Digital Retailing Disruption: The Dealer Perspective
Michael Lucki Academy [email protected]
Georgia MunsonAcademy [email protected]
Matthew VollmersAcademy [email protected]
DISCLAIMERThis webinar has been prepared for informational purposes only. Nothing is intended to constitute legal advice. Participants should contact their attorney to obtain advice with respect to any particular legal matter. Any reference herein to any entity, person, organization, activities, products, or services as well as any links to external websites, does not constitute or imply any endorsement, recommendation or approval by NADA. The presentation of this information is not intended to encourage concerted action among competitors or any other action on the part of dealers that would in any manner fix or stabilize the price or any element of the price of any good or service.
IMPORTANT:NADA assumes no responsibility for the results from applying these materials by dealers or other participants in a NADA training.
• What do dealers think about Digital Retailing?
• What do Customers want?
• How to take the 3 hardest areas of the sales process virtual?
• What do Employees want?
Agenda (40 minutes)Knowledge
Wisdom
Insight
• Sent to NADA Academy Students, Alumni, 20 Group Members and Professional Series Graduates
• Time Period April 10th, 2020 to April 17th 2020
• 227 Responses- 175 NADA Academy Graduates
• Email [email protected] for a pdf copy of survey results
Dealer Survey
• The flexibility of your customers:
– To select a vehicle– Get an accurate trade appraisal– Get a BANK APPROVAL WITH A PRECISE PAYMENT
• All without having a conversation or interaction with any dealership employee.
Dealer Survey: Definition of Digital Retailing
By 2021: Where is the disruption?
“The old way of selling and servicing cars simply will not save us. We need to adopt a new model." Paul J Daly
The Automotive Manifesto
Early Results during COVID-19
“Sales are down but visits to the SHIFT website have doubled during the Corona Virus”
George Arison
CEO, SHIFT Technologies
“Credit Applications through Autofi are up 30% since February”
Joe St. John
Head of Dealer Success, Autofi
NADA Academy Graduate
“Digital transactions tripled in March year over year, but that's "from a very small base””
Mike Maroone
CEO, Maroone USA
Dealer Survey
54%
71%
91%
46%
29%
9%
PRE-COVID 19 DURING COVID 19 AFTER COVID 19
Digital Retailing Adoption
Yes No
Will your store incorporate digital retailing (as defined above) in your dealership sales processes?
Definition of Digital RetailingTo select a vehicleGet an accurate trade appraisalGet a BANK APPROVAL WITH A PRECISE PAYMENT
Rhett Ricart, chairman of the National Auto Dealers Association (NADA), expects "80 to 90 percent" of dealers to have full e-commerce capability by the end of the year.
Is Digital Retailing Here to Stay?
On whether dealers will maintain the digital and remote selling tools they’re using during the COVID-19 outbreak once business returns to normal? There’s no doubt.
Mike Maroone, CEO Maroone USAAutomotive News April 13, 2020
Dealer Survey Quotes- PRO“I think the consumer has been looking for a more friction free process for awhile, and this crisis we're currently in may be an opportunity to disrupt the old road to the sale in lieu of an in-store process that more closely matches our online experience.”
Sean- Don Johnson MotorsNADA Academy Graduate
“We were ready and it paid off. "5 years from now" planning became TODAY. It's not smooth yet, but its smoother everyday” “The 3 systems are all easy to use, they just don't work together. We are hopscotching around through it, but everyone we do gets us a little smoother.”
Tom- Dave Sinclair MotorsNADA Academy Graduate
“Its like when people started shopping online, its the a new conduit of sales.”
Trevor- Lugoff ChevroletNADA Academy Graduate
“Everyone has access to an amazon prime account. We buy everything from home goods to clothes to furniture online. Auto is the next logical step and some of us are already behind the curve. Those dealers that aren’t incorporating digital or think they’re going to do it till the customer comes back are sadly missing out”.
