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Never Look Back:  The Future of Automotive  Retail is Now

Never Look Back:  The Future of Automotive  Retail is Now

How the pandemic changed… everything

The COVID pandemic accelerated existing trends toward digital purchasing—and digital everything. As work moved to the home, some consumers upgraded their hardware and bandwidth. Consumers who had resisted online interactions had no choice but to get with the program. Those who already had tried online shopping got even more comfortable with it, expanding the range of items they ordered.

The willingness to embrace ecommerce extended to buying cars. CarMax, with around 224 physical locations, as well as online-only sales, found that more than three quarters of customers were willing to purchase online, according to CEO Bill Nash. As pandemic restrictions eased, consumers began to shop in person again.

Nevertheless, Nash said, “I think all-online will grow, but grow slowly.” Still, the fear of contagion remains—and that’s likely a good thing for auto sales. Said Marc Cannon, chief customer experience officer at AutoNation, “Consumers have a whole new attitude. They don’t want to get into an Uber or Lyft, they want to control their personal space.”

To meet consumer demand in the midst of pandemic restrictions, retailers had to quickly update their sales processes.

“This was a dealer-heavy shopping experience until last year,” said Melissa Grady, Cadillac CMO. “When that went away, we were able to shift that process. We always had wanted to.”

One example is the test drive. “The traditional test drive with a product specialist in the car with you is a no-go,” said Kimberly Gardiner, SVP of marketing, Volkswagen of America.

“The emotional connection is the most  important. People don’t want to just  buy the car, they want to be part of the  brand. Our job is to cultivate that.”

Andy Thomas, VP of marketing and communications, McLaren of America

Still, especially in today’s tech-loaded vehicles,  it’s important to have a way to showcase the car.  Gardiner said VW’s answer was a virtual test drive  assistant. “You still want some of that guidance and  help,” she said. “You’re in control, but the virtual  assistant can point out some of the features in the  car.” 

That’s one of a plethora of ways that digital  technology can address the shift in consumers’  needs and expectations.

How dealers adapted

Many organizations have redefined the relationship  with nomenclature. Dealers have become retailers;  buyers are called customers or guests.  

Larry Dominique, SVP and head of Alfa Romeo NA,  pointed out that dealers have fixed costs that must  be paid regardless of sales or the sales channel. The  key to making money during lockdowns, Dominique  said, was to help minimize those fixed costs while  layering on another revenue stream in the form of  ecommerce. 

Change is always tough for the auto industry, but  this past year showed dealers they needed to step up  and give customers what they wanted and needed,  said Ryan Osten, COO of Gubagoo. But he said  that dealers could gain $600 more gross backend  profit per deal when they gave customers a more  comfortable and transparent buying process. 

Online information was only part of the new equation  for dealer success. Test drives and vehicle delivery  processes also needed to change.  

Cars.com created FUEL to let dealerships leverage  the website’s consumer data for targeted, in-market  advertising. It also offered home delivery and tour  badges. Within weeks, according to Dean Evans, EVP  of Cars.com and CEO of FUEL, more than 10,000  dealers offered the latter two.  

“It was an explosive moment,” Evans said.  

Finally, at-home pickup and delivery for servicing can  keep the service bays busy. Dan Mohnke, vice president  of ecommerce at Nissan NA, explained that Nissan At  Home gives customers an Open Table-like interface for  scheduling the pickup and return of their cars, as well  as facilitating the rest of the customer journey.

“Use smart tools instead of building more.”

Larry Dominique, Alfa Romeo

Digitization of car buying

These initiatives are just the beginning of the complete digitization of car buying. Consumers had no choice but to move online, nor did dealers, really. Presenters at the conference were in all phases of digitization.

“Digital became an incredible platform and tool,” said Doug Miller, chief revenue officer of Cars.com. However, dealers can’t rest on their websites.

Dealers should take heed of the way streaming services personalize content, said Tracy Cassady, exec VP of Penske Automotive Group.

“We need to serve up the right vehicle at the right time.”

Consumers also want more transparency in pricing. No one wants to haggle with a bot or negotiate with a call center.

“If you want a truly digital process, you have to try nonnegotiable pricing,” said Marcus Casey, vice president digital and ecommerce, BMW Group. The company tested digital price negotiations in the UK by letting shoppers chat with a dealer, but didn’t have good results. “If you are going to press a button and buy now, the price has to be fixed.”

The price of the auto is only part of the ultimate cost. Ideally, the digital sales process also prices a trade in, takes incentives into consideration and figures in financing.

“In the ecommerce environment, price discovery is as important as shopping and merchandising, said Jonathan Schenk, chief revenue officer at AutoFi.

“You need a finance-based solution that shows customers what the deal really is.”
To achieve all this, technology isn’t enough. Dealership processes also need to change, according to Colton Ray, car manager for Walser Automotive Group.

Ray said, “Over time, our traditional processes became about controlling the customer, in a process that ultimately slows the transaction down. As dealerships gravitate from traditional brick and mortar to a more ecommerce-like business model, one of the giant problems and opportunities I see is the disconnect between instore and online processes.

