Expert Automotive Knowledge at Your Fingertips

Commentary & Insights

eCommerce Has Permanently Disrupted the Way New Car Dealers Sell OEM Parts

By

Over the past two decades, retail has drastically changed with the rise in eCommerce. Compared to other sectors, the automotive industry has been slower to expand into online sales. Even slower has been the adoption of eCommerce strategies in the parts department. Traditionally, the parts department has relied on customers walking through the door and driving up to the service lane, or in some cases on local repair shops and collision centers ordering parts for their customers. In the past, consumers seeking out an OEM replacement part for their vehicle would have to physically come into the dealership, and parts were looked up in a physical or PC-based parts catalog. As an online presence became a vital component for businesses to flourish, dealerships created their own websites to better serve vehicle buyers and attract new ones, and later they even added new tools to allow customers to book service appointments online. However, the ability to browse parts and order online was rarely integrated into these sites. Even today, in 2022, the majority of dealerships do not provide an online option for consumers to browse or shop for parts, with only a quarter of new car dealerships selling parts online.  Instead, most parts departments continue to rely on old selling methods, including a parts form that online visitors can fill out to request information about a part. This form results in few conversions and is seen by consumers as inconvenient and impractical - even when they receive an actual response from the dealership.  Although only a fraction of dealers are selling online, it is becoming increasingly apparent that this is where the industry is heading, with more dealers adopting parts eCommerce strategies. COVID-19 Solidifies the Importance of Parts eCommerce If the shift in selling online wasn’t apparent before 2020, it quickly became a central strategy for many franchised new car dealerships as COVID-19 hit and the world began to shut down. In the U.S., businesses across the country closed their doors, and consumers went into lockdown. Even in states where stay-at-home orders were not adopted, and areas did not shut down, dealerships still saw a sharp decline in business.  In 2020, parts departments in the U.S.  lost $6 billion  in parts revenue, and new car sales  dropped by 15% .  Many dealerships found relief in their online parts business to combat this sharp decline in business. During the shutdown, many people use the time to repair their own vehicles or begin new projects. This led to a rise in the demand for car parts.  According to a 2020 eCommerce report from RevolutionParts, dealers selling parts online actually saw a  27% increase  in online parts sales, despite the economic challenges.  The pandemic accelerated the shift to online shopping by more and more people. As restrictions lifted and people began to return to normalcy, one habit that most people are holding onto is shopping online. In 2022, over 230 people in the U.S. made purchases online. In the automotive industry, the shift to online shopping has been drastic. Before 2020, only 32% of consumers felt open to purchasing a vehicle online, but this number has since  risen to 61% .  The impact of parts eCommerce doesn’t just impact parts being sold online, it also affects those being sold over the counter. According to Hedges & Company, regardless of whether a consumer purchases online or in-store,  74% of all parts purchases  begin with an online search. This means that people are not just shopping online for a part, but they are researching where they can get the best price, who has the part in stock, and how fast they can get it. If a dealership does not have a way for consumers to conduct this research, the probability of being passed over is high. New Opportunities for Franchised Automotive Dealers and Manufacturers The challenges dealers began facing in 2020 are far from over, as we are now dealing with the fallout of the pandemic and  worldwide supply chain issues  that have threatened the supply and production of new vehicles and auto parts. However, just as dealers were able to combat pandemic challenges in 2020, dealers who are selling parts online are now using these same strategies to mitigate the impact of the damaged supply chain. Creating an online parts business allows individual dealers to expand their customer base and reach parts buyers across the country and internationally. This means complete reliance on the local market has been eliminated, as new online revenue streams have been established, including selling parts through the dealership website, a separate parts web store, or through an online marketplace such as Amazon or eBay. Not only that, dealers can deal with obsolescence or aged inventory challenges by listing parts where they will be searchable by buyers who need them. Manufacturers have also understood the major opportunity eCommerce presents and often provide sponsored solutions to allow dealers to sell their OEM parts online through official parts eCommerce programs. Dealers and manufacturers know that they cannot compete with the aftermarket via traditional methods only. If they do not add their products to the online market, then consumers will no longer benefit from the opportunity to buy their higher quality products, and they will miss out on sales that go straight to aftermarket vendors and resellers. With the average vehicle age continuing to increase each year and the lack of availability of many new vehicle models, owners are looking to buy parts to maintain their vehicles longer and many even make upgrades to older vehicles Offering parts and accessories both online and over the counter gives dealers a multichannel strategy commonly used across industries to attract new customers and tap into this growing segment of second, third, or fourth owners of vehicles who would otherwise buy from the aftermarket.  The online parts market also grows larger every year, presenting new growth opportunities for franchised dealers and manufacturers. Most consumers today incorporate a hybrid form of online and offline shopping habits, meaning the method of selling products strictly over the counter is outdated and will prevent

