What is the Future of Technology in the Dealership?

A survey conducted by AutoTrader recently has identified that 42 percent of car shoppers use more than one device to research their new vehicle. 68 percent of dealership customers get a negative impression of the brand when a dealer’s mobile site doesn’t work well.

Technology has changed the way customers interact with the dealership, and how they conduct business with their dealer. Some dealerships and groups, such as EchoPark Automotive in Denver, implement islands with tablets where car shoppers can browse, much like an Apple Store experience.

Yet, repeat dealership business has been proven to heavily rely on a relationship with a customer. As the industry morphs and technology becomes more widespread in use across all facets, technology can be a help or a hindrance to the process.

Bill Wittenmyer, a Partner at ELEAD1ONE, answers some questions on the future of technology in the dealership.

In the past few years, we’ve seen an incredible increasing reliance on technology on the sales floor. Tablets, cell phones and texting are thoroughly integrated in the sales process. Where is technology taking the sales department in our dealerships and what’s the next step?

Bill: Ultimately, technology streamlines the entire sales process and provides sales staff and customers with more accurate information, faster. In the interim, it can be a bit cumbersome to adapt and incorporate past processes with modern technology, especially when workers hesitate to eliminate long-proven manual processes. However, today’s society is accustomed to quick, easy access – using technology for information gathering and online ordering. We’re able to place an Amazon order via smartphone or even speaking to a device across the room. Our everyday lives include this type interaction already, and consumers continually expect and desire this level of convenience in other areas including the auto shopping experience. Our next steps as an industry are to adopt innovative technology tools and transition to paperless transactions. A tremendous amount of redundant paperwork and required documentation still needs to be streamlined through technology.

Manufacturers like Tesla are taking an approach that reduces the interaction between the dealer and the buyer. Do you see this as a fad or is there a concern that it will replace the traditional dealership style?

Bill: Tesla certainly employs many consumer-friendly processes. We can’t ignore that Tesla remains strong in their position as a Wall Street darling with extremely high stock value. However, Tesla has yet to prove profitable on a per car retailed basis and is losing extraordinary amounts of money. Until Tesla can turn these processes into a profitable business model, dealerships are safe as long as they continue to prioritize improving the buying experience in every way possible. Looking at the long-term, it does not matter how many cars you sell or what processes you use if you are not making money. At the end of the day, it’s still about revenue and remaining profitable with innovation. I’m not suggesting Tesla is going out of business, but well all know that if dealerships and traditional OEMs were operating under this current model, they would not be around long.

How have advances in technology changed the service department landscape for today, and what does the future look like?

Bill: As compared to the sales end of the business, the service department is still a few years behind in the adoption of new technology. In my opinion, this is because most operators don’t want to fix what isn’t broken or painful enough. In other words, it’s still the main profit center of the dealership. Recalls and regular RO’s are still healthy for the most part, and good monthly results are generally there using traditional processes. However, with the advent of tablet presentations, video and enhanced information about customers available at service advisors’ fingertips, progressive dealers are making a move to catch up with the other departments in terms of technology and providing a better customer experience. Ultimately this shift should translate into higher CSI, better customer loyalty and high profits. It’s much like what we saw 15 years ago with CRM on the variable end. At first, dealers were slow to adopt and expressed discomfort with the change, yet now, it’s hard to find a dealer that does not have a CRM system. Many dealers are probably on their 3rd or 4th vendor as they have made changes over the years. I anticipate that the service adoption will happen at a faster rate, particularly if we see a continuing trend of flat sales and the compression of sales profits. Dealers will need to rely on improvements in the service department as a means of survival and profitability.

Will a service department that operates an ‘old school’ philosophy continue to be relevant in the future?

Bill: Anything can be relevant if it is profitable to the level that is expected and needed. Such a department can remain relevant as long as the processes are solid and consistently provide results. However, in the long run, it’s likely that the majority of today’s consumers will experience something different and choose convenience over the “old school” level of service. Alternatively, as an industry, we also tend to implement strategies proven over time via 20 groups or to keep pace with competitors, which could make the adoption happen more quickly. As an example, there are still a few doctors that make house calls — a service people pay a premium for — so it’s still relevant to those people. However, in our highly competitive industry, few niches work to that degree. We already know our customers are very cost-conscious and the overall sentiment is they are not satisfied with the current time-consuming service processes. Consumers today desire a high level of transparency, or at least the perception of it, with every transaction.

How does the progression of technology affect the BDC? Is relevance a concern or does it solidify the need for a dealership’s BDC?

Bill: When implemented the right way, today’s technology today still supports and improves BDC interaction for both dealerships and their customers. The advantage of timely internal communication, access to more information quickly, and the ability to better keep everyone on the same page during the buying or servicing phases ultimately affects the long-term relationship with the consumer. The ability to strategically and effectively communicate across multiple channels with the right information promptly gives the consumer confidence and improves the overall experience.

Can software and tech improve communication between a dealership’s departments, or can it get in the way?

Bill: As with anything, moderation is the key. Dealers must be cautious to avoid over-communicating or congesting the process. It’s critical to provide access to the right info and continually streamline processes to keep them productive.  

There are solutions for the sales floor, the service department, BDC, and all other facets of the dealership – how can a GM ensure that their store is ‘connected’ and running smoothly?

Bill: It boils down to two key factors – usage and feedback. We all measure end-results, but the real effectiveness lies in the usage or adoption of the solutions. For example, by tracking statistics such as the number of service presentations in the lane or the number of printed purchase offers using multiple payment options to ensure that usage is high, then the results will follow naturally. Additionally, I am a big believer in feedback. Not just from your internal departments and teams, but also externally from your customers. Ultimately, their experience is the one that counts and (hopefully) translates into profit or increased satisfaction. Each experience can drive that positively or negatively, so we must always solicit feedback from both sources and do so often.