We did it again. Another one of those digital retailing startups is this month’s cover story. Hey, I just want to make sure you know who the players are in this burgeoning segment, because there are a lot of them. Heck, with names like Blinker, Drive Motors, Roadster and Shift, the category is running out of nifty plays on words for these offerings.
Well, you can also eliminate the name Honcker, which is the startup the two gentlemen on the cover co-founded. If you flip back to it for a second, the individual on the left is CEO Nathan Hecht, whom former F&I and Showroom Senior Editor Brittany-Marie Swanson interviewed for her story.
"So when event organizers asked audience members to submit questions during the panel on which Hecht served, I made sure to slip in a question about dealers. I wanted to know what he had learned from working with dealers."
So, why Honcker? Well, part of the reason has to do with what I heard Hecht say at a lender conference I attended in May. I’m pretty sure there weren’t any dealers in the room. I bring that up because having attended other lender shows in the past, vendor and lender representatives can sometimes be a little more candid when potential dealer customers aren’t in the room.
So when event organizers asked audience members to submit questions during the panel on which Hecht served, I made sure to slip in a question about dealers. I wanted to know what he had learned from working with dealers.
“Car dealers are mathematicians,” he responded, praising your ability to immediately know where a deal is headed with just a quick look at the figures. He also said many of you suffer from attention deficit disorder. He learned that after trying to get dealers to embrace his technology by showing them a tutorial. “You have to give them a username and password so they can play around.”
Again, I don’t think there was a dealer in the room, so Hecht wasn’t playing to the crowd. And that’s really the moment I decided we needed to feature him and his startup in the magazine.
And as it turned out, I received the first draft just as J.D. Power issued two annual studies showing that, while digital retailing is making strides in the automotive retail industry, buying and financing a vehicle entirely online remains a work in progress.
Issued on Nov. 14, the firm’s 2017 Consumer Finance Satisfaction Study concluded that allowing consumers to submit credit applications online generated significantly higher levels of satisfaction for finance sources. However, the study also showed that only 30% of car buyers applying online received a credit decision within 15 minutes. In contrast, 46% of car buyers who filled out a paper application with a dealer representative received a decision within the same timeframe.
“With such erratic approaches to digitization, many auto lenders are failing to successfully capitalize on tremendous cost-cutting opportunities that have proven to boost customer satisfaction,” said Jim Houston, senior director of automotive finance for J.D. Power. “With some lenders varying widely on ease-of-use satisfaction scores for their digital offerings, a huge opportunity is going unmet by many.”
Released the following day, J.D. Power’s 2017 U.S. Satisfaction Index Study also offered some interesting insights about today’s internet shoppers. See, while consumers are visiting dealerships with more online research, it’s the pre-purchase interaction with the salesperson that often leads to high satisfaction scores.
So, yeah, digital retailing remains in its infancy, but it is allowing dealers to do things they’ve never done before. Take last month’s Cyber Monday, which, according to Drive Motors founder and CEO Aaron Krane, was the first time dealers blazing those digital trails were able to take part in one of the biggest online shopping days of the year.
Krane — who, coincidentally, appeared on last December’s cover — said his firm provided its dealer clients with a variety of marketing tactics and promotional materials to promote Cyber Monday deals. He noted that car volume orders through the Drive Motors platform spiked 56% during Black Friday 2016, adding that it was one of the first days the tech startup claimed at least one sale per hour throughout the day. For Cyber Monday 2017, Krane said he expected to see two to three vehicles ordered through his platform per hour.
I’ll have to check back with Krane on that, especially after he sent me this 2017 prediction last December: “Consumers who don’t like being ‘desked’ will spend less time inside the F&I manager’s office, especially as auto dealers sell more F&I products online and fewer offline.”
For 2018, Krane believes “top-level car sales” will increase as dealers continue to perfect their digital retailing strategies. He points to the centralized business development center one of his dealer clients created for its 70-rooftop group after signing up with his firm as an example. The move, he noted, allowed the organization to reduce costs and deliver a more streamlined and consistent customer experience.
Yup, it’s all a work in progress.