We mention the pandemic a lot in our blog as one of the main reasons for the rapid changes happening in modern auto retail. This is certainly not the only driver for change affecting the industry, but it is by far one of the most significant.
In 2021, consumer attitudes towards buying used vehicles have grown. By experiencing slick online operations in other areas of their lives, they now expect all industries to be able to provide the same experience.
Vehicle retailing is a complex process, and not one that all consumers are comfortable completing entirely online.
Some will embrace the wholly online experience as their preferred channel, while others might not.
One of the key findings published in our recent white paper was that the most dominant group of vehicle buyers are shoppers we call the channel hoppers. A group who start the buying experience online and easily transition to the showroom when it suits them.
Having the right tools and services available to cater to this kind of consumer is part of a process we call Connected Retailing.
This blog post will outline how providing a Connected Retailing experience can benefit modern vehicle dealerships and their customers.
Why is connecting the online and showroom important?
As stated above, one of the most significant findings in our recent white paper was how modern consumers shop for vehicles.
We found that most consumers now fit into one of three groups.
The three groups identified were:
1. The Online Buyer: Characterised as a younger audience, though with plenty of exceptions, this group is happy to complete the entire vehicle buying process online. In many cases, a vehicle is bought sight-unseen, and this group is comfortable going from research to delivery without ever setting foot in a showroom. These buyers make up approximately 10% of the current customer base.
2. The Channel Hopper: Channel Hoppers will begin the purchase journey online, and and and and use specific online tools to complete key parts of the journey, including finance, part-ex, and reservations. Then finish the sales process with a visit to the showroom, to conduct a test drive and be guided through the final stages by a salesperson.
3. The In-Person Buyer: The historically long-standing approach, the in-person buyers conduct the entire buying process in the showroom, across multiple visits, and typically take the longest amount of time to go from research to purchase.
The largest and most dominant group by far is the channel hoppers. The ease of use and the abundance of options available digitally means over 90% of vehicle buyers start the buying journey online.
By providing a Connected Retailing experience, your dealership can maximise the pool of consumers you have access to.
10 Benefits of Connected Retailing
- Ease and convenience - People live busy lives and can’t always take a few hours out of their day to spend time looking for the right vehicle. Convenience is king, and providing an effective way for consumers to find the vehicles they’re interested in online helps consumers decide you're the dealership they want to visit. This, in turn, helps you win the increasingly important consideration stage of the buying journey.
- Speed of process - Multiple visits to multiple showrooms just to find the vehicle they want. There’s a reason the in-person buyer takes the longest to go from research to purchase. Having the right tools on your digital channels helps speed up the sales process. Consumers can find out instantly if they qualify for the vehicles they’re interested in, find out what they can afford, and arrive as pre-qualified sales leads to your business.
- Fixed pricing models - The online experience provides consumers with a low-pressure, less intimidating, no-haggle environment. An environment where the price is fixed, and they are free to engage with the journey as much or as little as they want. This appeals to those who want an easy and transparent experience. The right technology helps keep you in control of this process, and deliver the essential touchpoints that can only be experienced in person, online.
- Consumer browsing times - The digital showroom is always open. The increased use of online tools has presented some interesting contrasts between browsing and buying patterns. 78% of online finance applications made during normal working hours, between 9am and 5pm, however, the peak times for online browsing happens between 6pm and 10pm, hours when a traditional showroom would be closed. The digital channel is an opportunity to capture consumer attention, and effectively get people into the sales funnel earlier, by providing the complete experience online.
- Extending geographical coverage - Online tools replace the need to travel for those consumers willing to complete key steps of the process online. This reduces the number of showroom visits that are required, resulting in an increased willingness to travel further for the right vehicle. Our own data demonstrates this, where the average distance from consumer to dealer is 22-miles further for consumers buying online, vs the showroom-only buyer.
- Sell more aftersales products - By building aftersales products into the initial product offering, retailers can give consumers the time to reflect and choose the right products for them. Retailers doing this have seen a significant increase in warranty sales, with leading warranty provider Warrantywise reporting increases of up to 84% in successful warranty upgrades from dealerships using the right tech.
- Manage a complex processes - While the online journey makes the purchase simpler in many ways for both the consumer and retailer, the increased flexibility does make for some complications that systems need to be able to address. One major factor in vehicle retail is the part exchange process. This is where a connected system really comes into play. The consumer can start the part exchange process online. Entering all the key information on the vehicle to receive an initial quote, then drops it off at the showroom for a final valuation.
- Save time by pre-qualifying customers - The hours spent dealing with customer enquiries that don’t turn into sales is a huge waste of potential revenue for a retailer. Customers can conduct a lot of the discovery stages themselves, meaning when they come into the showroom or make an enquiry, they’re pre-qualified and the likelihood of a closed deal increases drastically.
- An additional source of revenue - We mentioned the pandemic brought significant change to the automotive retail industry, and none felt this more than the new digital disruptors whose businesses grew during lockdown. When the traditional brick & mortar retailer was forced to close, those with the right tech could be there for consumers who still wanted to buy. As life slowly moves back towards the old normal, many consumers will still want the online experience, retailers taking advantage of this change will add a new revenue channel to their business.
- Future proofing & protecting your business - The retailers who were able to adapt their businesses during the rolling lockdowns, adopting online technology and in time connecting the two sales channels, were able to remain profitable and even grow in some cases. Having the right tech installed can help protect your business against future uncertainties, as well as deliver the retailing experience customers will expect going forward.
The right technology can potentially protect dealers from uncertainty, and demonstrates that digital transformation isn’t only necessary but also profitable.
The same technology can also allow them to fully maximise future opportunities by meeting a wider range of customer needs, as well as creating a situation where dealers are ready and more receptive to change.
Find out more about Connected Retailing
Get a more detailed view of Connected Retailing, as well as the latest industry insight from iVendi. Download our latest white paper, Connected Retailing: Addressing the Challenges of Digital Transformation.