Best Practices

Dealing with Digital Disruption: How to Make Digital Retail Work for your Dealership

By

Over the last few years, a combination of advancing technology and changing consumer behavior driven by the pandemic have pushed digital retail to the front of the pack of potential disruptors in the auto industry. OEMs from Tesla to Ford are embracing digital retail, but many dealers are struggling with the new landscape.  To get some perspectives that might help, I recently spoke with Lindsay Ciavattone , CarGurus’ Director of Dealer Relations for digital retail. With a background working at dealerships and an eye on the next generation of digital retail tools for dealers, she’s uniquely positioned to share insights on where digital retail is now, how dealers can choose the right solution, and what you need to do to get the most out of it. Jeremy Sacco: We’ve all been hearing about digital retail for years, and adoption has been slow to catch on. What makes this the time for digital retail to disrupt the old shopping models? Lindsay Ciavattone: Digital retail is disrupting the industry today because the customer is demanding a new experience. Until now, dealers determined the process, and customers had to go along with it. Now, with the increasing level of choice and availability online, and nationwide competition, dealers need to find a way to meet these new customer needs and provide the experience they want. Dealers need to disrupt themselves to serve the customer – before they get disrupted by somebody else. JS: We know that change isn't easy for some dealers, and incorporating digital retail is a significant change. What adjustments do dealers have to make to make sure they're getting the most out of digital retail? LC: Dealers need to understand first that a digital retail tool is just that: one tool in the toolbelt. It’s only as effective as the customer input and how the dealer personnel respond. Some think it’s a magic tool, that it’ll do everything for them, and essentially sell the cars in some new way – and of course that’s not true.  It’s also important to put a consistent lead flow and communications process in place – one that’s simple and holds people accountable. Whether you have one store or 100, process is critical, so your customers and your employees have a similar experience across the board. A great process means you can: Consistently move deals forward – you're not going back to ask questions you already have answers to in your CRM. Focus on removing obstacles that prevent sellers from doing their jobs. Act quickly – customers today expect fast responses, especially for sensitive information like credit applications. Provide a holistic approach to customer communications – phone, video, texting, however the customer wants to engage.  JS: We know that 'one size fits all' never works for dealers - or for shoppers, for that matter. But sometimes it seems like digital retail is implemented in ways that force both dealers and consumers down a narrow path. How can dealers make sure they have choices when implementing digital retail? And that they're providing options to their consumers?  LC: The first step of your due diligence when evaluating a new tool is to make sure the vendor can align with your values, your goals, your corporate structure or individual style – that they can work with you to meet your individual needs. Dealers should choose a vendor who can be their partner and work closely with them, and who can be flexible on implementation – including the ability to add or remove certain features to match your goals, as well as flexibility around integration with other systems. If it’s your first venture into digital retail, it’s important to take baby steps. A staggered rollout, for example: if you have several rooftops, get your digital retail footing in one, then roll it out to more stores. That approach helps if you have employees who may not be excited about new tools – when they see other stores have had success, they’ll be more eager to get on board. JS: If you were a dealer shopping for a digital retail solution today, what would you look for?  LC: A seamless integration with the lowest level of effort. It’s easy to say that, but not easy to find in practice – I'd look for a company that would work with me in a transparent way, that was quick to troubleshoot if necessary, and that provided all the support I needed to get up and running.  The tool itself should be as frictionless as possible, allowing customers to choose which steps of the buying process they do or don’t want to do online. Some customers are comfortable going all the way to putting in a deposit or a credit app, while others are less comfortable and just want to get through finding the right car and booking an appointment, so look for that flexibility.  Finally, as I mentioned above, you want flexibility on your side as well – in which features you implement and how you integrate with your existing systems so you’re able to create that seamless process from start to finish. JS: You’ve touched on that integration piece a couple of times. Can you give a little more detail on how a digital retail tool should connect with existing systems?  LC: If you walk into any dealership and take a look at the F&I manager or any salesperson’s computer, you’ll see 27 tabs open: OEM tools, CRM tools, inventory management, accessories, parts, financing, all kinds of things. A digital retail tool that simply drops customer information into existing dealer systems is ideal – that’s one less thing to open, to learn, to get running. I’ve talked to many, many dealers who are unwilling to work with a partner that requires dealers to use a new system, and I can completely understand that from my past experience working in dealerships. Ultimately, success will come from integrating a digital retail tool that fits into the flow of what you’re already using and allows you to maintain control of the sale.

