I recently participated in a panel discussion at CBA Live focusing on dealer motivations, eContracting, operational efficiencies, and internal dealer issues.
From the discussion, we heard common observations about the future of dealerships and how they need to adapt to the consumer’s desire to enjoy a better experience purchasing a car. However, the common takeaway was to meet today’s customer expectations, the role and purpose of F&I needs to change.
As Millennials and Gen Z have taken over the market, they are using their computers and smartphones to complete a considerable portion of the shopping process before going to the dealership. Customers want a faster and more digitized car-buying experience. However, even though customers want to complete more of the purchasing process online, most of them still want to come to the dealership to test drive, consult with a sales person and complete the purchase.
So, it is important for dealers to remember that when customers come into the dealership, they need to be ready. Customers become frustrated when paperwork they submitted online does not make it to the dealership and needs to be filled out again, when negotiations and paperwork take over the purchasing process, and when the F&I process takes too long. The average buyer spends three hours at the dealership during a car purchase, with 90 minutes – half of the time – spent on negotiating the financial details. This led to consumer satisfaction on the car buying process continuing to decrease, dropping from 55 percent in 2016 to 46 percent in 2018, according to the Cox Automotive’s Car Buyer Journey Studies.
Customers want the finance process to be faster and easier which corresponds to the entire purchasing process at the dealership needing to be consolidated. The more a dealership can digitize the process, the higher the satisfaction rate for customers will be.
As we look towards the goal of providing a fully digital retailing experience for consumers, most dealerships have digitized a large portion of their marketing and sales processes. The one area that continues to fall short is the financing and lending process. As demonstrated by the emergence of FinTech companies, Cox Automotive’s Accelerate solution, and our own lending partners, the credit application process is moving on-line. But to deliver a fully digital experience, dealers need to be able to close the deal with a digital contracting process as well. Digital Contracting enables a paperless experience where everything is verified, signed, and final contract packages are delivered to lenders and customers digitally. This saves time for the dealer and the consumer and maximizes efficiency and resources.
For dealers looking to make the move to digital contracting, they need to remember some important factors to make it a success.
- The entire signing process needs to be more transparent and portable. Rather than having an unmovable piece of equipment in the F&I manager’s office, the F&I process needs to become mobile so it can be done anywhere at any time.
- Dealerships need to have the proper infrastructure in place – WiFi, tablets, wireless printing or remote document delivery capabilities in place.
- Digital Contracting requires a change in the dealership process. As in every innovation in the dealership, it’s only as successful as the staff makes it. To truly recognize the financial benefits of faster funds and less recontracting, dealer staff needs to be trained and fully accept eContracting as the new normal. Ongoing training and education need to be offered to continue to make it successful.
My CBA panel was just one discussion, but these ideas are resonating in every conversation I am having throughout the industry. As new technology is incorporated in the lending process with the benefits clearly spelled out positively for the dealer and the customer, eContracting is the next step in bringing dealerships into the future.
Author: Andy Mayers
Andy Mayers is the Lending Solutions Strategist at Dealertrack, a Cox Automotive company.