it more like something you want, it’s controversial, keep going.
It is, but it’s interesting because Musk has this incredible ability to do this, just by his personality, if he screws…
Yeah! But he has this incredible ability to turn adjustments that are made to improve bottom line because they need rise through the company, or they need to do this or that, and improve sales and reduce spend, they make it look like innovation ’cause it’s Elon Musk.
It’s like, I’m gonna take 100% of car sales online. That sounds like a really stupid thing to do at the outset, but because it’s Musk, you’re like, oh, interesting, go on, tell me more about the future.
But he might be right, and that’s what makes him such an interesting, powerful brand that has these evangelical fans that will do crazy stuff like spend $35,000 on a car they have never seen.
And takeaway for HAMYAW viewers is that brand matters.
When we’re talking about your website, and we can sit there and we can pontificate over what elements of the website are optimized or not optimized or how they did the copy, you have to consider the context of how you’re saying something
So I can only imagine how annoying it must have been to be the web designers on this project because you’re right, they created, basically, a regular website for cars,
But the fact remains that Tesla, in and of itself, as a brand, and what you think of, the set of ideas you have in your head about what this is, precede anything about the website.
Nothing about the website is making or break your decision. You arrive there and it justifies the choice.
You’re a hot lead.
For sure, again, and you were asking, talking about the funnel, this is sort of a funnel in the ether almost for people. ‘Cause people are led through, start in the Tesla funnel when they hear about Elon Musk.
When they first heard about Tesla going live, when they saw those really exciting events, talking about him, people were like, this is the future of cars, self-driving cars, and all the headlines. Tesla, models, makes, see I can’t even words, I’m so excited just talking about this.
But they even have an $88 thousand Tesla SUV that people are buying, especially in San Francisco, let’s be honest with each other. But it’s so incredibly interesting to me the power despite all of Elon Musk’s gaffs, despite the fact he’s shown himself to be a bit of a futurist who has a habit of getting ahead of himself, and announcing things before they’re ready and making ridiculous time specifications on when things are gonna be ready for launch, that are almost never accurate.
But he has this incredible likability and mythos around him that he’s basically unstoppable.
If you can dare to step out and make these crazy decisions just to see if they work, you increase your likeability and trust tenfold, kind of regardless of what happens. And unfortunately, for all of us, that is incredibly difficult to do. Or maybe fortunately for the world.
But it’s definitely something to think about. If people see you as an innovator, if people see you as somebody on the cutting edge, and about to change the world, you can get away with an incredible amount of bullshit. (laughter) It’s wild.
Well let’s hope that this isn’t bullshit and that (laughter) this is a lasting trend. I would love to see this stay. I think it’ll be really cool to watch what’s happening and what other car companies do, if they pivot totally in the other direction and we’re like, we’re only in person.
If they try and do some hybrid, buy online, test drive in person model, or put money down online, you know, save your spot. I think there’s some cool things that could come out of this to get the market ready for the next iteration of retail.
Yes, absolutely, I love that.
To that end, I’m Margo Aaron.
I’m Hillary Weiss.
This has been HAMYAW, and if you like us, like us below, subscribe, share us with your friends, and come back in two weeks!
Yes! We’ll see you then, guys!
Photo by Juliet Clare Warren