Digital Finance SOS – Is Digital Retailing the Answer? Part Three: What is Digital Retailing’s Impact on Dealers and Consumers?
Part Three: What is Digital Retailing’s Impact on Dealers and Consumers?
Digital Retailing is all about giving the customer what they want – and doing so within a profitable sales and finance model. As the technology has evolved, it is no longer a matter of sacrificing one for the other; the technology is unique in that its true power is in the way it provides value to buyer and seller through transparency, process efficiency, and trust. It’s that kind of power that have made “DR” a lasting and permanent fixture in the world of automotive retail.
If Customers Like Digital Retailing, then Dealers Like it More
In fact, it’s fair to claim that Digital Retailing – albeit still in the early innings – may be one of the most transformational innovations in the automotive space – second only, perhaps, to the age of the internet. Consider: According to our recent survey, 60% of dealers using Digital Retail solutions found that the average profitability of digitally initiated transactions was equal to, or higher than, transactions not initiated via digital retail.
It makes sense: Consumers are willing to pay fair prices for the convenience of an efficient, transparent process, especially when they feel the dealer is being upfront about pricing and trade-in values. The more customers know, the more comfortable they are. The more comfortable they are, the more likely they are to buy.
In the current marketplace, customer experience is edging out price and even product quality as the prime differentiator. In the absence of value, it will always be just about price. Leading dealers are realizing the pain of not changing is greater than the pain of changing. They are accepting that they can’t stop the evolution and are instead embracing the change of an increasingly digital and transparent sales process.
Efficiency: Fast is In, F&I Frustration is Out
63% of dealers surveyed report that the F&I time delay is the biggest risk to profits. Those same dealers saw a decline in customer satisfaction and loyalty. According to JD Power, that’s not surprising: 91% of consumers would consider an instant vehicle loan offer if that mean they could avoid dealing with a bank or doing extra paperwork.
Since more consumers than ever before are pursuing finance options online, it would make sense for dealers to get in on the action and offer qualified finance information on their websites.
It’s a compelling example of how time delays and efficiency are far and away the biggest issue that dealers face – and why Digital Retailing is so uniquely suited to answer the call. Best of all, while it’s efficient for consumers, this self-serve finance option also enables dealerships to protect and grow finance penetration and deal profitability.
Transparency Works when Both Sides Get It
It’s simple: two-way transparency is a trust multiplier and deal accelerator. The sooner finance gets involved (online or in-store) the more confident consumers are that a deal can be structured. The information a customer gets prior to visiting the showroom acts as a sweetener to come in and finish the deal – disarming hesitation and sales objections through a realistic picture of finance. And, for dealers, early finance involvement not only increases the likelihood of the deal, it enhances the potential for a profitable deal.
And, importantly, two-way transparency through the Digital Retail experience increases the speed and quality of the journey from website to showroom and, ultimately, to the final conversation between customer and F&I manager. In our survey, 62% of dealers report that ‘quoting consumer qualified payment terms online’ is the top opportunity to improve the customers online to in-store transition.
Simply put, dealers are finding that the combination of technology and data enables dealers and customers to come together faster and more thoroughly. It’s a level of transparency that builds trust and moves transactions quickly toward the F&I office. That, in turn, helps to increase F&I product penetration and ensures compliance. Consumers will pay a premium for an amazing digital retail experience, offering an opportunity to earn gross in a declining margins market.
Trust through Technology
It used to be that a handshake was the best way to make a positive first impression and start knocking down trust barriers. And while that’s still true, nowadays, the handshake happens online, via technology. That’s where you interact with your customer for the first time because that’s where they are. We are all consumers, and we are all users of technology. almost all of us are more comfortable with the device in our pocket than a person we’re meeting for the first time. Digital Retail technology gives sales and finance teams an opportunity to create an active, personalized interaction, that leverages clarity and trust to help the customer buy the car.
At the end of it all, perhaps the reason why Digital Retailing has made such an indelible impact on automotive retail is because of this overriding trust factor. People simply want to know what’s up, and what they can afford. And they don’t want to spend all day buying a car – it’s frustrating and makes them wonder if they’re getting the right information. Those dealerships that provide that service get to create that trust – and do so profitably. That’s the true and lasting impact of Digital Retailing.
In part four of Digital Finance SOS – Is Digital Retailing the Answer? We look at Digital Retailing, Done Right. For a summary of today’s numbers, click here.
Author: Pete Maclnnis
Author Bio: Pete brings over 37 years of experience in automotive finance and technology as Founder and CEO of eLEND Solutions™. Founded in 2003 as DealerCentric, eLEND Solutions™ is an automotive FinTech company specializing in online and in-store digital credit, identity and finance solutions designed to create a more efficient and profitable vehicle purchase process for the retail automotive industry.