Commentary & Insights

The Biggest Disruption of All: The Quiet

By

When we think about disruption, we think loud, rowdy, and bumpy. But in reality, it’s the dealerships that can mitigate the noise who are making the biggest disruption of all.   Setting up sales and marketing infrastructures at dealerships often comes with manual legwork, long processes, and disjointed data sources from numerous vendors and technologies. But, it's when dealerships need to work through all that noise that it actually gets rowdy. Today’s modern dealership has shifted to reduce noise and increase transparency with the help of top-notch technology. And while there’s a handful of solutions that support noise reduction, the majority of these technologies pale in comparison to the Customer Data Platforms, or CDP for short. What is a CDP & CDXP? A Customer Data Platform provides you with a comprehensive window into customer behavior and insights by way of centralizing your data. CDPs fundamentally break data silos and bring data together in one coherent platform so you can see all your customers' information and behavior in one 360 view. When your dealership has a handle on its customer data through a CDP, it can then seamlessly layer in an experience platform which leverages the rich customer data and turns it into action. This is commonly referred to as a CDXP , customer data and experience platform.  Dealerships that invest in CDXPs can trust that their marketing infrastructure is running smoothly and focused on:  Providing a foundation for a 360-degree customer view Increasing customer loyalty  Storing precise targeting and higher-quality interactions with customers Allowing for meaningful analysis of marketing initiatives across different channels A CDXP will bring everything together for a dealership to consolidate and automate the heart of the dealership’s sales and marketing. So while other dealerships are actually making the noise trying to make sense of their data silos, the CDXP dealerships will be quieter and more confident in their approach.  Making history doesn’t always mean making noise. And just like the smoothest car engines run silent, so too should your marketing engines.  If your dealership needs more information on what CDXP means for automotive, feel free to also download the whitepaper CDXP for automotive here . 

