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Automotive News

Lies The Digital Age Told You About Selling Cars [Chapter 2]: Are We Using Technology as a Crutch?

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| by David Metter, President of AutoHook powered by Urban Science

There is this perpetual echo of the word “disruption” in the car industry. What will be the next big disruption? What do we need to prepare for that will change everything we know about selling cars? The reality is disruption is largely incumbent upon technological advancements and the rate of societal adoption to these new, uncharted territories dominated by things like artificial intelligence and machine learning. These future “disruptors,” such as the rise of alternative online retail formats, subscription services or the transition from gas-powered vehicles to autonomous, connected cars are impossible for any one dealer or OEM to predict, let alone control.

Therefore, I’d like to propose a new approach. What if instead of the next big disruption we focused a little more on what we can control – the constants – the parts of the equation that aren’t powered by data or machines. What I mean by the constants is the people, or more specifically, the relationships that form when a customer goes to look at a car and has a positive interaction with a salesperson while doing so. The value of relationships when it comes to selling cars has been vastly undermined by the shiny new innovations of the digital age.

I think we’ve become so infatuated by the latest technology and the newest cutting-edge solutions to selling cars that we forgot about the fact that technology becomes useless without the people behind it who make it work. Relationships in the digital age still take precedence over technology and despite the advancements we have yet to see, technology in all its glory can’t replace social skills. All this talk about connectivity and connected devices yet I think we’re failing to connect the dots when it comes to knowing what will ultimately yield the highest ROI for dealerships, both in today’s world and in the future – knowing who your best salespeople are and how to keep them.

We as an industry need to stop using technology as a crutch. We’ve become so focused on the next big disruption in digital marketing that we’ve started to rely on the help of digital tools entirely, forgetting that cars are still bought and sold by actual people at actual dealerships. Deloitte’s 2018 Global Automotive Consumer Study reported car shoppers still rate physical interactions with a vehicle as critical to their buying decision – with over 8 out of 10 needing to see the vehicle in person before making a purchase decision. So, if this is the case, why are we spending the majority of our time and money on the minority of the buying public?

It’s all about striking a perfect balance between technology, the right data and the right people. It takes all three to get the job done. Technology is a powerful tool that can be leveraged to enhance or continue existing relationships, but it can’t create them in the first place. When it comes to the right data, we are extremely fortunate because our solutions are powered by the Urban Science® DataHub™, which allows us to be the first to know when a customer buys a car, what car they bought, where they bought and if they didn’t buy from you. And we get that sales data and the equally important defection data within days – not months.

In the same way that technology lacks value without good people, the right data can uncover things about your salespeople you otherwise never would have known. For example, you consistently see all these closed sales opportunities by let’s say, “John,” so naturally you think John is one of your best salespeople. But how many opportunities is John losing every month to one of your competitors? You’d never know without the right data. So it all goes hand-in-hand. The person selling the most cars may be losing more opportunities than he or she is closing, so your “best” salesperson can quickly become your worst salesperson when you can compare what they’re winning to what they’re losing at the same time.

Having that ability to layer sales and defection data on top of your CRM data is critical if you want to operate more efficiently. Without it would be like making decisions for your dealership based on a cost-benefit analysis but forgetting to include the cost part of the equation. It’s the only way to add enough dimension to your CRM data to make it truly actionable – instead of looking like Flat Stanley.

Having the right data combined with great technology can help your operations in a multitude of ways. It can suppress the leads in your CRM that have already purchased so your people can stop wasting time following up with them. It can pinpoint the ideal time and channel to re-engage your lapsed or dormant leads. Technology can help dealerships interrupt a customer while they’re shopping online and grab their attention just long enough to influence their decision-making process. It can also help ensure a customer chooses to visit your showroom instead of your competitors with things like test drive incentives.

