Disruptive Technology: The Courage to Seek A Better Path
Progress in automotive has always been marked by disruptive ideas and new technology
Disruption. Just hearing the word makes some people wince, evoking as it does a surprise, interruption, or abrupt change of course.
Most people prefer to have at least some idea of what to expect in the present and future. Disruptions in technology, processes, or ways of thinking that veer away from the known and proven scare off many people, especially business owners, who fear being inconvenienced at best, derailed at worst.
But disruption is as old as human history, and progress—especially in business and technology—can usually be traced back to a disruptor: A person, group, or movement that challenged norms, refused to accept existing solutions, and weren’t afraid to go out on a limb, knowing the potential payoff was well worth any risk.
In the world of automotive sales, disruption can come in the form of new marketing, sales, financing, and servicing processes within the existing vehicle sales model and dealership paradigm. This is the kind of disruptive technology that dealerships are used to and have ultimately embraced, especially in the past decade—not always without resistance, admittedly.
For example, not that many people currently working at dealerships were around in the days before computers became a normal part of business. Imagine the financing and paperwork process involved a vehicle sale before the earliest computer F&I systems came on the scene in the 1970s. People think it’s time-consuming now?
It might seem like a no-brainer to embrace technology that sped up a process that involved typing up and printing bills of sale, contracts, title forms, etc., but back then, it was a leap of faith for the first dealerships that incorporated computer systems into their business. They took some lumps along the way, but their pioneering spirit paid off in more efficient processes and greater revenue, and these systems became the norm.
The other kind of disruption, and perhaps the biggest unknown in 2017, involves consumers’ attitudes toward how they want to buy vehicles in the future—and their views toward personal transportation ownership, period. Will they want to buy without ever stepping foot in a dealership? Will autonomous vehicles and car sharing make single-owner vehicles the exception rather than the rule?
Whatever type of disruption is involved, today’s disruptors are counting on the promise and potential of their technology to overcome the inevitable uncertainty and fear of taking risks that their early adopters confront. Disruptors have to be convincing salespeople to convince dealers to invest time, money, and potentially, lost short-term profits in a new technology paradigm.
Basically, it takes courage both to be a disruptor—and the disrupted. Fortunately, this industry has always been at the forefront of technology and progress, and never short on courage, which is why much of the most interesting disruptive technology gets its start in automotive.
Dealer Marketing Magazine set out to find out more about what disruption means in the automotive world in 2017 from the point of view of three industry pros who have been on both sides of new technologies and industry developments.
Our panel includes Tej Soni, CEO of izmocars, Rich Shugg, senior director of strategic accounts, Autobytel, and Mike Martinez, managing director of AutoPoint, who share their take on disruption, and give a hint of what to expect at the 2017 NADA Convention & Expo.
Dealer Marketing Magazine: How would you define disruptive technology as it applies to the automotive industry and, more specifically, to new-vehicle dealership operations?
Tej Soni: Autonomous cars are definitely going to define transportation in the near future, and the car ownership concept is bound to change.
Dealers have to prepare for this change in consumer behavior. Not that car sales will go down, but there will be a new kind of customer—one who views a car as a transportation device and does not necessarily need to own it.
Rich Shugg: When people in our industry hear the phrase “disruptive technology,” they immediately think of things like autonomous cars, connectivity, data-driven services, or shared mobility.
At the dealership level, we view it a bit differently. We see it as real-time engagement.
Let’s face it. Why are lead response times so important? Because today’s consumers want instant gratification.
They want to feel connected and engaged with in real time. They want a user experience that delivers them directly to the products and services they want, for quick and easy fulfillment—one that is entirely online, or one with shorter dealership transaction times.
So for us, the technologies that replicate the in-store experience online are the ones that are truly disrupting the traditional sales model.
The technologies that enable dealers to instantly connect with their customers, that drive quality customer engagements and ultimately, showroom visits, are the ones revolutionizing the automotive retail landscape.
Mike Martinez: The most advanced technology in the automotive industry is working to move dealerships from a contact-based model to a cognitive-based model.
Currently, so much CRM and dealership sales activity relies on direct contact with the customer. But as disruptive technology continues to evolve, dealerships won’t have to focus as much on traditional sales models.
We will be better able to predict customers’ needs and preferences in such a way that customers will no longer be the sole deciders. Systems will make the decisions and customers will agree, or not, with those decisions.
DMM: What do you consider the most-common dealer response to new technology and process changes at their dealerships—receptive, cautious, or resistant, and why?
TS: Most dealers are resistant to change, but there is definitely a growing breed of dealers who are willing to experiment. They will emerge as the thought leaders and become beacons of change.
The reason that dealers don’t like change is the same answer why anyone does not like change—it challenges them and brings uncertainty to their business.
Moreover, it means more training and adapting to the new technology, which is not only costly but can be a painful exercise.
RS: Forward-thinking dealers are on the hunt for engagement opportunities. The more progressive dealers are embracing our vertical search product that sends highly engaged traffic from our research sites directly to the dealer.
They’re implementing texting technologies for all departments of their dealership, including service. They’ve turned their websites into virtual showrooms with our SaleMove technology so they can co-browse inventory and specials with their customers in real time.
They’re offering shop-by-payment tools. They’ve employed instant retargeting technologies like WebLeads+.