Commentary & Insights

Everywhere I look, I see automotive

By

Steve Schmith is the director of automotive industry strategy at Acxiom . He has spent nearly all of his 25 years of professional experience working in the automotive industry, including 17 years at Deloitte, wrapping up his tenure as the Global and US Automotive Marketing Leader and two years at Automotive News as the Executive Director of Custom Research and Data and host of the Daily Drive podcast. I caught up with Steve at 7am, as he has his morning coffee and is accompanied by his three Boston Terriers. The Industry of Opportunities “I had no intention of ever working in automotive. In fact, I had never even been to Detroit.” I went to journalism school, I got a degree in journalism with a minor in television and radio production. I actually started my career in economic development. What I have come to love about this industry and what outsiders sometimes don’t see is how much opportunity there is in the automotive industry. If you’re an engineer, a designer, a marketer, if you studied supply chain, I really believe that there is an unrecognized opportunity for folks who didn’t grow up in an automotive family, to create their space here. I think that when most people think about the automotive industry and dealers, they stop with the transaction; the sale of the car. The truth is, when you think about it more broadly, and you think about how people connect with all the brands in their lives, it is so much more than that.  There are so many vendors because there are so many opportunities. From selling a vehicle, to financing a vehicle, insuring, repairing, and servicing, as examples.  If you’re in the business of reconditioning vehicles, or running fleets. And none of that even begins to touch on what happens when you’re inside the vehicle, particularly as vehicle connectivity improves, matures and scales and the opportunities to connect with customers those technologies create. There are just so many opportunities for people to connect with brands and there are increasingly a lot of brands – automakers, suppliers, lenders, insurers, in-vehicle content providers, etc. – competing for that attention.  “I think a lot, I think about the industry a lot.” Clearly these are exciting and fundamentally transformative times in the automotive industry, so it helps being such a fan of the industry, a fan of the brands and the manufacturers. It’s also very fun and inspiring to be on the road and to see these beautiful machines and all the technology. You often hear people speaking about automotive brands as if it forms a part of their identity. These brands are very personal to people. They take them on family trips, they take them to work every day, they hold our families and they are where some of the most wonderful conversations happen. I just feel so lucky to be a part of the automotive industry, to work in storytelling, in strategy, to bring it all together in such a personal way. Being able to relate the personal nature of automotive and the brands in this industry helps as our team at Acxiom thinks about and strategizes how we can best deliver value to our automotive clients. An Industry in Motion “It surprised me that it took a pandemic to really drive digital retailing.” Digital retailing in our industry has been around for 20 years but there was really no catalyst to put a lot of money into it because the model was working. Coming out of the 2009-10 Great Recession, we were on a growth trajectory that did not stop for 10 years.  So, understandably, there was no reason for automakers or their franchised dealers to go “all in” and fully invest in, adopt and scale what is best-in-class digital retailing.  Then suddenly, the pandemic hit and the environment changed. We saw disruptors entering the market who did not require the in-person relationship, and they became very big competitors. It’s amazing to see how far we have come in the last two years and, yes, there is a lot of disruption and, yes, there is a lot of investment and growth but I am truly excited and think it is so wonderful to see how companies are focused on connecting with customers.  An Industry Driven by Data: The Changing Ecosystem “As we push digital, we also need to understand that we have this entire ecosystem of businesses that have historically worked within very defined industry lines. Those lines are blurring.” There are so many opportunities for different brands in the connected mobility business ecosystem to connect with people outside and increasingly inside of the vehicle. There are so many aspects of the full customer journey when you think of the entire experience. Whether they are driving the vehicle, sharing it, or riding in it. Whether they are getting it serviced or charging their EV. The once clear industry lines separating the brands engaging people as they move from one place to another are blurring more and more each day.  On the flip side, having that single view of the customer gets very hard and that is where Acxiom really plays well and creates value for our clients. That is our core competency, our ability to create a single view of the customer and help brands deliver in real-time personalized, omnichannel customer experiences based on a deep understanding of people.  If you consider the buying side, there are multiple channels where a person interested in buying a vehicle can enter the shopping funnel – an automaker website, a dealer website, a third-party website or simply walking into the showroom of a local dealer. Brands that can connect those channels and deliver a personal customer experience while doing so can be better positioned to win. Consider the finance and insurance aspect of buying a vehicle and services like extended warranties, gap insurance, or increasingly connected vehicle subscription services. They all come into play and there are just so many ways that people interact and expect those interactions to be personal. Having the ability to deeply understand consumer behavior, preferences, timing and then make it all personal, that is the challenge that the industry faces.  How do you create a consumer experience that brings all of that together, that is very personalized and that is done at scale and done in ways that are ethical and done with privacy built in? That is what we do at Acxiom.  What are you thinking about, what is next? I am really interested in how various segments of the U.S. market will adopt electrification. It is not a one-size fits all model. Acxiom has a point of view publishing in June where we will be presenting a bell curve that is essentially a view of EV adoption among people in the U.S. Not all consumers are in the same position, which means marketers require different approaches in terms of marketing; the mission is different for people wherever they fall on the adoption bell curve. People on the far right side of the curve shouldn’t be ignored today regardless if they are likely years away from buying an EV. They simply require a different message than that of people ready to buy today.   I am also thinking about the customer experience at the charging station and whether a good or bad experience may be associated with the type of charging station or the vehicle brand itself. Right now, that’s an unanswered question, but my sense is if a new adopter of EV technology has a poor charging experience, the person might equate that experience to EV technology and the brand EV they are driving and not so much the charge point provider. When you consider your in-depth understanding of consumer behavior, what do we know? We know that when it comes to autonomous technology, consumers are interested in technology that protects them from themselves. Interestingly, the paradox is that the willingness to pay for autonomy is not high. I think that presents an interesting opportunity when we consider connected solutions like infotainment and vehicle health monitoring, which, in contrast, is a faster and more near-term opportunity.  Right now, when we consider the regulations and the fact that there are somewhere between 15-16 million new vehicles entering the market in the United States annually, each one with about a 12-year life cycle, it is going to be a long time before we get to fully autonomous vehicles everywhere. The more near-term opportunity to connect with people will be through in-vehicle technology. That experience inside the vehicle, greater convenience within the vehicle, managing your calendar, your groceries, your digital communication from inside the vehicle, all of that, can happen in the vehicle right now. What I also really love about this technology is that it can be built, it can be upgraded, it can be scaled much faster than autonomous technologies can. We are going to likely see a lot more forward motion regarding what happens inside the vehicle in terms of connecting with consumers and creating experiences. Of course, the development of autonomous vehicles will continue to move forward but there are clear opportunities that are technologically rich and where the ROI and the value to shareholders is clear and scalable. “When we think of people, these are not experiences that are foreign to them. When you get an update on your phone, you don’t consider that a recall; your phone is now better because it got updated. Same should go for your vehicle. If your car is pushed an update, your engine can run more efficiently, the software inside your vehicle has been patched to provide better cyber security. Your car is better: The vehicle that I bought last year is better today. That is a very fundamental shift in how consumers view their vehicle." There were so many ideas shared in our session, so many perspectives gained. Steve is a deep thinker and it is apparent in everything he does, including the way he speaks and tells stories. His ability to seamlessly shift from technical, data driven conversations to sharing his personal views on the industry is flawless. Steve will be moderating a panel at CXAUTO2022 which will include Jeremy Beaver, the CEO of the Del Grande Dealer Group ; Richelle Estrella, Department Head – Customer Data Lab at Honda North America ; and Myles Rose, Automotive Digital Strategy Director at Acxiom . This Panel will be discussing “Harnessing the Power of CDPs to Nurture A Customer First Philosophy That Drives Profitability and Loyalty.” CDPs offer automotive brands the opportunity to build modern marketing platforms where customer identity serves as a foundation on which automakers and dealers can build strong, first-party identity solutions while also regaining control of marketing decisions related to targeting, media spend and attribution.

Get Tips & Tricks every Week!

Join our newsletter and get news in your inbox every week! We hate spam too, so no worries about this.