Marc- Eastchester CDJRNADA Academy Graduate
“It is growing and we had plan on incorporating 3rd quarter of 2020...due to academy class.”
Brian- Monroe DodgeNADA Academy Graduate
Dealer Survey Quotes- CON“We are in the process of implementing Digital Retailing, however it’s difficult when the OEM is “requiring” it and only endorsing a few companies. If you want something that is on trend, not all OEMs are supporting them. Meaning you have to pay 100%. Also some OEMs are only assisting for the first 90 days then all expense is on the Dealerships.”
Che- Abilene CDJRNADA Academy Graduate
“I personally think it will provide the industry with Yet another race to the bottom and customers will begin to use the retail tools dealers are scrambling to install against us even more so then customers do now when they walk into the showroom. At least now when a customer walks in holding another dealers quote we know with better probability that they at least went to another dealer. now they don't even have to have communication with a dealer to get a final out the door figure and they can now walk in to our dealership with a ”final quote” in their hand that they created solely using an online tool! not ideal at all!! And I am 30 yrs old and I think it’s bad news!!”
Ryan- Hoffman FordNADA Academy Graduate
“To most people purchasing a vehicle is and always will be an emotional transaction. Will people ever purchase a home 100% online? Very few if any. Parts is more of an acceptable online transaction yet very few dealers offer online parts purchases.”
[email protected] NADA Academy Graduate
Dealer Survey
“Most (north of 90%) customers prefer to complete the process up to the point of actually seeing and test driving the vehicle.”
Jeremy- Allen Toyota
68.9%
Customer Survey- Digital Air Strike (2019)
Category TrendGross Profit per SaleCost of Doing BusinessEmployee ExpectationsOEM ExpectationsCustomer Expectations
Why Change?
“The next 90 days will make or break digital retailing”Joe St. John
Head of Dealer Success, AutofiNADA Academy Graduate
Customer and Employee Centric
Safety+
Efficiency+
Personalization=
Customer Engagement=
Employee Engagement=
Growth of Net Profits
Post COVID-19
1. Vision
2. Process
3. Structure
4. People
5. Inventory
6. Marketing
17
Improving Your Dealership
Survey Results
Hardest to Complete in a Virtual Environment
• Demo Drive (75%)• Trade Evaluation (51%)• Business Office (47%)
Walk-Around Presentation / Demonstration Drive
“The most important decision a customer makes is happening outside of the dealership. It is determining which dealership to visit.”
Joe St. JohnHead of Dealer Success, Autofi
NADA Academy Graduate
Walk-Around Presentation / Demonstration Drive
“88% of customers will not buy a car without test driving.”
Roadster
Demonstration Drive- Hardest to complete virtually (75%)
Offer Walk-Around and Test Drives in customer centric ways that provide
SAFETY PERSONALIZATION
EFFICIENCY
Offer them in customer centric ways by providingSAFETY…. PERSONALIZATION…EFFICIENCY
• Pre-recorded VIRTUAL 360 Tour in Gallery (TIP: Use manufacturer links to virtual tours)
• Live Webcam 360 interactive virtual tour/walk-around (Personalized)
• Test drive at home instead of dealership
• Professional Photo Gallery of Vehicles – multiple views on website
• Consider adding accessories or selecting vehicle with following: Highest level trim packages or packages that match their checklistVacuum cleaner hook upsOutdoor sport racks (bikes/kayaks/bags/tents)Vehicles w/ excessive cup holders – fill with water bottles Spare tire inflation pump demo
Customer Centric Walk Around / Test Drive Methods and Best Practices?
How and why is this customer
centric and working?
