Will Social Distancing Be What Finally Shortens In-Dealership Transaction Times?
People will always prefer to buy cars from people. They will always want that test drive and the personal connection that happens at a dealership. Countless surveys across the industry have dissected the question, analyzed the topic and found a remarkable consistency to their answers: people buy and will continue to buy from people they trust. We all still want to ‘feel’ the car before buying but the overwhelming majority of car buyers want the process to take significantly less time and less hassle — especially at the dealership.
Today? It’s not that much different except for, well, one very key thing: consumers just want less of the in-store process, with more car-buying tasks shifted online. Even before the coronavirus changed our lives, consumers appreciated the efficiency and convenience of Digital Retailing (DR). Now, our “New Covid-19 Normal” includes some healthy thinking about health and social distancing, realities that just might force long-needed changes to the in-store process – including making dealership websites more transactional. Changes, by the way, that dealerships can easily pivot to, and are primed to benefit from, as long as they have the technology and the DR strategy in place.
It’s been a long time coming: those numerous surveys, including eLEND’s own, have pointed to a familiar theme: the process takes too much time at the dealership. Consider how the recent crisis has amplified these long-running trends, and how new habits, such as social distancing, have become harbingers for a new “digital first” retail model that shortens in-dealership transaction times — but doesn’t replace it. “Digital First” isn’t “Digital Only.”
- As people settle into the new normal, being mindful of viruses will become a more important part of their daily interactions. As we move away from the Coronavirus and towards recovery, we will be more cognizant of spending too much time in an enclosed space and opt for a healthier balance that will also encourage greater dealership/F&I efficiencies.
- Most dealerships are ready and able to accommodate this shift toward reduced human interaction from a cost and opportunity perspective. The evidence is clear that as transaction times drop, customer satisfaction and profitability improve. For example, a recent eLEND case study showed that by pre-qualifying customers at the start of the transaction, one dealership knocked over an hour off the transaction time — which resulted in increased gross profits per car sold of $300+, while saving as much as $275 on variable labor and other costs and generating a four-point increase in CSI.
- Right now, dealerships can promote a “Digital First” process and align to new COVID-19 edicts. They include:
- Proactively encouraging customers to get pre-approved or pre-qualified for financing prior to a home test drive or the showroom visit. ‘Credit first’ moves the customer down the funnel faster and enables the dealer to match the buyer to the right car and right payment earlier in the process – while reducing friction in the negotiation, improving first pencil closing ratios and holding deal gross.
- Improving sales and F&I efficiency and morale by offering consumers opportunities to start car-buying activities online – including qualified payment/term quoting and deal structuring tools – and finish them at the dealership. Completing these purchase steps online saves considerable time in the dealership, significantly reduces rehashing and re-contracting at the store, and ensures a faster, more accurate funding process.
- Reducing the average time spent (61 minutes!!) in the F&I office, by pulling forward other key tasks (e.g. F&I product education and pricing information online) and adopting a more digital and paperless workflow. Pre-selling F&I products and digital contracting in-store enables the Finance office to complete originations more efficiently and profitably while handling more deliveries. A true win-win-win for consumers, dealers and lenders.
Customers have long asked for something to come along that shortens in-dealership transaction times, and a more efficient experience. Our most recent survey, in fact, spells it out: of dealers surveyed, 80% agreed that DR has a positive impact on the customer experience. Interestingly, the vast majority of dealers surveyed now agree with a common definition of DR that reflects this priority. Over 80% said that DR combines technology and process/workflows to help customers move down the funnel online, and seamlessly pick up where they left off when they get to the dealership.
It’s a definition that perfectly describes our new normal. The most important takeaway for today and into the future is in aligning to that definition because it will no longer be a request. Those dealerships that leverage DR and credit apps to deliver a more efficient “Digital First” experience will be more efficient and more successful at sales in the coming new normal.
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.