Best Practices

Seeking and Creating Environments that Honor People: How Sarah Vantine is changing the BDC

By

In preparation for our meeting with Sarah Vantine of Quantum5 , we spent time researching the company and reviewing her profile. Anything but ordinary comes to mind. Clear messaging about who she is, what she does, and most importantly, why she does it, sets the tone for a very people-centric conversation; the synergy between Sarah and Quantum5 exceeded our expectations. As Sarah sits in front of an elegant bookshelf, decorated in accolades, she boldly smiles and tells me that she assembled it herself when she was eight months pregnant. What would follow would be two people interacting, truly engaged. By the end of our conversation, I would understand the power of forward-thinking approaches to the BDC, vision boards, and how a dolphin toy on the desk of an employee was the game changer that made it all connect. Balance, Success, Courage and Seeking The word balance, to me, has always kind of been misleading because it implies that you always hold everything in equal measure. The reality of it is that at different points in time, you need to let go of one thing in order to focus on another. You can't physically hold on to all of your work and personal responsibilities equally and at the same time. What allows you to achieve your goals, personal and professional, is having the courage to seek out opportunities in which you can build a support network. There are companies out there where the mission statement is cookie-cutter and may not actually be reflective of the core culture, something you will notice when you consider things like retention of employees. I have sought opportunities that have allowed me to have a level of support and understanding, which has really been the secret to my success. “This was the best thing to happen to me so far in my career.” I am so thankful to be a part of the team that I am with now. Finding Your True North “It's not personal, it's just business.” Ken Herfurth sums it up really well, "it's always personal." In every business, there are always people. There is a person at every single interaction. It is never just business, there are always elements of personal experience woven into the very core of business. When Dave O’Brien and Ken Herfurth, the Founders of Quantum5, approached me, I had, up till this point, really made an effort to create a future within the BDC departments. We really focused on the individuals within the BDC itself. The term BDC is such a loose term for a variety of departments. You may find a dealership that says that they have a BDC department and in reality, they have two people answering calls and transferring them to somebody else; they have no authority, there is no empowerment and their job is quite limited. This leads to people within the dealership viewing them as an expense and someone who will never have the opportunity to move up in the organization. And so, one of the challenges that I always encountered throughout my career was challenging the perception that existed in terms of the BDC and what the BDC was capable of. I focused on putting the human aspect first and by focusing on how I developed my people allowed for the development of better customer relationship and management skills. When Quantum5 came along and I asked them about their reason for building the company, some of the pain points that they highlighted were things I had experienced in my own career and their values really impacted me because my heart was fully aligned. I had the opportunity to do something I really believed in on a larger scale, impacting hundreds of dealers, based on values that really represented my true north. Oftentimes in automotive, training is an event and it is done in a vacuum. And so what often happens is you go to a training seminar or a trainer comes in and you're pulled off the sales floor, you're pulled off the phones, and you're stuck in a room with this person. And then at the end of the training session, you go back to reality. Whatever was covered in that session slowly fades away. So, having the opportunity to take what I was doing in the BDC, like daily check-ins with all of my staff, is also really important to me. Although incredibly time-consuming and at times quite difficult when you're talking COVID and some of the restrictions that happened with face-to-face interactions, we still made an effort to have those one-on-one conversations. We used those sessions to understand what the challenges were and what we needed to adapt and adjust. How could we better serve our clients and build on that culture of creating and nurturing mutual trust? One on one human development directly impacts culture, skills development, and creates a better learning environment. What can we expect at CXAUTO2022? There are three strategies that we are going to unpack in the work session. We are going to talk about enabling multi-channel communication strategies within the BDC and what that really means at the end of the day. There is a lot of technology out there, and there are a lot of conversations around removing the human element by introducing chatbots or a predetermined response menu where the customer selects buttons and that becomes the full engagement experience. The reality is that people want the best of both, a combination of human interaction and technological implements. The customer does not want technology in a vacuum; they want a personal touch and they want to feel like they matter as an individual to the business. One of the biggest opportunities is including the BDC in developing communication skills to deal with a variety of clients. For the client, it feels familiar when a business really takes time to listen to them and facilitate human communication, allowing for their receptiveness to be elevated. The conversation becomes something of value for the client as well as the business. It is important that the BDC is equipped with the skills necessary to understand strategies that are going to lead to success. The second component of our work session will be focused on step-by-step instructions for a dealership to adjust their processes to best suit their customers' needs. An example that I can share comes from one of our case studies. Noises in vehicles are often one of the hardest things for a technician to diagnose. If you don’t have a good strategy to help the customer communicate the issue, it becomes very difficult for the technician to replicate the problem and without the information, they are unable to diagnose it. This creates frustration as the customer ends up having to return multiple times, a clear indication of a pain point within the dealership which is reflective of an existing process not being beneficial to the customer experience. The case study that we will be sharing is that of the Scott Clark Auto Group, who is a brilliant example of what can happen when you truly understand and adjust your process to the customer's needs. Lastly, we will be talking about strategies that really engage and retain the best professionals for your organization. Everyone talks about employee retention. We will be focusing on the human element and understanding what drives employee attrition. The BDC Representative oftentimes feels unappreciated and undervalued, and this is sometimes linked to a lack of training and development, essentially a lack of opportunity to grow within the organization. People are seeking companies that put people first and invest in them individually through teaching them how to interact with people, and how to become a successful person not just at work, but in life. We have some amazing strategies that we will be sharing with dealerships that focus on how to truly gauge employee satisfaction and how to adjust processes in order to retain talent. We dig deep into figuring out and understanding the people on your team. What makes them unique, what are their challenges? How do we best integrate this alongside the department and dealership goals? In BDC specifically, oftentimes we get hyper-focused on how many phone calls are being made. How many customers we are talking to, and how many appointments we are booking. But really, at the end of the day the person behind the scenes has a very complex life and they have their own goals and challenges that may not be obvious or mirror the same as the department’s. And so, the key strategy is to understand and then align the goals to the business. Sarah will be joined by Elizabeth Martin, the Service BDC Manager at the Scott Clarke Auto Group , as they discuss The New BDC: Best Practices to Capture and Upsell Service Business at the upcoming CXAUTO2022 . You can expect great insights based on case studies that illustrate concrete steps implemented to improve retention and continue to build value for customers. The new BDC is driven by innovative management and leadership practices that focus on honoring the individual through training and development and, ultimately, aligning the complexity within people, teams, and departments to achieve business goals. We would highly recommend that you see Sarah live! You can read more about her here

