By most accounts, the digital revolution has already occurred. We began shifting from mechanical and analog technology to digital electronics between the late 1950s and late 1970s. However, while industries across the U.S. changed their working dynamics to accommodate the digital revolution, vehicles are still fundamentally sold today the way they were 50 years ago.
Consumers still have to go to the dealership, fill out tons of paperwork, and sometimes spend hours waiting for funding paperwork to be finalized. Conversely, when was the last time you went to a bank to apply for a credit card, or even a mortgage? Now, banks have a fairly robust digital presence, where brick and mortar locations are seldom used.
In 2017, more than 30 years from the “end” of the digital revolution, the automotive industry is just now beginning to undergo its own revolution.
According to a recent study by J.D. Power on top trends to improve the retail automotive experience, 42 percent of dealership consumers made phone calls to dealers when shopping for a vehicle. Conversely, 75 percent of consumers used the internet. However, those buyers who rely on the internet had lower satisfaction scores than those who made a phone call. The reason for this can be easily explained by the current dealership model, which is geared towards bringing people into the dealership.
Some dealership websites are still just displaying inventory. If a consumer wants to know more information about vehicle pricing, financing options, or vehicle upgrade options, they have to either call the dealership or make a trip to visit the showroom. So of course, people are more satisfied with the more information they receive.
Unfortunately, Generation Y is now the largest segment of the population. And, as Baby Boomers continue to get older, Generation Y is quickly becoming the largest player in terms of spending power. With that in mind, this generation has no time for phone calls and dealership visits. They want all the information up front and online. No exceptions.
By comparison, the J.D. Power study also stated that in the automotive retail space, in general, satisfaction is lower among Generation Y consumers, especially for those measures that require the most personal interactions. Conversely, Generation Y satisfaction is higher than other generations in industries that conduct business mostly online, including utilities and full service investors, life insurance, and credit cards. This quantifies the general sentiment that Generation Y consumers give their business to companies that meet them where they are – online.
With this in mind, we’ve just begun to see the automotive industry invest in digital solutions to the dealership quandary. Just recently, Ford Credit announced its investment in an online car-buying platform. F&I and Showroom Magazine even featured, in its February edition, a dealership that has successfully implemented an online F&I platform. These stories will only continue to grow in prominence. The key for dealerships to remain relevant with this generation will be how quickly they can adapt their own operations for the digital revolution.
The internet has changed how consumers buy vehicles. In the early days many dealers were fearful of providing too much vehicle information online, while others blazed forward. Today’s consumers look up information on new and used vehicles, their trade-ins, financing, right down to calculating monthly payments. Now, there is a debate on starting the Finance and Insurance process (F&I) online. Some will lead, others will follow. What the internet has shown us is consumers want information and the dealers who provide what the consumers want tend to be awarded by those same consumers. Rather than balking at what seems like immense change, dealers have an opportunity to use the digital revolution to augment their current processes for the better.
Shorter Transaction Times – Enabling customers to apply for credit online and learn about available F&I products allows them to initiate the transaction in their own time, and gives F&I managers the time they need to submit the application for funding and get it approved by the time the customer is ready to review their final paperwork.
Product Penetration – Steve Finlay, senior editor with Wards Auto said it best, “The more somebody knows about something, the more comfortable they are to talk about it, and the more likely they are to buy.” By allowing customers to learn about the products offered and self-select before speaking with an F&I manager, dealers have the opportunity to turn the F&I presentation into a conversation rather than a sales pitch. This will better enable their managers to focus on value-driven product penetration and overcoming objections, giving F&I managers more time to increase product penetration and upgrades.
Of course, for dealers to truly reap the benefits of an online F&I process, they need to invest in training their team members on how to work with a digital platform. While the platform has the opportunity to speed up the car buying process, both sales and F&I managers still need to focus on learning as much about the customer as possible to ensure successful sales and profit margins.
With more than 40 years of experience helping dealers implement strong sales and F&I practices, EFG Companies’ training curriculum has demonstrated results in equipping dealership teams with the skills needed to enhance the bottom line, close more sales, and meet performance goals. Contact EFG today to put our training to work for you.