If we can unify those two things, where the customer starts online, and the store uses same software in-store, or the same process in-store, that would be great help to our customers.”

Borches said Carter Meyers could use more collaboration with OEMs on how they can train sales associates to excel no matter what channel they use to communicate and sell, whether in person, on the phone, video chat or text.
“We’re trying to grow a team able to properly use technology throughout the sales process, but also wrap that in a relationship,” she said.

Borches also noted that every generation wants a different sales process, so dealerships will have to continue to evolve.

Osten of Gubagoo challenged dealers: “The three constants are a fast purchase, a comfortable purchase, and I want to trust the process. Are you providing that?”

The new hybrid sales model

Pandemics may come and go, but selling cars will never go back to the old way. Even before the pandemic, the majority of car shoppers started the research process online. It’s likely that the majority of consumers will want to complete even more of the journey digitally. There was consensus at Automotive Retail 2021 that the future belongs to a hybrid model.

Steve Wittman, chief digital officer for Sonic Automotive, said customer surveys showed that 76 percent preferred to do much of the process online. Ninety percent of Sonic buyers start on the website, and 40 percent take at least some action on the website. Ten percent complete the purchase online— and that amount is up 30 percent year-over-ear.

Said Wittman, “Each customer is unique and chooses their own path, in person, online or hybrid.”
Another conference buzzword was “seamless.” That means that, no matter what channel a car shopper begins on, they don’t have to redo any steps when they change to a different channel. If someone configures a car online, the dealership should have her configuration when she walks in.

Still, few people are, at this point, willing to buy a car sight-unseen. Said Elena Ford, chief customer experience officer for Ford Motor Co., “Customers also want to go to the dealership to test drive and ask questions. Dealers play a critical role every day. It’s important we build a seamless online to offline experience.”

Data is key

Perhaps the biggest advantage of digitization is the data that it produces. At every step of the research and sales process, OEMs and dealers can gather data via anonymous profiles and in the aggregate. On the individual level, data lets them better target offers and messaging. In the aggregate, data helps them understand not only what products, services and offers are attractive but also where their online processes fall short.

The most important data to support online shopping and buying is accurate information on inventory and pricing, noted Mike Darrow, president and CEO of TrueCar. If retailers provide that to shoppers online, the next requirement is to be able to pass the same inventory information on to the retailer, so the consumer can complete the transaction.

BMW uses data to help simplify the bewildering number of choices in configuring a car. “There are so many options and variations that it’s not easy to find the right car for you,” said Casey of BMW Group. BMW is working on offering preconfigured cars based on what’s most often configured. BMW also created mobile barcodes as a simple way for shoppers to transfer the work they did online to the physical dealership.

Data-driven marketing

Of course, the ability to use consumer data for marketing is a big opportunity that’s been little exploited by the auto industry. Certainly, online searches for cars will subject searchers to ads for those cars. But better data can take marketing from reactive and retargeting to addressing consumers at every stage of the journey. It can also segment consumers and personalize the ads and content that they see.

Equifax seeks to overlay data about consumers financial capacity to their interest in a specific vehicle, according to John Stremel, vice president of marketing services at Equifax. For example, someone may be doing a build on a $30,000 vehicle, when they could afford a $50,000 car.

Understanding which data is valuable and uncovering new insights takes time and expertise. Constantly testing and learning is key. Stremel commented, “We’re at a stage now where we almost have too much data. We’re looking at unique datasets beyond the obvious life events and micro moments to bring unique datasets to our clients… Every CMO wants something unique at scale. They’ve got all the usual data.”

Customer data platforms, common among marketers in other industries, can ingest customer data from different silos and different formats to power more incisive marketing, according to Andrew Shaffer, industry principle, automotive, at Treasure Data. Instead of a dealership sending one postcard or email to every customer who bought a car but hasn’t been back, for example, the dealership can determine the next best offer for different segments, whether that’s a 60,000-mile service or a tire check.

He said Treasure Data customers found a significant impact in service revenues using this approach.

“Omnichannel experiences are table stakes,” Shaffer said. The better question is, “How can you be relevant to your customer?”

As Nissan got ready to launch 10 new models in 20 months, it knew it couldn’t use a one-size fits-all marketing strategy. Nissan did advanced audience segmentation to create four or five different segments for each vehicle segment, according to Allyson Witherspoon, US CMO for Nissan NA.

“Even if you’re looking at an SUV, it’s not one single buyer,” she said. “We want to have messaging that’s relevant—and relevant in how we deliver it and where they’re going to be shopping.”

The result was higher-quality leads and quicker conversions, Witherspoon said.

Getting there involves changes to many business processes, said Robert Skinner, lead technology strategist for FordDirect. OEMs must eliminate isolation among channels and databases.

“We need to connect the dots across channels and across tiers,” he said.

Bryan Long, solutions principle, automotive, for Medallia, agreed, saying, “Unless you’ve taken the time to redesign the processes for any new technology, you’re basically taking new technology and overlaying it over potentially bad processes. All that does is make the bad process faster.”

