Six Areas of Opportunity to Power Through an Uncertain Auto Market
Many industry experts are forecasting a less-than-positive outlook for the auto market through 2019. For Dealers, it doesn’t matter that you know unforeseen downward pressures on margins are going to happen – many outside your control – and slowdowns are going to occur, but an uncertain auto market and other adverse financial outcomes are inevitable if you don’t take prudent steps to prepare for them. “Predicting rain doesn’t count; building the ark does.” — Warren Buffett
What can dealers do to thrive in today’s shifting market?
For dealers to adapt and thrive in a tightening market and in a marketplace where the customer experience is edging out price and even product quality as the prime differentiator, dealers have the daunting challenge of figuring out the business model, technology stack, operating culture and people strategy that works best for their dealership, their customers and their brand – that also increases revenues, volumes and profitability.
As always, there are many places to start, but a good first step is to focus more than ever on increasing the efficiency and effectiveness of their operations. There are six areas of business – each having their own unique challenges – that offer revenue and profitability opportunities for most dealers: their people, the new and used car departments, service department, the finance department, and the overall customer experience.
There are six areas of business that hold significant opportunities for car dealerships to improve processes in an uncertain auto market to meet and exceed changing consumer demands: their people, the new and used car departments, service department, the finance department, and the overall customer experience.
Eliminating Hurdles to Dealer Profits
While margin compression is certainly a front-and-center issue in an uncertain auto market, the biggest challenge in the variable departments is the lack of a diversified people strategy, outdated pay plans, and costly talent gap – the inability to attract and retain talented salespeople – inevitably leading to poor customer interactions and negative impacts on the customer experience whose impacts on the bottom line likely totals far more than margin declines.
Today’s convenience-driven consumers demand better online interactions and immediate action from dealers, whether it’s personalized vehicle selection or instant credit decisions. Consumers are more interested in getting information than giving it. Lead forms = commitment forms. They push consumers away. Help them buy the car. If your customer says their preferred method of communication is text or email, don’t call them. Remember, you have to win the deal online before you can expect to win in the store. Somebody has to go first!
And customer-centric business models are just the beginning…
The Service Department – Digital Retailing Extends Beyond Car Buying.
Your service department is probably already one of the highest profit generators for your dealership but growing your dealership’s service department should be an integral part of your business development plan. In the evolving marketplace, consumers aren’t just purchasing cars at the dealership; they’re also turning to dealerships for the maintenance of their cars throughout their lifecycle. Everything from service conveniences like online scheduling tools and work estimates to marketing your service department to better compete with third-party service centers can help your service center shine.
Digital Retailing, Digital F&I Finance, and the Customer Experience
You may or may not already be using digital retailing tools; but are you using it in the most profitable way? Digital retailing is a deal generation tool. It is the start of the deal. It is not a lead generation tool. The majority of your shoppers want to start part of the deal online. 90% of car buyers are payment buyers. If consumers are looking for finance information online, don’t disadvantage your dealership by not giving it to them.
By changing when and how the shopper is introduced to payment information and dealership financing options, the combination of technology and data will enable you and the consumer to come together much faster. The two-way transparency is a trust multiplier. Sell the car, not the appointment. information transparency has become the currency in a marketplace where customer experience is edging out the price and even product quality. The most successful businesses in every industry build customer processes around what the majority of customers want. Future-proof your dealership.
Think Like Your Customer
Many dealers are reluctant to make serious changes to a sales model that has made them financially successful. They are comfortable with what got them to their station in life: a traditional way of selling cars, even though it may be out of step with today’s consumer expectations and modern retailing experiences. The most successful businesses in every industry build customer processes around what the majority of customers want, and sometimes it take an uncertain auto market to realize what changes need to be made.
Today’s leading dealers are accepting the evolution is inevitable and realizing the pain of not changing is greater than the pain of changing. How can you jump ahead of your competitors during this evolution, implementing Digital Retailing into your sales flow not only future-proofs your workflow, but creates a better buyer experience which leads to higher CSI scores.
Author: Pete Maclnnis
Author Bio: Pete brings over 40 years of experience in automotive finance and technology as Founder and CEO of eLEND Solutions™. Founded in 2003 as DealerCentric, Pete is leading the company’s evolution to an automotive FinTech company that specializes in digital credit and finance solutions designed to create a more efficient vehicle purchase process for the retail automotive industry.
How Many Cars Are You Not Selling?
Estimate the impact ID Drive can have on your dealerships' volume, profitability and transaction times.
Our platform specializes in digital credit, identity, and finance solutions for remote and in-store shoppers - designed to accelerate conversions of digital end-to-end purchase experiences - concluding with a fundable, transactable deal structure.