Millennials have an increased presence in the auto retail space and Generation Z will enter the market over the next few years. Car buyers’ preferences are moving from face-to-face interactions to online activities.
According to Cox Automotive’s 2017 “Future of Digital Retailing” study, while most consumers prefer completing at least one step of the car-buying process online, most car buyers want to complete the transaction at a dealership. Seventy-one percent of consumers want to get accurate, detailed information on the deal online and 83% of consumers want to complete at least one purchase activity online.
"A good place for dealers to start making this shift is to look for help from their finance sources. Many of them have made the change to going online in other verticals such as real estate, so doing so in the auto industry should come easier for them. This is important for finance sources because they need dealers to go digital in order to keep expanding their customer base."
However, the study also concludes the dealership continues to play a significant role in the car buyer’s journey. Nearly nine in 10 respondents want to complete their purchase at the dealership; only 11% of consumers are ready to review and sign paperwork online away from the dealership.
Now that more technology-savvy customers dominate the marketplace, aspects of the car-buying process that have been slow to adapt need to move quickly to make themselves digital.
Offering online services is no longer a competitive advantage. Rather, it is the expectation. A recent Cox Automotive survey with accounting network PwC found that dealers reported a 25% increase in mobile device usage at the dealership. Yet only 45% of dealerships are even able to offer those capabilities. With mobile usage expected to continue to increase, dealerships need to digitize.
Dealers are moving toward a digitized customer lifecycle encompassing advertising, purchasing, servicing, and financing. The digitalization of the dealership can steer customers in the right direction to make purchases that suit their needs. So it is time for your dealership to go completely digital, to complement your physical presence. In order to do so, the financing part of the business needs to go strong on going digital as well.
Transitioning to digital will not be easy for dealerships. Adapting from the traditional face-to-face interaction to a transparent and consultative online sales approach is a drastic but necessary change. Cox Automotive and PwC’s survey found that 64% of dealers do not offer customers the option to structure a deal online. This, in turn, does not allow deals to be negotiated online and forces customers to show up in person before they are ready to purchase.
A good place for dealers to start making this shift is to look for help from their finance sources. Many of them have made the change to going online in other verticals such as real estate, so doing so in the auto industry should come easier for them. This is important for finance sources because they need dealers to go digital in order to keep expanding their customer base. Lenders can help dealers embrace digitalization in the sales and F&I processes.
Once a dealership is digitized, with the blessing of its finance sources, customer satisfaction rises significantly and fewer errors occur in the record-keeping process. Among dealers surveyed in Cox Automotive and PwC’s survey, 63% saw the biggest ROI from the digitization of the sales and F&I process.
If your dealership is already in the process of going digital or has gone digital, you are setting yourself up for success. If you want to start the process now, keep in mind that going digital requires a significant investment of time and resources. Staff, vendors, and everyone else that touches the dealership needs to be onboard and trained on how this type of move will change what they do for the dealership.
It will be difficult at first, but once completed, your customers will be happier, and your revenue and profits will be up. The time for the digital dealership is now. Focusing on online sales and F&I processes will help you build a more fluid business geared toward the future.
Cheryl Miller is vice president and general manager for Dealertrack’s F&I Solutions. Contact her at [email protected].
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