Personalization

The goal of all this data analysis and segmentation is personalization: being able to fine-tune marketing and offers to not only individuals but to where people are in the sales process. “Everyone tries to fit the buying journey into a linear process, but consumers shop very differently,” said Beth Mach, chief consumer officer at TrueCar. The goal, she said, should be understanding what consumers want and personalizing that. “Make them feel special, as though the process has been truly dedicated to them.

Jennifer Symington, manager of the results delivery customer experience division of American Honda Motor Co., explained how personalization should contribute to the consumer experience. “When data is used well across channels, I feel recognized and valued,” she said.

Marissa Hunter, head of advertising, Stellantis, noted that marketers must walk a fine line in targeting, especially when marketing to women. She said, “We want and need to be aware of motivators or differences in how women process information or make decisions. We should avoid messaging that would be considered pandering.”

“Engaging with influencers and their audiences is a great way to share information. When we did CES, we used influencers to bring to life the technology. The take rate and demand came up to a much higher level.”

Deborah Wahl, Global Marketing Officer, GM

The OEM shift

The digitization of car buying extends all the way up the value chain to the OEM, so car makers have a new focus on customer experience. It starts with corporate-run websites and tools; but tighter collaboration with dealers is also important.

Said Andrew Pine, global director of Excite! at Porsche Cars NA, “The customer experience must live up to the product experience.”

Excite! represents a long-term global shift in the company’s strategy, he explained; the initiative aimed to change the Porsche culture to be more customer centric. The result was a top ranking in customer satisfaction from JD Power, as well as increases in market share, sales and aftersales revenue, and employee satisfaction.

FordDirect launched an advertising program called Advantage with six certified adtech vendors, integrating with their systems to capture data that would help Ford understand media attribution and perform analytics. Then, Ford brings it into an artificial intelligence platform to leverage its first party data and distribute leads to dealers at scale.

With 1,900 dealers in the program so far, he emphasized that Ford must be careful to use each dealer’s data only for that dealer, and only for that dealer’s use cases.

Skinner noted that OEMs can’t do things in a vacuum. “We have 3,600 strong franchisees who like to choose how they go to market and what tools they use.”

Deborah Wahl, global CMO, GM, emphasized the need to work closely with GM’s dealer network to expand the selling proposition from buying a new vehicle every five years or so to a more continuous relationship. The automaker redesigned all the mobile apps to offer more regular engagement with vehicles, and created the OnStar Guardian app that lets any vehicle owner access functionality on a smartphone. The goal, she said, was to get even more value out of the GM ecosystem.

“After a century, choosing a car is still a hell of a hassle. The average car has a build combination of half a billion.”

Alain Visser, CEO of Lynk & Co

“There are growth opportunities for all of us in this industry if we start looking at this in a new way. We’ve seen other industries transform. It’s now our turn to do that,” Wahl told conference attendees.

Nissan’s Mohnke noted that a seamless, hybrid experience is only possible if OEMs work closely with dealers. He said, “The brand promise gets delivered at the dealer level. We have progressive dealers doing great things and others still trying to figure it out.”

Elena Ford explained how the automaker has gone more deeply into the customer experience. It prioritized three customer promises: personalized experiences to meet individual customers’ needs; providing a single touchpoint to access Ford resources and expertise; and transparency across interactions, especially when it comes to service.

Its loyalty program has also expanded, according to Ford, with a new customer education and onboarding platform, Discover Your Ford, as well as a FordPass Visa rewards card.

“We need to make sure, with every interaction, no matter what channel, that consumers have a seamless and consistent interaction,” Ford said.

Medallia’s Long agree about the importance of loyalty, saying, “The more relationship we can create, the more signals we can collect, leads to being able to understand when customers want to talk to us. The helps us create a loyalty model that keeps customers coming back.”

Finally, OEMs shouldn’t forget to let customers know about the changes they’re making, as well as promoting innovations at the dealer level, said Evans of Cars.com. “It’s a new moment in time for all the brands,” he said.

Conclusion: Meeting customer expectations now and into the future.

Finally, many panelists emphasized that technology can never replace the human touch. After all, buying a car can be an exciting experience, and people certainly may become attached to their cars. The most successful dealers see this as central to their businesses.

For example, Bentley Americas salespeople know the names of owners’ families and even pets. They often have the personal code to the garage door so they can retrieve cars for service.

“That is our owners’ expectation,” said Mike Rocco, vice president of sales and operations.
Subi Ghosh, founding board member of Women in Automotive, recounted how a dealership where she worked personalized used vehicles. When someone traded in a car, they were given a “tell us your story” form. Their anecdotes about the car fueled social media campaigns and also were included in the description of the vehicle.

Noting that the industry has for years chased a better customer experience, Evans of Cars. com asked, “When do we bring technology and humans together?” His answer: “There will be a way back to normal. Let’s not over-digitize, because human eyes sell cars.”

About Acxiom

Acxiom is a customer intelligence company that provides data-driven solutions to enable the world’s best marketers to better understand their customers to create better experiences and business growth. A leader in customer data management, identity, and the ethical use of data for more than 50 years, Acxiom now helps thousands of clients and partners around the globe work together to create millions of better customer experiences, every day. Acxiom is a registered trademark of Acxiom LLC and is part of The Interpublic Group of Companies, Inc. (IPG).