While it is easy (and correct) to point to the ongoing pandemic as a supercharger of consumer migration to the digital space, dealers know that the advent of the digital marketplace began well before COVID-19.
Relatively unknown for a time after its inception in 2012, Carvana has transformed the automotive space and catapulted itself into the Fortune 500 in just nine short years. With rival companies like Vroom and Shift Technologies solidifying their own positions, this transformation appears here to stay.
More and more digitally-inclined consumers are coming of automotive-buying age, and dealers that cater to these shifting consumer habits are seeing dividends from the digital space.
Consumers have more and more ways to voice their preferences, and they have been clamoring for the car buying experience to be as seamless as buying an iPhone or pet. One of the foremost facets of creating this seamless experience is omnichannel retailing, known as the idea of a frictionless transition between or combination of online and in-store purchasing.
One way to deliver this experience is to have a robust delivery option that works for both the consumer and the dealership.
Many consumers are willing to pay more for a dealership experience that does not involve price negotiations from a salesperson, even to the point of not having to visit a dealership at all. Instead of facing attrition of these potential clients to services such as Carvana, dealerships can take a leaf out of Carvana’s book and fulfill this preference with delivery services. Whether through a third party delivery service or in-house personnel, this potent revenue stream should not be ignored.
However, there are drawbacks if not implemented correctly. A blanket policy of free delivery service invites consumers that are more likely to be one time clients, increase service outlays without corresponding revenue, and increased operational costs. To combat these inevitabilities of a free market system, dealerships can implement a variable delivery plan.
Clients within the dealership’s locus of operation (a distance that must be determined on a dealership by dealership basis) can be offered free delivery, while clients outside the range can be offered a delivery rate that essentially reimburses the dealership for the labor and other costs associated with delivering a vehicle over larger distances. This will enable dealerships to retain delivery personnel, and effectively reduce labor costs without having to damage morale through hours or personnel cuts.
Further, clients that are willing to pay for delivery of a vehicle are more likely to be repeat clients, as this signals their willingness to pay extra to patronize that dealership in particular.
Working in the digital space means working with software. Many dealers have come to learn over the years that software can make or break the car-buying experience, and even the dealership itself. When a consumer wishes to purchase a vehicle, the first place they tend to search is online. High speed internet and flashy design have trained consumers to expect an online experience that is snappy with a quality UI (user interface). This is expected both on mobile and desktop platforms.
80% of consumers are unlikely to be repeat buyers from a website they are dissatisfied with, and that 40% will abandon a website that takes more than 3 seconds to load
Research from Kissmetrics indicates that nearly 80% of consumers are unlikely to be repeat buyers from a website they are dissatisfied with, and that 40% will abandon a website that takes more than 3 seconds to load.
Another common complaint of consumers are situations where vehicles are listed on a dealership’s website, but are not actually at that location. The aforementioned consumer dissatisfaction metrics can only go up when these situations occur.
However, internal software is just as vital to the consumer experience as outward-facing software. When a client has to wait while a salesperson struggles to get their software to comply with their inputs, revenues suffer.
While software training is important for all personnel, licensing software that is intuitive and easy on your personnel will allow them to spend more time with the actual business, rather than troubleshooting software issues. They’re hired to be photographers or salespeople, not software engineers, after all.
With these things in mind, the savvy dealer will hire or contract top talent to ensure these friction points are avoided internally and externally so that clients and personnel can focus on the contents of their black mirrors rather than being frustrated with what is going on behind it.
The digital space does not have to be a daunting one, and with the right people in place it can be a marketplace to thrive in. While there are many more aspects of the space beyond delivery services and software, these key pieces will help your dealership keep pace and even surpass the entrenched online dealerships.
Jonathan Cook sat down with Bailey Price to discuss the effects of the digital age on dealerships. Watch the full video by clicking below.
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