Commentary & Insights

Let The Government Be Your Customer Service Department!

By

Three super-large dealership groups are trying it!   Here’s how it’s going for them so far… Carvana lost the ability to transact in Illinois according to  Automotive News  (May 16, 2022) because, “The Secretary of State's police department opened an investigation into consumer complaints about Carvana in February, (Henry) Haupt told  Automotive News . The investigation spans about 90 signed complaints, Haupt said. He said he couldn't provide an exact date as to when Carvana might see the suspension lifted.” According to a press release from the Texas Attorney General’s Office: “Texas Attorney General Ken Paxton filed a deceptive trade practices lawsuit against the online used vehicle dealer Vroom Automotive LLC and Vroom Inc., which also sells cars to Texas consumers under the name Texas Direct Auto. The lawsuit alleges that Vroom has misrepresented and failed to disclose significant delays in transferring clear title and obtaining vehicle registrations, burdening thousands of consumers. The State also alleges that Vroom has misrepresented and failed to disclose vehicle history and condition and terms of financing and approval—all violations of the Texas Deceptive Trade Practices Consumer Protection Act. According to the lawsuit, Vroom has not managed its growth effectively, leading to inadequate systems and procedures that have harmed Texas consumers.  Over the last three years, consumers have filed over 5,000 complaints with both the Better Business Bureau and the Office of the Attorney General against Vroom and Texas Direct Auto.”  According to the Federal Trade Commission’s (FTC) Press Release dated April 1, 2022: “The Federal Trade Commission and the State of Illinois are taking  action against Napleton , a large, multistate auto dealer group based in Illinois, for sneaking illegal junk fees for unwanted “add-ons” onto customers’ bills and for discriminating against Black consumers by charging them more for financing.  Napleton will pay $10 million  to settle the lawsuit brought by the FTC and the State of Illinois, a record-setting monetary judgment for an FTC auto lending case… A survey cited in the complaint showed that 83 percent of buyers from the dealerships were charged junk fees for add-ons without authorization or as a result of deception. One consumer cited in the complaint reported that the dealership located in Arlington Heights, Ill., charged him for nearly $4,000 in add-on fees after he’d paid a similar amount in down payment.” So, from the outside looking in, it appears these three (3) organizations do not have procedures in place to handle their customer queries, issues, and problems. So, by default, by attrition, or by apathy, they are ceding control and allowing the regulators to fine them and suspend them, thereby driving the dealerships to manage their own business affairs. (Good pun, right?)                                                                                                                 In the Napleton matter, a staggering 83 percent of buyers said Napleton took advantage of them. Let’s examine that statistic even further. In order to gather the information about the 83 percent, Napleton had to allow the FTC to have access to its customer files.  The FTC must have had quite a lot of leverage for Napleton to agree to give them that access.  Further, 83 percent cannot be simply “miscommunications” or “misunderstandings.”  It’s an astonishing number which cannot be explained away. Let’s keep this simple: Handle your customers or the government will.  

