When it comes to adopting new technologies, the automotive industry is typically slower than other leading industries. This is a sad fact as these technologies provide better customer experiences and, if they work, can easily lead to an increase in revenue and customer retention.
Technologies such as texting, artificial intelligence, chat bots and more are frequently tested by leading retailers. Sometimes they hit a homerun, and sometimes they strike out. But the important thing is that they try.
Traditionally, leading retailers focus mostly on their method of sales. Online companies continuously seek to reduce friction while improving the online experience. Brick and mortar retailers do the same, but with the focus on the in-store experience, while using their online presence to virtualize their inventory. Companies that tried to cross over that online/offline divide were typically scoffed at.
Consider Steve Jobs’ idea to open Apple retail outlets in 2001, while many were predicting the death of brick-and-mortar stores due to the emergence of a little company named Amazon. Prior to opening Apple retail stores Apple stocks were falling and Steve Jobs himself said at the MacWorld trade show, “Buying a car is no longer the worst purchasing experience. Buying a computer is now number one.”
At that time, David Goldstein, former president of research firm the Channel Marketing Corporation, felt that opening these retail stores was a really bad idea. He went on record stating, “I give them two years before they’re turning out the lights on a very painful and expensive mistake.” Well, we know how that worked out! A short ten years later Apple had 300 retail stores and was making more money per square foot than Tiffany & Co. Steve Jobs knew that his future success was based on customer experience and education — and, he was right.
Now fast forward to 2017. Today, like Apple did in 2001, other retail industry leaders are making some unusual moves that have people scratching their heads. Take Amazon, for example, arguably the world’s largest online retailer. It has perfected the online buying experience with ease of purchase and continuously improved speed of delivery – from two-days via their Prime loyalty program, all the way down to one-hour delivery in select markets.
Their customer experience has produced a highly-loyal customer base. But they continue to experiment and test new ideas – including delivery via drones, grocery delivery, and a cashier free checkout experience in a physical grocery store with Amazon Go.
There’s no doubt that Amazon threatens and typically ends up dominating any market it enters. However, what causes the head scratching is that they’ve now started to enter the very market they essentially put out of business – physical bookstores. Amazon also just made another entry into brick and mortar retail with their acquisition of the Whole Foods grocery chain. Do you think this might be because they want to convert the complete Whole Foods chain into a cashier free checkout experience with Amazon Go?
The reverse is happening with the world’s largest traditional retailer — Wal-Mart. It has been on an acquisition spree for online retailers since 1997 and to date has acquired 13. Just this last year it accelerated this path and since August of 2016 has spent $3.4 billion to acquire four online companies. Wal-Mart seems to understand that consumers want to shop online and is aggressively seeking to stay relevant and profitable as it watches Amazon continue to grow.
So why are these industry giants investing so heavily to enter into opposite ends of the retail spectrum? It would be very easy for Wal-Mart to keep doing their thing and for Amazon to continue to do theirs. But these companies have figured out that consumers want… well, everything. And unless a company can deliver the spectrum of experiences consumers choose, the consumer will find a retailer who will. Consumers are demanding the experience THEY want on THEIR terms, not one that you want them to have.
What does any of this have to do with your dealership? Everything.
This is the exact reason why the automotive industry has seen disruption through companies that offer easy buying experiences completely online. These aren’t car retailers, they’re technology companies who just happen to retail cars. Take Tesla, arguably the largest threat to the traditional franchise retail dealership model. They were able to secure 600,000 reservations for a vehicle that DIDN’T EXIST when they took the deposits. Tesla owners are very loyal to the automaker and many become brand evangelists very quickly. Sure, their cars are cool, but they’re also pricey – or should I say they were pricey — apparently, with new releases — those who previously couldn’t afford a Tesla now should be able to – which can easily threaten many automotive manufacturers.
However, the simple fact is that as a franchised dealership, you have an essential monopoly on the sales of new vehicles. Consumers vote with their wallets and spend that money at dealerships that operate on their terms, providing an experience that they want, which is increasingly online.
It is important to realize that today’s car shopper is very different to that of even as little as five years ago. You can no longer get away with acting purely on your terms, providing the experience you want consumers to have. You simply can’t communicate with them the way you want to and play the games that have, up to this point, earned the automotive industry a reputation worse than Congress.
Successful and progressive dealers know that consumers want instant information and updates via the communication platform of THEIR choice, not yours! They want to quickly gather meaningful and accurate information from your website. They simply hate widgets that provide useless generic information and force them to pay for that information with their personal information.
There is so much technology right now on the market that can help you streamline just about every aspect of your dealership operations – from providing access to accurate, real-time market valuations on trades (rather than values that are ranged); to instant and accurate credit approvals and interest rates; to efficiently managing service appointments — load balancing the service bays realistically, rather than simply sending a confirmation email saying, “Come in!” when technicians, shop capacity and parts availability are unknown by the system. The lack of these technologies perpetuates the types of faux pas that can make the customer experience a poor one and drive the customer away before they even set foot in your service drive.
To be successful it is important to always be willing to study and learn from others. Take a lesson from innovative retail industry leaders and truly analyze what information, abilities and technologies your dealership really has at its disposal. Study this for both the front-end direct customer interactions (be that in person or online), and the back end — streamlining operations to create a more efficient and effective workflow that allows your dealership to provide a better overall experience, increase volume and profitability without increasing staff or expanding the facility.
The merger of the traditional and the digital retail experiences is the future. The retail automotive industry is no exception to that rule. Hopefully, it won’t take five more years for dealerships to realize the truth of this.
Amazon is already eyeballing and making moves to enter the automotive retail business and, while that may prove difficult for them at the moment in the United States, they’ve already displayed their interest by literally retailing vehicles on their website in other countries.
Take steps now to improve the customer experience both in store and online, or you may find you are confronted with a disrupter that you certainly don’t want entering the industry – someone like Amazon. You think Tesla has influence? Wait until Amazon starts selling cars. They already have Amazon Vehicles and Amazon Automotive to make car and parts purchasing easier!!
Learn more about how to improve your customer experience by attending Ujj Nath’s session at the Digital Dealer 23 Conference & Expo this Sept. 18-20th in Las Vegas. Register now and start building your agenda by choosing from more than 100+ educational sessions!
Author: Ujj Nath
Ujj Nath is the Founder and CEO of myKaarma (www.mykaarma.com), the cloud-based conversational commerce software that’s revolutionizing the auto service industry. He has 25 years of experience as an entrepreneur and automotive industry executive. In 1990, prior to myKaarma, Ujj founded Syncata, a major provider of business consulting and systems integration services. In 2004 he successfully negotiated the sale of the company to ProQuest Business Solutions (NYSE: PQE), which was subsequently acquired by Snap-On Tools (NYSE:SNA). At Snap-On, Ujj was Vice President of Global Accounts and headed the Professional Services Organization for Snap-on Business Solutions. He can be reached at email@example.com.