The retail landscape has changed dramatically over the past few years. Today, e-commerce dominates industries from clothing to groceries to prescription medication. Experts call it the Amazon Effect, and no sector – not even automotive – is immune. Still, customer expectations and desires are changing thanks to digital innovation, and the auto industry needs to adapt. Here are six things dealers and Original Equipment Manufacturers (OEMs) should keep in mind to stay competitive in 2017 and beyond:
1. Millennials with purchasing power: After years of evidence showed young adults just weren’t buying cars at the same rate as previous generations, the tides seem to be turning. In response to a 2015 Cars.com Nielsen Omnibus survey, Millennials said they were significantly more likely to purchase a car over the following year compared with U.S. adults overall. And as the economy continues to strengthen, so does their spending power. Millennials represent an estimated $1.6 trillion in buying power. That’s good news, but it comes with some caveats – Millennials don’t shop the way Baby Boomers do. They’re less likely to walk into a dealership without a pretty good idea of what they’re looking for, and whether or not you can deliver. After all, 85% of Millennials use the internet for car shopping, and when they do, they’re shopping around.
2. Dealerships and OEMs no longer own their vehicles’ reputation: Thanks to Millennials’ internet prowess, manufacturers and dealerships don’t have as much control over what buyers know and believe about their vehicles. According to Google, 95% of shoppers used the internet to research cars, 72% of their car search sessions involved cross-shopping, and their searches averaged 24 research touch points. That means that over the 1-3 months shoppers are in the market for a new vehicle, they get information and narrow down their preferences using a combination of: dealer sites, manufacturer sites, search engines, third party sites, professional review sites, consumer review sites, regional dealer sites, online mapping tools, classifieds sites, video sites, social media and newspaper sites.
3. The expectation of an omnichannel experience: Because car shoppers use the internet so heavily throughout the research and buying process, and because they are so digitally connected, Google reports 80% of customers will use multiple devices to research a vehicle purchase. Desktop computer search activity is higher during the week, and mobile activity is skyrocketing. 2013 saw a 460% year-over-year increase in customers using mobile to find information about cars and trucks. Considering only 35% of Americans owned a smartphone in 2011, and 77% do in 2017, imagine how much car-buying activity happens on mobile today.
According to EY, “Automakers and dealers interact with customers using a multi-channel approach, which allows for different sources and ways to collect information. However, these channels often provide an incoherent customer experience. Customers want the freedom and flexibility to move between numerous information sources and receive a similar brand experience across all channels. Retailers need to evolve to an omnichannel strategy to deliver a seamless customer experience at every level of the customer life cycle.”
Right now, customers don’t think they’re getting that experience: AnnexCloud reports 67% of shoppers are frustrated by inconsistency across channels, and 87% think brands need to work harder at providing seamless experiences.
Creating a true omnichannel won’t happen overnight, but there are steps dealers can take to enhance customer experience without complete infrastructure upheaval. Robust loyalty, incentive and referral solutions are popular methods of creating memorable omnichannel experiences. “If you’re a car dealer,” says DealershipMobileApp, “you can use a mobile app to inform your customer about exclusive deals & promotions, give them reward points, and set schedules for car servicing.”
4. Incentivizing customers in the door: Because auto shoppers spend so much time researching their options online, many dealerships just aren’t getting foot traffic like they used to. Dealers know, however, that sales are made in person. While 46% of buyers say they’d be willing to finance a car purchase online, and experts predict they’ll soon be able to, in 2017 there’s nothing like a test drive to seal a deal. Internet research and comparison shopping are valuable, but actually getting behind the wheel is what usually makes a buyer’s decision. So how can dealers get customers through their doors? Incentives.
Thirty two percent of car buyers actively looked for discounts or offers while shopping, so consider offering an appealing incentive for customers. A combined offer for a $50 promotional/reward prepaid card and a $500 rebate upon purchase was the top pick among surveyed test drivers. Fuel cards, redeemable prepaid card codes and maintenance credit were also successful at getting shoppers in the driver’s seat. If you’re not already offering incentives like these, you risk falling behind – The New York Times reported that sales incentives were about 25 percent higher in the fourth quarter of 2016 than in the same period a year earlier.
5. Sustained importance of in-person experience: Once your incentive program gets customers through the door, how are they treated? Make sure your employees – from technicians to salespeople to owners – acknowledge and interact with customers, making them feel appreciated and respected. After all, talking face-to-face with someone knowledgeable can fill in the gaps left by internet research. Sixty two percent of customers say service at dealerships shapes their future purchases, so it’s imperative to remember that technology isn’t everything.
6. Prioritizing customers after they’re off the lot: Customer service doesn’t end after the ink is dry. Surveys have found it costs 500% more to acquire a new customer than it does to keep current ones. But 62% of customers don’t think that the brands to which they’re most loyal are doing enough to reward them. Consider providing maintenance and service loyalty rewards in the form of prepaid cards with the purchase of a vehicle. Overall, loyalty members visit their dealers’ service departments twice as often and spend twice as much as non-members. If your dealership doesn’t provide maintenance and repair services, consider closed-loop collaboration with aftersales services providers. “Partnerships with aftersales service providers, marketers, etc., will help influence customers’ perception of the brand,” says EY.