The bottom line is, they understand the importance of driving highly qualified traffic to their sites and converting that traffic into showroom visits, and they’ve been very receptive to using technology to do that.
MM: Dealers are incredible entrepreneurs, but they tend to be risk-averse. Technology has overpromised and underdelivered for years, and I would say 60% of dealers are reluctant to take it at its word.
They’re cautious—and they should be. About 10% dealers are early adopters who are willing to take risks and lead the charge, and then maybe 30% are totally resistant.
Our industry is still largely generational, and we haven’t even convinced everyone in a dealership that email is important yet.
DMM: Does a product or technology need to come from a start-up or a vertical industry to be considered disruptive, or are the industry’s long-established, successful vendors also introducing dealership solutions that challenge conventional mindsets and processes?
TS: Start-ups have the luxury of starting from a clean slate, whereas existing vendors have legacy systems and clients to deal with.
Established vendors also have a P&L which determines their valuation, so they may find it difficult to get hot VC money. On the other hand, start-ups can hype their ideas and get huge valuations, and consequently, [receive] substantial risk funding to experiment.
And that’s why they seem to be the creators of technology. One must bear in mind that most start-ups usually have industry insiders, or even veterans, as founders, so it is part of the existing ecosystem.
Having said that, existing vendors do innovate and experiment. izmocars is one such company with a track record of launching new products which are disruptive: accessories platform, virtual reality, and data analytics, to name a few.
RS: Our company was founded by a car dealer over 20 years ago. We pioneered the automotive internet, we have a long history in this business, and we have seen plenty of technologies come and go.
What it boils down to is whether or not a vendor truly understands how dealerships operate, and if they have created a solution that actually improves operations to help dealers sell more cars—regardless if they’re a start-up or a longtime player in this space.
Leads are just one piece of the pie, really, albeit still a very important part. The best vendors are the ones that have experience, understand what dealers go through every day, and offer a suite of the right products and services that drive in-store visits.
MM: Disruptive technology does tend to come from start-ups because they’re unencumbered with an installed base or entrenched beliefs. They’re already starting something new, so they have more freedom to break the mold.
That said, companies like Solera have shown themselves to be very nimble. We want to disrupt our own services before they’re disrupted for us.
DMM: What current areas of the industry and dealership operations do you believe are the most ripe for—or in need of—disruptive technology?
TS: There’s a lot of work being done in sales with mobile devices for communication. We think that the disruption will be in data-driven platforms. So look out for marketing automation and big data analytics.
It means that both the front end of the dealership and the back-end accounting/management and service business is ready for disruption.
RS: Despite how far this industry has advanced when it comes to technology, we think there is still plenty of room for improvement when it comes to a dealer’s best sales tool, and that’s his own website.
What type of traffic are you driving to your website and where are you getting it? What is the experience when people get there?
Are you offering all the information and tools a person needs to feel confident to stop researching and buy from you? Are you guiding them to the right pages of your site?
A large number of people who visit a dealer website never even leave a footprint, but are you doing anything to capture and engage with these visitors?
With the technologies available today, dealers can really optimize their websites to drive sales. That’s really what it’s all about.
MM: First, vehicle sales. Someday we’ll have the full shopping experience online. It’s a very complex problem, but it’s solvable now.
Fixed ops and F&I are also ripe for disruption. The fact that we still rely so heavily on paper forms and data entry is senseless. New technology brings some much-needed efficiency into these offices.
Marketing is already facing disruption as we work to shift to more cognitive-based models. We want to see even more of that in the coming years.
DMM: What future changes in buying behavior by consumers or different car-selling paradigms do you foresee that are likely to spike the development of not-yet-imagined technological trends?
TS: Here’s my top-four list [of trends]:
- [First], virtual reality as a sales tool.
- [Second], fractional ownership of cars (not just rental).
- [Third], car on demand—autonomous cars—the car makes itself available when you need it.
- [Finally], car-to-car communication, making the driving experience more intelligence-driven.
RS: In as much as technology has improved our industry these past 20-plus years, there have been some sacrifices—arguably the biggest being the minimization of the human element and human interaction.
Anyone who has sold cars knows this is a people business, and building relationships and trust with your customers has never been more important. You can utilize the best technologies on the market, but if your sales and customer service processes are lacking, you’re missing the mark.
It isn’t about future change but rather, getting back to the root of what is important, optimizing the basics, and really engaging with your customers in a deeper way. In our view, the truly meaningful and effective technologies are ones that create handshakes instead of handoffs.
MM: Total online shopping. This is already prevalent in other industries, and it will soon be the norm in the automotive world as well.
As vehicle sales shift online, we’ll also need technology to better fuel retention marketing and service delivery integration. Dealerships’ digital interactions with their customers will ultimately define their loyalty and retention rates.
DMM: At this year’s NADA Convention & Expo at the end of the month, what do you expect to be the most buzzed-about new or emerging technology being touted by vendors?
TS: First, virtual reality, and second, data analytics.
RS: Stop by Autobytel’s booth, #819, and we’ll show you.
MM: Solera will be unveiling a targeted advertising platform that will change the way dealers reach their customers online, and cut down on a lot of wasted marketing money. Most dealers rely on shotgun-style online marketing right now where they just hope they reach the right customers.
This solution will change that and we’re pretty excited about it.