Technology is supposed to make things simple. That’s about as clear and concise as it gets when the debate turns to the application of technology throughout dealer systems and workflows.
Sure, lots of expensive solutions do many great things. And there are many wonderful ideas that might one day become the next “sliced bread.” But they can also create added cost, increased complexity, and staff frustration – all over this new and confusing way to get a simple job done. This is extremely relevant in the automotive retail space because, if we’re being honest, there are many incremental tasks that work better with a straight-forward approach.
And that’s the point: technology should make things simple. It’s a mantra that dealer managers and CTOs should repeat when faced with the onslaught of new ideas and “magic bean” formulas being sold inside the showroom and at automotive retail conferences.
High Tech Rules: Improves Efficiency and Profitability
Many dealers have told me that they won’t change the way they do a manual task until they find a tech-based solution that does three basic things: speed the process, make it easier for staff to be more productive and improve profitability. That’s a pretty good litmus test that lines up to the simplification metric: does it keep work simple and help make the dealership successful — every month?
This is an especially important approach to consider when it comes to new technologies and dealership growth strategies, because we have arguably entered into an era of complexity. It’s no longer about getting inventory online quickly or optimizing websites; today’s conversations now include things like blockchain, artificial intelligence and personalization (online and in-store). Frankly, it’s enough to make your head spin.
By keeping it simple, you can stay focused on how technology can improve existing and integral retail steps in the process. Here’s three good examples:
1. Digital Retailing: A recent study by our team at eLEND Solutions found a substantial amount of confusion on the part of dealers over what digital retailing actually is – and what it accomplishes – likely created by the varied definitions of technology vendors are dubbing “digital retailing. Dealers seem clear on its benefits, however. Close to 70 percent said that
the top benefit was shorter transaction times. In addition, 19 percent defined the technology as something that let customers start but not finish the deal online. Ten percent
claimed, additionally, that being able to facilitate the entire sales and F&I process online best defined digital retailing.
Ultimately, what makes digital retailing effective is its true simplicity: tear away the bells and whistles, and what you’re left with is the value of interactive and personalized deal
configurator tools – including credit, finance and trade – making the showroom sales process easier and faster.
Countless surveys and studies have found that customers value the concept of digital retailing because it starts the process online – where they are most comfortable – and accelerates the in-store process, making for a much more pleasant positive buying experience. less anxious and friendlier environment. That’s simple. And effective.
2. ID Verification: Smart ID verification is the epitome of effective technology that makes a manual task simple and more effective. It does one thing, very well: data capture –
something every dealership must collect as potential buyers head out for the test drive. Good ID verification programs will also protect your dealership from financial fraud related to identity theft – and also enable a faster pre-qualification process, quickly and easily, at any point in your sales process. Further efficiencies include electronically exporting the purified information into your CRM and other critical platforms in the sales and finance deal flow.
All of this efficiency has positive impacts for the customer and the dealership. A recent case study with Huntington Beach Chrysler Dodge Jeep Ram found that 53 percent of customers
who opted-in for pre-qualification prior to the test drive went on to purchase. In addition to much higher closing ratios, gross profit per car sold increased $300, 60-minute faster transaction times, and a 4pt increase in CSI.
3. F&I Aftermarket: F&I product sales have become a more prominent part of the F&I revenue stream; smart dealers are applying technology to help increase product penetration and back-end profitability – especially via use of tablets and mobile devices. That’s important, especially when you consider recent statistics on adult online usage: trend forecaster Mary Meeker’s recent (and hotly anticipated) Internet Trends presentation
reported that adults spend 5.9 hours per day online. That’s up from 5.6 hours in 2016, mostly due to increased mobile usage.
We consume content and interact via mobile, so using these same devices during the sales process will make customers comfortable and relaxed. It just makes sense. In addition,
recent studies have found that consumers are interested in aftermarket products – as long as they’re introduced earlier in the process and via online (read: mobile) means.
The reality is that it’s happening, anyway, and it’s altering the traditional F&I process. With study after study showing how only one-in-four customers are even aware of F&I products prior to visiting the dealership, it’s easy to see the opportunity.
It’s always important to think about how future technology solutions will impact the way we conduct the business of automotive retail. In fact, it’s critical: staying abreast of changes and trends can help us to plot the way forward in terms of profitability, hiring plans, and
growth projections. But just because there’s a shiny new gadget doesn’t necessarily mean that it will work effectively for retail operations.
Blockchain, for example, offers a great opportunity to build collaborative platforms between vendors and dealers; but until the application is proven, it probably makes more sense for dealers to be aware of its potential versus diving right into how you will leverage it.
That’s why applying a simple test to judge the simplicity of new technology will help you make smarter decisions about how to evolve your dealership operations.