3 Reasons to Believe Digital Retailing Will Help Future Proof Your Business
The retail environment has been forever changed.
The days of salespeople herding near the front of the dealership, waiting to ‘sell’ a car to the next information disadvantaged ‘up’ are almost certainly in our rear view mirror. Instead, informed leads (digital walk-ins) will be looking for sales professionals to add value in a way that helps the customer ‘buy’ the car. In auto retail, a digital-first, customer-first approach is quickly becoming the norm for many dealers and dealerships.
Now more than ever before, dealerships big and small have an opportunity to capture the business of the local or next-market-over virtual car shopper. Whether it’s fully online or an omnichannel purchasing experience, dealers should be preparing to sell the way customers prefer to buy and offer a more flexible, modern retailing experience.
Here are 3 reasons to believe that we aren’t going back to the way things were, and dealers accepting to change or be changed, will be well-positioned to take full advantage of the fast-growing demand for auto ecommerce and future proof their business.
1. Making the ‘short-list’ starts online
It’s expected that automotive ad spend in the US – focused on influencing consideration and purchase intent – will top $13 billion during 2021. That’s because more than 95% of shoppers will use online research as their primary source of information before contacting a dealership. By the time dealers receive an inquiry online, consumers have typically visited four or more sites for research.
With so much information just a click away, it is important to know that a typical car buyer visits just 2 dealerships after doing their research. What does this mean for car dealers? It means your best chance at making a good first impression happens online because that’s where the buyers are. It also means you will need to meet the customer on their terms. Make it easy for the customer to find the information they are looking for – at every stage of the process – from curious to committed.
All available research indicates the overwhelming majority (91%) of shoppers still want to complete the transaction in-store and 80% of consumers would never purchase without a test drive, but you first have to make the buyers short list. You have to win the deal online before you can expect to win in the store. Lead forms push people away. Sell the car, not the appointment.
2. Buyers are increasingly comfortable with digital buying options
The 2021 Cox Automotive Digitization of End-to-End Retailing Study found that 76% of shoppers are open to the idea of buying completely online. The same study indicated car shoppers had specific preferences to receive a trade-in offer, get prequalified for financing, finalize the purchase price, select F&I products, calculate payments and arrange a test drive – completely online, clearly spurred on by the pandemic and related restrictions.
It’s a segment led by millennials who are widely considered digital natives who want you to “court them actively”, according to Vonage. Whether it’s the millennial car buyer or most any other demographic, convenience and speed are driving the strong preference to complete many of the steps of the car buying process online, prior to visiting the physical dealership.
Think of it like this: The goal of a Digital Retailing strategy should be deal generation. It is the start of the deal. It is not lead generation. According to a Cox Automotive study, 90% of U.S. car buyers are payment buyers. If most shoppers want to lock-in the final purchase price, receive a trade-in offer and know what payment and finance terms they qualify for, prior to making a buying decision, make it easy and convenient for shoppers to find the information they are looking for. The information transparency just makes sense: The more customers know, the more comfortable they are. The more comfortable they are, the more likely they are to buy.
3. Post-pandemic preference for lower-touch transactions will continue
The retail automotive marketplace and the way cars are sold – has likely been forever changed by the pandemic – like all other retail environments. In the post-COVID new normal, there will be many who will continue to prefer the convenience and safety of transacting remotely. Dealers will have to continue to innovate and find ways to sell the way the customer prefers to buy.
The most successful businesses in every industry build customer processes around what the majority of customers want. By choice or by force, adoption of digital retailing buying experiences significantly accelerated as a result of the Pandemic. It’s the dealers who adopt and implement a ‘customer-first, digital-first’ approach to retailing that will continue to win with buyers, drive profitable growth, and win at the expense of the competition for the foreseeable future.
Pete brings 40+ years of experience in automotive finance and technology as Founder and CEO of eLEND Solutions™, an automotive FinTech company providing a middleware solution designed to power transactional digital retailing buying experiences. The platform specializes in hybrid credit report, identity verification, and ‘pre-desking’ solutions, accelerating end-to-end purchase experiences - helping dealers sell more cars! Faster!