The reality is technology will never be able to stop a customer from walking out of your dealership after a negative experience with one of your salespeople. Furthermore, when it comes to closing lead opportunities, your salespeople may already be at a disadvantage. A recent Automotive News dealer training webinar reported that as many as 98% of qualified leads fail to result in closed business. So instead of pouring all your focus into staying ahead of the next big disruption promising more and better leads, maybe we need to shift our focus back to the one thing capable of converting those leads into sales once they hit your showroom – your people.

Great employees are what gives meaning to the capabilities that stem from great technology. Your salespeople are the foundation needed to ensure data-powered solutions work in favor of your dealership. In a word, the future state of our industry’s digital landscape is unpredictable. But there are two things we do know. Change is constant and retaining great salespeople is still paramount. There’s not a lot we can do to control the rate of change, but fortunately for dealers, there’s a lot we can do to help our salespeople and to make sure we're holding on to the good ones.

 

Stay tuned for Lies the Digital Age Told You About Selling Cars, Chapter 3: Power to the [Sales] People to learn more about the importance of retaining your best salespeople and how to provide a better in-store experience.

Mining Your Data for Equity

by David Metter

I’ve said it before, and I’ll say it again. Our industry has a skewed perception of big data and its intended uses. I think that the term “big data,” has been overused and I believe it’s time to replace it with “best data.” Big data will only continue to get bigger, and I don’t think “colossal data” will ever really catch on or be worthy of a hashtag. So let’s open our eyes to what’s been missing from the information age and allow a little common sense to flow through our vantage point, straight into our dealership operations.

So what is the best data? If you asked 50 different people, you’d get 50 different answers. But these are just opinions, and opinions are noise. The best data is science-based, inarguable, and absolute. The best data is something you already have, and it’s located right within your own DMS. The data that matters most, before observing any other KPIs, is sales and service data – that’s it. If you think any other type of information is more important than if people buy cars from you and if they get their vehicles serviced from you…I’d advise you consider a different line of work.

If I were to purchase a dealership this very moment, the first thing I’d put into play is equity mining. I don’t own an equity mining company, and I’m not trying to sell you an equity-mining product. But I do know good common sense solution and execution when I see it. Equity mining takes the sales and service data you already have, and identifies opportunities to drive people actually in-market to purchase into your showroom or to your service department. It’s that simple.

According to Automotive News, “Equity-mining software, sometimes called data-mining software, enables dealerships to spot current customers who are in a good position to get out of the vehicle they have and into a new one for about the same monthly payment.” They also say it's been an absolute “gold mine” for one Honda store that has utilized it to fuel profit in nearly every one of their departments.

Top Equity-Mining Software Providers:

  • AutoAlert
  • CDK Global
  • DealerSocket’s Revenue Radar
  • Dominion Dealer Solutions
  • ELEAD1ONE Xchange
  • VinSolutions

AutoAlert has one of the industry's best data mining tools that uses advanced algorithms and analytics to reveal online trends and consumer behavior in order to provide actionable, in-market consumer intelligence. Their AlertMiner Retention Alerts will inform dealers of any and all profit opportunities as they arise. The software shows dealers when a past or potential customer’s contract is ending on a lease or purchase or if they can get a newer vehicle for the same monthly payment they have now.

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AlertMiner alerts dealerships of relevant consumer shopping behavior and when it is a good time to reach out (or not).

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DealerSocket’s Revenue Radar continuously scans your DMS in order to highlight customers that are in a favorable position to spend money at your dealership, before they shop your competitors. Their equity mining process is shown below. 

The choice is yours. Go with your gut, or go with the recession-proof combination of science and common sense. Common sense will tell you science has a higher probability of being right – despite your intuition and experience. Equity mining is at your disposal, waiting to help you reach past, present, and future customers when they are in the market to buy. You have the best data already (sales and service data), now it’s time to mine it and work it! It’s the difference between being part of the noise and being the first one to speak up when the moment is right.

Equity mining is exactly how dealerships get their ducks in a row prior to a campaign launch. It is how you avoid wasting money on prospects that are not considering a purchase. I believe in this concept so much is because it’s common sense in its purest form and much less complex than we’ve been led to believe.