Best Practices

Fixed Operations Marketing: The Revolution

By

The Niello Company started 101 years ago in the Fixed Ops Department. “I try to remind everyone of that all the time” Tully Williams, The Fixed Operations Director, laughs. I was projected onto a boardroom smart screen and before me, sat two gentlemen in really good suits, with the company values behind them. They smile and introduce themselves. I meet Tully and David together; they will be presenting at the upcoming CXAUTO2022 in Marina Del Rey this June. Tully’s Story You have extensive experience in Fixed Operations. How did you get started and what has kept you here? I started as an independent technician and I really just enjoy dealing with people. I really love to talk to people and Fixed Ops gives me that; I get to help people out. I love to be in service, greeting the customer; I am training to have my retirement job as a Walmart Greeter. I just want to help people and listen to all the stories and Fixed Ops has a lot more engagement with customers, long term engagement. "People keep me here, customers and employees." What has changed, what has been disrupted? When I started, we hand-wrote repair orders and of course, we now have computers and systems in place. What has been disrupted is the inspection; the electronic part of the inspection of the automobile. With the technician inspection piece, before it was like, my car is broken, fix it. Now we do an in-depth inspection on your car, we take pictures and video, we are marking down all the stuff to give you a list of the specifics and to me, back when I started, that wasn’t even in the realm of operations. The whole thing has changed for the better of the consumer and I believe also better for the technician. As we continue further along this journey, what we are really focussed on is making it easier to do business with us. We are focussed on mobile integration and accessibility; how can we make everything visible on the customer’s cell phone? How do we get them to say yes via their mobile device? There are a lot of people in this space but it is still kind of clunky. David’s Story Can you share your journey within the automotive industry with us? "Joining The Niello Company, working on the retail side, feels like I have completed the triangle" I always wanted to start in DMS so that I could truly understand what dealers prioritize and focus on. In order to become a Lead Installer, you really need to master all aspects of the DMS and I was fortunate enough to achieve that within my tenure at Cox Automotive . I then went over to the OEM side of the business working for Ford Direct , the digital arm of the Ford Motor Company which was just fantastic. In terms of my region, I was responsible for the Pacific NorthWest, from San Francisco up to Seattle and all the way over to Montana, over 193 dealerships and focussing on all aspects of digital marketing. I was working with the regions and the dealers on what they were doing to drive more quality traffic to their websites, what they were doing to convert that traffic into leads, and, then most importantly, what they were doing in terms of lead management. There was an opportunity for us to improve processes in order to harness the potential of the traffic that was being driven to their sites. My performance got the recognition of Chrysler and I then got recruited to work for their biggest business center, which covered six States in the South East. With a little over 360 dealers, that role expanded my responsibilities and I got control over our Tier Two budgets, and then also complete control over the Tier Three spaces as well. We focussed more heavily on Tier Three because that is where we saw the most opportunity. As the National Digital Marketing Manager of Stellantis , a really fantastic experience, I had the opportunity to work with all aspects of an OEM and assist in keeping our dealers afloat during COVID by rolling out our digital retailing strategy. What is different now, how has your focus changed? With the OEM, it's really easy to get focussed on just one aspect of the business. In my role, I was laser focussed on new vehicle sales. There are so many profit centers within a dealership, I can now expand my horizons and create profitability across all departments, there is just so much more to work on to create a healthy and successful dealership.At the start of the pandemic, with Stellantis, the focus was really, how can we save as many employees as possible? When I transitioned over to retail amidst a different kind of crisis, the micro chip shortage, I was presented with a whole new set of challenges, challenges we continue to confront every day. On the Partnership between Fixed Operations and Marketing: What is certainly understood here at Niello, from the top to the bottom of the organization, is that we are all part of the same Ecosystem. That Fixed feeds Sales and Sales feeds Fixed and that is our universal truth; that is something that we hold near and dear to our hearts. On average within the industry, about 3% of the marketing budget is dedicated to Fixed Ops, that is not the case with The Niello Company, we take Fixed very seriously. One thing that makes us unique is that we have a specific Agency that is dedicated to Fixed Operations and the main reason is that we want them to be passionate about Fixed Ops. We need them to focus and to understand that what is important is answering how they are actively helping us to drive more traffic and convert more appointments so we can have more inspections. We take it seriously, we track it every day, and we meet with our Agency three times per month. We start with a past month’s performance review and then we meet in the middle of the month to make sure we are dealing with course corrections: is there anything we are falling behind on and are we hitting our targets And then, most importantly, what are we planning for next month? We are really committed to that and what is really fun about it is that we bring everyone into those meetings. It’s not just our Fixed Ops Director. We have our department heads included, our Service Managers and Parts Managers; they are all on those calls. We are focussing on what they are focussed on. We have that kind of community, the idea of centralized success. Within Fixed Ops, we focus on crafting a clear message and then making it measurable. "The key question is: are we driving appointments into our service bay?" Marketing and Fixed Ops work together really well. We set the message and monitor it through the rest of the month. We do see this happening elsewhere but only at forward thinking dealerships. We have the right platforms to do this, and the right agencies. On Getting Buy-in, across departments and across Stores: We really want the Store to be involved. “Tully and David don’t know what is best for the Stores”; the Stores do. We may have a lot of ideas and we will most certainly share them but essentially, we want the Stores to make those great decisions. And of course, if we disagree, we will challenge that, but to be honest, we know that they know what is best. They also feel very engaged. It's their marketing plan, the Stores’ plan; we are here to support them on implementing and achieving that. On Change: "Are we projecting out what the change is going to be? Are we showing them the benefit?" We don’t force feed anything. Whenever we want to roll out anything, whether it is a new partner or a new region, we sell it to our Stores. We want them to see the value, understand what is expected and say “Yes, we want to move forward, we want to share this success too”. It starts with the culture of the store, behind us are our values. At The Niello Company, embracing change comes from the leadership and that really impacts culture within the Stores. Also, we show the change and we show it in multiple ways. We have these huge television sets in the service shop with all the stats of the technicians in the store, showing them how well they are doing and how great they are. In the sales office, we are talking about stats with the sales people and F&I people. We also push communications internally. "We communicate" The truth is, you can’t be secretive about the stats. We are an open book, transparency is not only important for our customers but for our employees and teams as well. “I want them to take a picture of their name on the screen and show their mother", Tully smiles. What to expect at CXAUTO2022: A high-energy and in-depth discussion on creating better customers through changing the way Fixed Ops services is marketed; through digital customer experiences. They work together to increase their service department value by building trust with their customers before they arrive. David and Tully will share new communication methods as well as their 3 Pillars of Fixed Ops Marketing Success. "All our decisions have to be based on a foundation of clean, visible analytics that every department head has access to" The Niello Company has been around for over a century, and together, Tully and David educated us on Fixed Operations Marketing, with insight that could only be gained through time and energy spent working hand in hand with their Stores. See the duo live at CXAUTO2022 We would highly recommend it! See more about Tully here and David here