Safety
Use Video to Explain your White Glove Services, Sanitation Processes and No Physical Contact Process
Pre-recorded Website Greeting ExplainingSANITATION PROCESS
“83% of Text Messages are opened within 5 minutes of receipt, but consumers only read 1 out of 4 emails received”
“Email is a Nocturnal Activity”
Flowroute National Survey 2016
Steve Roessler, Drivecentric 2019
Communicate in a Customer-Centric Way
Personalization / Efficiency
“As we evolve, most of the older generations that are phasing out of vehicle purchases are the largest group that still feels the need to experience the actual "ride" during the test drive. Most of the younger generations need to experience the "bells and whistles" during the test drive. The "ride" can not be simulated but the "bells and whistles" can be. Going forward we need to put more emphasis on utilizing virtual technology in order to complete a test drive without ever setting foot in the vehicles. This can reduce liability costs for dealerships and conforms more to what the younger generations are comfortable with.”
Patrick- Rogers Dabbs ChevroletNADA Academy Graduate
Digital Air Strike 2019 Trends Study
Personalization
Personalization
Digital Air Strike 2019 Trends Study
• Virtual Test Drives
• Follow the KISS method and use
the tools your brand provides
Personalization / Efficiency
• Return/ Guarantee Policy
Demonstration Drive
“42% of customers WILL buy a car without test driving as long as they have some guarantee.”
- Beepi Consumer Auto
Safety
Demonstration Drive
This is the time to build the value and rapport
HomeDealershipOff-Site
“88% of customers will not buy a car without test driving.”
Roadster
“I think that the shift will continue to happen with the demographic shift (younger people buy cars). However, I think human nature will not be changed - people like to drive cars before they dish out thousands of dollars. Also, when it comes to the virus, people have short memories.”
Jeremy- Garavel MotorsNADA Academy Graduate
Personalization / Efficiency
“40% of customers think a personal connection with the salesperson is important.”
Demonstration Drive
This is the time to build the value and rapport
Personalization / Efficiency
Make a great impression• Cleaned• Full tank of gas• Employees with masks/gloves and extras• Preplanned/Customized driving route• Vehicle with simulated/actual equipment (camping, ski racks, vacuum, DVD for kids, etc.)• Tablet in Vehicle
• Personalized Video of Cleaning Process• Concierge on Demand• Customization Options (Colors, accessories, packages, etc.)
At the Customer’s Home“Have a radius or process to determine if a home delivery test drive makes sense.”
Rick RicartPresident, Ricart Ford
NADA Academy Graduate
Because they’re delivered to your home or office, you can sort of easily discover basically what it would be like to sort of live with the car”
Comparative Test Drives“So if you’re considering the Honda CRV or Toyota RAV 4, you can schedule them side by side and do a cargo test and all that stuff.”
Grant Feek, CEOTRED Automotive
https://www.digitaltrends.com/cars/tred-piece/
Personalization / Efficiency
• Overview the process
• Detail the process
• Transparency in process
Longo ToyotaEfficiency
At DealershipDealer Tips:• Direction / Signs for test drive pickup• Provide video in advance of expectations• Have keys in car ready to go• Virtual salesperson on tablet in vehicle after they leave store• Use loaner fleet as test drive vehicles (minimize cross contamination)
• Test drive vehicle line up in front of store ready to go• Be prepared to greet at appropriate distance (communicate arrival times)
Demonstration Drive
Safety /Efficiency / Personalization
At Off-Site LocationDealer Tips:• Choose a public place that is empty
– Airport/School/Church Parking Lots
• Provide video in advance of location and the expectations• Bring WIFI hotspot• Bring Payment Processer / Tablet / Payment Calculator• Be prepared to take and receipt deposits• Use this opportunity to evaluate any potential trade in vehicles
Demonstration DriveSafety / Efficiency
Write-Up / Trade Evaluation
Write-up / Trade Evaluation
Trade value is certainly tough, as we can usually place a reasonably accurate number through photos and questions answered, however if the complete process is virtual, then there is no chance at pulling back the value when the customer actually arrives for their in-person appraisal and demo, because there may not be that opportunity!
