What is Digital Retailing?
It’s the excitement of another deal made, funded, and delivered that ends with a sticker beside a salesperson’s name. Making deals and selling cars is what automotive retailers do best, but it is a process built by dealers for dealers that is a significant source of anxiety and dissatisfaction for most car buyers. Over the years, dealers have perfected practices that optimized the opportunity of knowing more. The whole automotive retail industry grew up believing you control the customer and the deal.
That’s changed dramatically. Today, long before COVID-19, shoppers know every bit as much about the vehicle’s value as the seller does. Empowered, tech-savvy, convenience-driven consumers are accustomed to segueing seamlessly from online to off and expect a transparent, more personalized, inclusive shopping experience. The Pandemic accelerated a transformation that forced dealers to sell the way customers have wanted to buy.
The reality is that real Digital Retailing, including getting to a fundable contract remotely – versus ‘enhanced Lead Gen’ masquerading as DR – has the potential not only to save our industry by creating buying experiences that consumers prefer, but also to accelerate the changes that can ensure a more efficient, more profitable future.
What is Digital Retailing?
Automotive Digital Retailing is a process that enables a fully integrated, connected buying experience that makes the car buying journey more convenient and less time-consuming for your customers. Good automotive digital retailing should allow the customer to move themselves down the funnel online by creating a clear path to purchase that gets them closer to the sale – and seamlessly pick up where they left off when they get to the dealership.
Digital retailing means making your website more transactional. Think of your website visitors as digital walk-ins. Your virtual showroom is your first chance to make a good first impression because nowadays, that’s where you interact with your customer for the first time. Think of your website visitors at digital walk-ins. With automotive digital retailing, making a good first impression includes giving the shopper the tools to complete many or all car buying steps when they want, where they want, and progress at their own pace. You have to ‘win’ with the customer online before you can expect to win in the store.
What Digital Retailing is Not
It isn’t simply a website: A website with photos of cars and pricing that dead-ends shoppers at lead forms – forcing customers to call or come to the dealership for more information – is lead generation. Automotive digital retailing is a deal generation. It is the start of the deal. It is not enhanced lead generation. Sell the car, not the appointment.
It isn’t simply technology. It’s work-flows. It’s a process; a culture. Technology takes away the human aspect that customers want in the car-buying journey. And for car dealerships worldwide, it’s common knowledge that it’s people that sell cars, not the tools they have. While technology is an important component of a digital retailing strategy, there’s so much more to it than that.
It isn’t simply e-commerce. There are some automotive retailers that operate as e-commerce businesses like Carvana and Vroom. While they may sell millions of dollars worth of cars every month, there’s a reason they haven’t yet made a net profit. Automotive digital retailing can facilitate an end-to-end eCommerce experience, but less than 5% of car buyers want to complete the entire transaction online Nearly all, the other 95%, still prefer to complete some steps of the process – including the test drive and taking delivery – at the dealership.
Automotive Digital Retailing Capabilities
A digital retailing experience should offer a well-designed path-to-purchase that allows car shoppers to self-direct the entire car-buying process online. Purchasing a car involves many steps and the exact process can be different for each customer, but the capabilities of your digital solution should include (the list below is not meant to be comprehensive):
- Vehicle Search: Let your customers search based on their preferences. Enable advanced browsing based on new/used, type, make, model, year, age, price, payment and more.
- Shopping Cart: Allow consumers to select cars and save them for consideration as they continue to browse.
- Trade Valuations: Customers want the ability to not only get a trade-in estimate online, but receive an actual offer. Allow for the customer to enter in vehicle information and upload videos/photos so you can offer an accurate trade-in value remotely (based on the accuracy of the information provided). The solution should also support providing precise loan payoff amounts.
- Human Assist: Today’s consumers expect better interactions and immediate action from dealers. Make it easy for your customers to communicate with you. Help your shoppers find and buy the car they want. Basic integrated communication options such as built-in chat, messaging, email widgets and easy-to-use video technologies (e.g. video chat, FaceTime, Zoom, etc) make it easy to virtually engage with your shoppers.
- Credit: If you go by the rule that you are more likely to lose a sale if the buying process is interrupted, then having the ability to complete a credit application, provide an instant credit decision (based on your credit tiers), and ultimately submit the app to a lender is critical to keeping the shopper engaged and satisfied.
- F&I Protection Products: F&I benefits from automotive digital retailing by moving F&I upstream in the buying process, creating opportunities to educate and pre-sell protection products specific to the customer and vehicle of choice. Digital retailing also offers you the data-driven intelligence to present the most relevant products and the flexibility to determine what offers are made. Starting sales and finance at the same time creates efficiencies, improves closing ratios and increases PVR/CSI.
- Payment Quoting: Basic payment calculators establish unrealistic payment expectations and perpetuate stereotypes that lead to unwinds and defections. Your digital retailing solution should allow the shopper to view qualified purchase and lease payment options – matched to the consumer’s full credit profile and vehicle of choice. The two-way transparency is a trust multiplier and sales accelerator.
- Negotiation: One of the great things about digital retail transparency is that people perceive the price more accurately. Good DR dealerships will offer live virtual assistance to help shoppers understand the deal structure and figure out payments based on the vehicle selling price, qualified lender terms and the trade valuation. Functionality should allow the shopper to change terms post-offer and recalculate the deal (e.g. change term, down, etc.) Finally, let the customer save their deals.
- F&I: Penny perfect pricing is nice but selling the car digitally involves getting to an out-the-door, fundable contract. Your digital finance technology should support hard credit-pulls and allow shoppers to select from a waterfall of qualified payment options – configured to include qualifying incentives, trade allowances, taxes, fees and dealer reserve – matched to your dealerships lender programs.
- Digital Contracting: As part of the streamlined process to eliminate lengthy F&I waits, digital retailing should include remote or at dealership digital signing capabilities for all parties.
- Scheduling: Digital retailing should include scheduling capabilities that enable consumers to schedule a test drive – remotely or at the dealership. Digital retailing allows shoppers to try before they buy. Post contracting – whether your buyer prefers the car delivered remotely or prefers to take possession at the dealership, a scheduled vehicle delivery option is important.
The way people want to buy cars has changed, and those changes are here to stay. Nearly two-thirds of car shoppers want to do more purchase steps online compared to the last time they purchased a vehicle, according to the 2020 Cox Automotive COVID-19 Consumer Impact Study.
Leading dealers are realizing the pain of not changing is greater than the pain of changing. It’s a balancing act between your customers’ expectations and your dealership’s success. If profits are determined by sales and sales are determined by your sales process, there’s little doubt that the greatest obstacle to success and customer satisfaction is making the process more convenient and accelerating transaction times.
Thriving dealers are devoting more time to thinking through and investing in the customer experience – creating value in the form of a superior ‘connected’ retail customer experience as their prime differentiator. Automotive digital retailing, including the right combination of technology, process change and people, will make the process easier and more efficient for both buyers and sellers.
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 platform focused on deal generation solutions that power transactional digital buying experiences for the retail automotive industry.
The platform specializes in hybrid digital credit, identity, and finance solutions - designed to accelerate conversions of digital end-to-end purchase experiences - concluding with a transactional, fundable deal structure.