It’s no secret that digital retailing has gained tremendous traction since March, accelerated by COVID-19. What the data shows is why it works so well, and why it is unlikely to go away anytime soon.
The importance of digital retailing, since the pandemic reached North America, should not be underestimated: 52 per cent of auto retailers in the U.S. using digital retailing technology experienced a positive impact to their front-end gross, versus 27 per cent who do not have digital retailing.
That is according to a Dealer Impact Study by Roadster and the National Automobile Dealers Association (NADA), in which 236 car dealers were surveyed and April statistics were compared to pre-COVID data. The same report also reveals that 60 per cent of auto retailers experienced positive impacts to both new and used back-end gross, versus 35 per cent that do not have digital retailing.
“What we found was, in particular for back-end, but for both front-end and back-end, there was a higher likelihood that they saw positive growth per transaction in the category that had digital retailing, versus not,” said Michelle Denogean, Chief Marketing Officer at Roadster. “So that one was I think, a big takeaway. But the one for me that really, really crushed it was the efficiency.”
Lessons learned duringrapid adoption
In an interview with Canadian auto dealer, Denogean said the average number of vehicles a salesperson would sell in a given month pre-crisis was about nine to 13 units, based on data from NADA. Pre-COVID, that number hovered around 13 and shot up to 18 in April. The data is particularly intriguing when considering the number of additional sales per person grew as the number of staff decreased during the pandemic.
The overall time it took to transact also decreased from February to April, with 68 per cent of transactions in April completed in under two hours. To provide a clear picture of the situation: in February the average transaction time was 2.31 hours; in April it was 1.71 hours.
“The real interesting stat is when they (dealers) restricted their team,” said Denogean. “Because if they kept their team fully, those people actually — for the dealerships that did that — they actually sold a little less per person, which makes sense. But when they took a really deep cut, like a quarter of their staff, what they saw was this push to then be able to sell over 20 cars per person.”
To be clear, Denogean is not suggesting dealerships should run on 25 per cent of their staff. What she is saying is that there is a lot of efficiency and ability per person to sell more. The enablement of digital retailing and the function of being able to sell more, she said, is because it digitizes the sales process.
The idea here is that a streamlined process due to digital retailing technology and the fact that they are self-serving from home allows the salesperson to guide the consumer online, which in turn can speed-up the transaction in the showroom (if they are taking delivery there).
The data indicates that dealership staff can guide customers online to save time. They can sell more per person with remote selling, perhaps in smaller “pod-style teams”. F&I can be presented remotely. And based on the report, flexible schedules (such as split shifts) and after-hour availability/activity can drive more engagement.
Choosing the right approach
While digital retailing tools have gained significant traction during the pandemic, the end result is only 50 per cent about the tool. The other 50 per cent is a combination of culture and process change, according to Louis-Yves Cloutier, President and CEO of 360 Agency — a Quebec-based provider of e-commerce web solutions that caters to Canadian dealers from coast-to-coast.
“It’s the human being,” said Cloutier. “They need to embrace — the dealer with the staff — the new reality of transacting online.”
Cloutier said cases where a customer will go through the whole online process to buy their vehicle are still relatively rare today. But cases where the consumer will go through the process, drop out, and require encouragement from dealership staff to get back in the process are more common.
There are also cases where consumers will start to engage through the phone, and can be guided or enticed to go online and continue their transaction there. At the end of the day dealers need to find ways to engage, but engagement should not be limited to simply booking an appointment. In fact, the focus should be less about that.
“Engagement may also be having a client go a little deeper in the sales process, as early as possible in the process,” said Cloutier. “So use your tool. Use your website as an extension of your showroom. Make sure that when you talk to a customer and they haven’t started the transaction online, and you’re on the phone or email, make it easy for them to go and start their transaction online.”
This, Cloutier said, is culture change — process change. And it is something that digital retailing tools itself cannot solve. How then can you implement a strategy through marketing and communications? And how can you make a difference in your ability to transact online and in-store in a seamless manner, while also benefiting from a competitive edge?
According to Cloutier, among the approaches that are working — dealers need to ensure they have a communications strategy that is adapted to the new reality and the new tools that they add on. In other words, don’t let the customer go through the process randomly online; guide them through additional content pages, videos, and through the proper email communication. If they are thinking about changing their vehicle, send them a link and show them how it works.
“I think one of the key elements is to build a communication plan and a communication strategy that will present a solution to consumers you won over or existing consumers that you would like to enter into the sales cycle,” said Cloutier. “We’ve seen dealers that are spending time on that marketing strategy and having greater success.”
The key component is having a multi-channel digital strategy. Cloutier said having a strong digital presence works today, but it is going to be even more important tomorrow.
Recommended area of focus
There are a number of areas of focus for car dealers to implement digital retailing. An important one, according to Jill Hadfield, Chief Product Officer – Marketplace, autoTRADER.ca, is ensuring your sales teams are equipped with the right training.
This, she said, can go a long way towards boosting dealer and consumer adoption of online transactions. And when examining digital retailing or any remote transaction tools, Hadfield advises considering the three Ps — People, Process and Platform.
“You absolutely need great tools and platforms to facilitate the remote transactional experience, but you also need to match the tools to the people and processes in your organization to augment the conventional retailing process to a new, more consumer-centric experience,” said Hadfield.
She suggests building a program internally, or implementing new methods to promote and incentivize the dealership team to both support and embrace digital retailing as a new way of selling cars. This could mean training employees on how to create a smooth and transparent omni-channel experience for consumers, or to meet consumers at a point in the process where they want to actually engage.
“Empower your team to make this the most convenient and efficient car selling and shopping experience for your customers,” said Hadfield. “Whether touch-points occur online or in person, both provide an opportunity to build trust with consumers by guiding them through the process.”
Asked what tips she could provide to dealers around implementing digital retail, Hadfield pointed to accuracy of payments — which she described as a complex but integral part of the online and offline retail experience. This means building the price tools to provide accurate payments to customers online so they can see the same prices offered as in the dealership. It is the foundation for building trust and transparency among customers, she said.
Also of importance is the ability to be flexible and reflective of how consumers like to shop, which is what an omni-channel experience allows for — that seamless transition between online and offline that consumers crave.
Dealers may also need to consider how they can use the online platform or tools in their physical showroom to build deals with customers “and move all leads through one consistent and transparent process,” said Hadfield.
The case for digital retail is strong, but for Canadian dealers that are less convinced — consider this: consumer interest in buying a vehicle online has roughly doubled as a result of the pandemic, according to CarGurus Canada COVID-19 Sentiment Study for June 2020.
The company surveyed 505 car shoppers and found that, as part of its long-term projection, more than half of prospective car buyers (60 per cent) are open to purchasing online. And 29 per cent of current prospective buyers planning to buy a vehicle this year (but have yet to do so) would actually prefer it.
Furthermore, when considering urban and suburban car shoppers, urban consumers (61 per cent now versus 41 per cent before COVID-19) are more open to buying online and would prefer to use contactless services. But openness to purchasing a vehicle online among suburban shoppers has actually doubled — in June it was at 54 per cent versus 27 per cent pre-crisis.
The investments in digital retailing, now, could save dealers a lot of trouble down the line.