Your Q4 Reality Check: 5 Reasons Online Buying is NOT Everyone’s Reality

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by David Metter

People buy everything online these days. Or do they? In reality, there are some items people simply prefer to touch, see, feel, taste, smell, or drive before they consider signing on the dotted line or forking over their credit card. Several automotive leaders have recently come out in the media claiming a vehicle is still in so many ways, one of those items.

Online car buying models have been a ubiquitous topic of conversation over the past year – one that has made many in our industry uneasy about what to expect in the future as companies like Carvana, Drive Motors, and Vroom claim their place in the market.

We’re now in the fourth quarter of 2016, the time when we line up our budgets for the year ahead. Which technologies will thrive and which will die? Will the option to offer a complete online buying method for our new and used vehicles become necessary? According to DealerSocket, “There’s a false sense of urgency to take car buying online.” If you were to ask me, I’d say the vast majority of consumers are still not ready for it.

In a recent article from Automotive News, they highlight the results of DealerSocket's 2016 Dealership Action Report. “While there is a segment of car shoppers who want to buy vehicles online in an Amazon-like experience, a new report indicates dealers may be overestimating how strong consumer demand for this capability really is.”

Actual responses are shown below:

Without a doubt, there are items consumers prefer to purchase online, things like books, electronics, or your go-to cologne. It’s also true that there is a current market of buyers that want the ability to purchase a vehicle online. However, relatively speaking, that number is still small - small enough that we can all take a big deep breath and let go of worries about completely changing our buying models and the way we market our inventory.

When it comes to big-ticket items, people overwhelmingly still choose to visit actual brick-and-mortar stores. A new eMarketer study revealed it’s not just the large items. When it comes to packaged goods or groceries, the market is not budging despite having the option for online grocery shopping and at home delivery. eMarketer emphasized several valid reasons why 90% of internet users still prefer to do their grocery shopping in-store. These same reasons for opting out of online buying can be directly applied to the car business.

If your dealership is contemplating integrating an online sales platform in 2017, make sure you consider the following five facts before taking on this monster:

1.    When people are ready to buy, the ability to purchase immediately in-store is still very desirable as there is comfort in seeing, touching and testing products (or vehicles) in person.

2.    Completing a lengthy online purchase request may be too time-consuming for customers to follow through with the entire process.

This past August, Alex Jefferson, eCommerce director of Proctor Dealerships said, “Where online buying is going I don’t necessarily know, but I do know that it did personally have an adverse effect on us when we integrated with the tool. I will tell you after a year of testing it, our lead volume went down by about 30-40%.”

3.    Less tech-savvy customers or older generations who have the dealership experience ingrained in their mindset may struggle with the concept or dismiss it altogether.

4.     Consumer income levels largely dictate their level of interest in whether or not they would prefer to buy a vehicle online.

“Half of surveyed consumers earning $100,000 to $149,000 annually would like to bypass the dealership and buy vehicles online, DealerSocket said. In contrast, 29 percent of people making $25,000 to $49,000 said they'd like to buy vehicles online.”

5.    Online buying models may be better suited for luxury or high-end electric vehicles only – one of the reasons Tesla has been successful selling almost exclusively online.

Forbes explained why a direct sales model works for Tesla. “Since electric vehicles do not need as much regular service and the company does not offer financing schemes, a dealership model would put pressure on its margins.”

Marylou Hastert, DealerSocket's Director of Product Marketing advises dealerships, “Stores should prepare for the digitization of car buying, but not at the expense of in-store processes.” Simply put, an online buying model may not be right for your dealership. It could even be harmful to your conversion rates, which dealerships have reported over the last year.

My expert opinion? Get your fundamentals down first before heading full-speed down the click-to-buy road. Online buying has been effective with some of the larger dealer groups, but they have already conquered the essentials. After you have mastered the art of securing a high-converting website and high converting forms across devices, and once your inventory is immaculately merchandised with video walkarounds, photos, and custom comments, THEN and only then should you experiment with an integrated online buying model.