Will- Seaway Hyundai
• Trade Evaluation – 2nd Hardest to complete virtually (51%)
Write-up / Trade Evaluation“Clients want and trust technology" CHRIS SUTTON, VP OF
AUTOMOTIVE RETAIL PRACTICE AT J.D. POWER
Efficiency
Total Transparency will be a must - The Old Dog Tricks and Techniques have to be put out to pasture. – MMV, NADA Academy Instructor
Write-Up / Trade Evaluation
Age 2017 2019
0-15 80% 88%
16-30 83% 89%
31-45 83% 90%
46-60 83% 93%
60+ 90% 95%
Total 83% 91%
Cost to Market Percentages
The efficient market on the internet has had an impact on sourcing.
Dale PollakVauto 2019
Efficiency
Write-Up / Trade Evaluation
• Carvana 4th 2019 Largest- 177,000 units• 43% Vehicles Acquired as direct purchase from the
Public• CarMax 2019 Largest- 750k Retail 450K Wholesale• 1.2 Million Units – 500k + Units acquired direct
from Public.
Used Car Dealers
Efficiency
COVID-19 Update: Many of the trade appraisal systems are not as accurate due to a lack of market data
Write-Up / Trade Evaluations - Best Practices Dealer Tips• Obtain VIN to run a background check – OEM Service History - Auto
Check – Car Fax• Request – Multiple pictures (at least 20) with a customer check list to
guide pictures • Simple and transparent disclosure form that all distance evaluations are
conditional based on verification • Verification must take place during the meeting at the test drive • Customer must be allowed to witness verification • Possession of the trade must take place during the transaction• If transaction is with 3 days of test drive and trade verification • Adjustments to evaluation are not as prevalent as initially thought
Safety /Efficiency / Personalization
Business Office / F&I
Negotiate, Business Office / F&I
Business Office – 3rd Hardest to complete virtually (47%)
Business Office / F&IGive the Customer Control
Efficiency / Personalization
Roadster2019
71% of consumers are more likely to purchase F&I products if they can do research at home prior to purchase
COX Automotive Future of Digital Retailing Study
2017“89% of consumers want to sign at the dealership"
JM&A Virtual F&I Playbook2020
• 89% Consumers prefer Virtual F&I to their last F&I experience
• 60% Choose to interact online if given the choice
Autofi/ NADA2019
• $1716 PVR • 52% VSC PEN• 48% GAP PEN
42
71% of consumers are more likely to purchase F&I products if they can do research at home prior to purchase
One Stop ShopBe Part or All of the Research Process
Efficiency
Offer Education Tools / Minimize Their Need to SearchEfficiency
FASTLANE your NEGOTATION TIME
Work your deal. Pick your payment using our Fastlane tool.With Fastlane, you are in control of your deal. Get live market-based pricing on all pre-owned vehicles to ensure the most competitive prices in the marketplace
New Pre-Owned
Efficiency
Do you have a virtual Drive Up Window?Are Online Purchases Available? Efficiency /
Personalization
Negotiate/Close & Business OfficeREMOTE F&I Efficiency /
Personalization
Dealer Tips:• Be a one-stop shop
– Offer a research tab on your website– Pre-price units online to speed negotiation– Offer full menu/pricing of vehicle protection plans– Add online shopping cart for protection plans and add ons– Provide payment calculator along with rebates/rate programs (for qualifying individuals)
– Off Credit Application/Banking Info online
• Deliver exact payments • Maximize use of online software tools for all paperwork that permits e-signature• Bring Payment Processer / Tablet• Salesperson/F&I Mgt gets odometer and any other wet signatures required at delivery
Business Office / F&I Safety / EfficiencyPersonalization
Negotiate / Business Office / F&I
Roadster 2020 NADA Academy Presentation
Give the Customer ControlIt will most likely be in their driveway or living room
Total Transparency will be a MUST - The Old Dog Tricks and Techniques MUST be put out to pasture. – MMV, NADA Academy Instructor
Safety / Efficiency /
Personalization
Customer and Employee Centric
Safety+
Efficiency+
Personalization=
Customer Engagement=
Employee Engagement=
Growth of Net Profits
Post COVID-19
“Clients do not come first, employees come first. If you take care of your employees they will take care of the clients.”
