In today’s Internet driven auto shopping environment and in the future, a dealership’s online sales and marketing strategies will need to constantly evolve in order to attract and retain customers while positively impacting their bottom-line. Digital retailing tools are at the forefront of helping dealers address the growing consumer demand for completing more of the buying process online beyond just locating inventory and submitting basic leads.
In the February issue of Dealer Magazine, I discussed how digital retailing tools can help deliver highly qualified leads, increase customer engagement and improve sales workflow for a dealership. Since then, digital retailing tools are quickly becoming an integral and proven part of dealers’ websites nationwide. For example, Lou Bregou of Driver’s Village/Burdick Car, an upstate New York dealership, has attributed more than 10 sales in one month alone, representing a more than a 30 percent close rate, directly to the dealership’s use of digital retailing tools.
Adapting to a Changing Marketplace
Over the years, the vehicle research process has significantly changed for both dealers and shoppers alike. For example, 15 years ago, a simple website with a picture of the dealership, address, telephone number and email address (maybe) was enough for consumers. Then, 10 years ago, dealer’s started posting inventory on their websites, followed by the addition of incremental innovations, such as Internet specials, chat, video and social media integration tools.
Today, consumers are seeking more than just information about their next vehicle, they want to be able to perform the majority of the car buying steps online including the traditional payment first pencil, trade-in quote and finance functions online in an intuitive fashion hoping to save time and energy within the dealership showrooms. As the Millennials gain more purchasing power, this is a trend that dealers should not only heed but also capitalize on for competitive advantage.
Digital Retailing: A Reality for Today’s Progressive Dealerships
As the adoption of digital retailing increases, the available functionality is also improving. For example, in addition to their original ability to present payments based on realistic lender loan, lease and incentive programs and delivering real-time qualification for financing, digital retailing tools can now integrate accurate dealer specific trade-in offers directly into the online deal structure. This powerful online trade-in functionality presents market specific, dealer-controlled appraisal values for used vehicles through a combination of analytics, dealer-configured settings and vehicle market data.
Our studies have shown that more than 54 percent of shoppers would prefer to obtain a trade-in offer online. This trend, combined with the increasing need for dealerships to find new channels to source used vehicles, offers a compelling solution to help dealers harvest higher-quality sales leads as well as incremental trade-in opportunities through their online marketing channels, while offering shoppers the information that they are looking for prior to visiting the showroom.
Many dealers have already capitalized on the online trade-in leads trend by utilizing book values on their websites. The advantage of using book values for a dealer’s online trade-in strategy is that book value providers have a brand that consumers trust. The disadvantage is that for a given region and vehicle, these values are the same among competing dealers. These are reference values not a dealer specific offer. Other dealers have utilized “guaranteed offer” formats where they offer an amount based on an underlying guarantor. A guaranteed offer certainly holds an attraction for a consumer, but the values are generally controlled by the guarantor and may be conservative in nature due to the risk profile of a guarantee. One may argue that guaranteed offers could also be generated by the used car manager manually, but that takes time and is not the experience that a consumer is looking for in today’s instant gratification era. The next generation of online trade-in functionality needs to take into consideration realistic in-store appraisal processes and data, namely utilizing some combination of book values, dealership’s supply/demand and pricing history, and the vehicle’s detailed condition to derive at a specific offer automatically.
These next generation trade-in tools provide vehicle information, including a detailed equipment and vehicle condition report, making the valuation process transparent for both consumers and dealers. Dealers retain complete control over the process as well as the offer, opting out of automatically offering values on vehicles they don’t want or need. The trade-in value is also not finalized until the dealer physically inspects the vehicle.
Initial results have been encouraging. For example, more than 30 leads per month per dealer were generated on average. It should be noted comparing the lead count delivered by tools versus online value guides will be comparing apples to oranges. The self-service questionnaire that the consumer goes through in these next generation tools is more involved. At first glance, this may cause abandon rate concerns, but data shows that more than 30 percent of unique visitors go through the entire process resulting in a highly qualified lead.
When dealers integrate trade-in offer functionality deeply with digital retailing’s payments and offers functionality, dealers can now, for the first time, deliver an attractive and accurate “1st pencil” online to consumers. Thus, allowing them to stand out as a progressive dealer focused on delivering the right experience and value to the next generation buyer.
In addition, with a greater than 25 percent lead to sale ratios, conversion rates for these qualified leads continue to be double that of basic website leads, making digital retailing tools an even more attractive addition to one’s website.
Digital retailing’s trade-in capabilities will continue to become an important part of a dealership’s best practice for engaging and securing highly qualified leads from their websites throughout the remainder of this year and going into 2014.
What will tomorrow’s digital retailing tools bring to the table for dealers? If the success of earlier digital retailing tools and the introduction of an advanced digital retailing trade-in appraisal tool are any indication, the future of digital retailing is bright for dealers and consumers.