Richard Branson
Dealer Survey Results: Employee Retention
35.7%
26.8%
US LABOR MARKET
www.bls.gov
Past 4 weeks have seen just over 22 Million UE Claims
Employee Retention
You must have a plan to recall the associates you could not keep.
Amazon – 100,000 New Associates - $350M additional annual pay increases
One example: Non-Major Suburban Marketplace.
Target – 9,000 new positions with $300M in pay increases
WALMART – 150,000 New associates w/ signing bonuses and full benefits.
Home Depot & Lowes hiring over 100,000 new associates with full benefits and bonuses.
These Career Oriented Companies are Hiring NOW
Dealer Tips:• Avoid layoffs and furloughs by maximizing government programs• Explore all federal and state unemployment insurance options for associates with reduced hours.• Promote the steps taken to keep the facilities safe for the associates • Equip Associates with the needed tools to have the ability to operate remotely • Maintain as much “Normalcy” as possible to operate without controllable distractions
• Avoid restructuring of compensation plan • Explore options such as mid-month draws to help associates families
• Continuous Communications – Daily top to bottom of associate structure• Daily Online Meetings – Zoom, MS Teams, Adobe, GoToMeeting etc. • At minimum – Daily video messages
Take the “Long Term” approach to retaining your workforce.
It will become exponentially more difficult to recall valuable associate who have accepted positions with a new company.
Employee RetentionSafety / Efficiency / Personalization
YOUR ASSOCIATES NEED TO KNOW THAT YOU CARE BEYOND JUST
BUSINESS
The business is definitely more challenging, however, now more then ever is the time we all need to be the best coaches, motivators and even therapists that we can be. In my opinion other then the health and safety of our employees nothing is more important then keeping morale up.
Chad- Bratt Auto MallNADA Academy Graduate
What Matters Most to Millennials?5 key values millennials look for in an employer:• Development. Millennials are hungry for training, career advancement, and
opportunities for growth.
• Meaning. Nothing is more important to millennials than doing work that matters.
• Autonomy. Millennials have a natural entrepreneurial spirit and want to work on their own terms.
• Efficiency. There’s always a better, faster, and easier way to work. Millennials want to find it.
• Transparency. Information is essential to millennials—they want to be kept in-the-know on the job.
Source: Driving Sales-Jerod Hamilton 2016 conference
Efficiency / Personalization
Employee Efficiency Efficiency
Without Express Storefront10-15 cars / month55-60 hours / week
With Express Storefront36 cars / month40 hours / week
Without Express Storefront35 cars / month70-80 hours / week
With Express Storefront40 cars / month40 hours / week
“Despite all the training, all the pay plans and all the IT tools provided, dealership salespeople have not seen any fundamental improvement in productivity (cars sold per head).”
Dealership of Tomorrow Study-NADA and Mercer
Roadster 2020 NADA Academy Presentation
Put the customer to work to make your employees more productive.
Roadster 2020 NADA Academy Presentation
• Start the process on the internet.• Send an interactive deal to the customer with
different scenarios.• Have the client input their details and answer
questions.• Give the customer educational materials and have
them pre-select finance and insurance products on an ipad or kiosk.
• Complete the credit application digitally.
EfficiencyEmployee Efficiency
Dealer Survey
54%
71%
91%
46%
29%
9%
PRE-COVID 19 DURING COVID 19 AFTER COVID 19
Digital Retailing Adoption
Yes No
Will your store incorporate digital retailing (as defined above) in your dealership sales processes?
Customer and Employee Centric
Safety+
Efficiency+
Personalization=
Customer Engagement=
Employee Engagement=
Growth of Net ProfitsAutofi Digital Retailing Playbook
Use Digital Retailing to:Safety / Efficiency / Personalization
BecomeSafety / Efficiency / Personalization