Best Practices

Disruption is the New Normal

By

Disruption. One of the buzz words lately over-used and misunderstood. The standard business definition is “radical change to an existing industry or market due to technological innovation.”  I would argue is not always technological. And is that radical change good or bad? Is disruption good or bad?   The fact of the matter is,  DISRUPTION IS THE NEW NORMAL.   Whether we like it or not, as business owners, as consumers, as social citizens, we better embrace it. It is the new norm and will only continually cycle and accelerate.   If it is self-disruption, or at least a state of managed or accepted disruption, it can benefit our enterprise.  This agility and flexibility to take on disruption and capitalize through it and because of it, should even be a capability or culture that is driven in an organization. It will change the way customers expect products/services and experiences, it will change the way workers produce, and it will change the way we must manage our business models. In automotive, we could highlight a lot of major and recent disruptions. There is the pandemic effect amplified by home delivery and mobile service. There is the new mobility ecosystem accelerating around access to transportation on-demand. There is the new wave of EVs coming on due to many factors including gas and oil prices and a drive to a sustainable economy. Many technologies are disruptive to our previous industry and business models such as Cloud computing, Artificial Intelligence, Augmented and Virtual Reality, 5G and more. These technologies enable new experiences, real-time information, constant connectivity, and an overall overhaul of traditional, sequential, and transactional engagements. The customer experience with a brand is now always on, anywhere, anytime, and anyhow they choose. An illustrative landscape of some of the disruptive forces, effects and outcomes is pictured below. In the automotive retailer world, what have we seen in terms of disruption, again not just technological impacts but all kinds of disruptions or “disturbances”. There are quite a few, including but not limited to: Supply chain issues and inventory shortages Even more demanding customer expectations  New EV models and companies with direct-to-consumer models Ever increasing technology in vehicles including over-the-air updates Uncertain future of the “as is “dealer profit model  Ability to work with customers in a multi-channel format Some brands and vehicles getting more flexible financial access and even subscription models …and much more. The real question is, what do we do about it?  How do we handle these disruptions?  How do we survive and capitalize on disruption and build our business into future-proof models? The hard part, even though I asked the questions, is that there is no easy answer. There is no one solution, one technology, or even one way to ensure that your business can survive and thrive in the future.  I have heard before, “we cannot predict the future, but we must plan for multiple futures.” Good advice.  Meaning nobody knows what exactly the world, our industry or our business may look like in 5 years, 10 years and certainly not beyond. Anybody see the supply chain shortage coming 3 years ago? Anybody think Tesla would be on of the Top 10 market cap companies 10 years ago?   52% of the Fortune 500 companies from 2000 are extinct. That is not a typo. Read that again. So, there is no 100% prediction, and there is no one easy answer. But the recipe for success in an ongoing continuous cycle through any disruption must include some basic core operating principles and capabilities.   Some critical components and general principles include: Do not have a rigid business model, be willing to change Build a business model enabled by flexible business processes and enabling technologies aimed at delivering experiences and fulfilling needs (not transactional simple mundane tasks) Equip your people with training, knowledge, culture, and power to deliver customer experience (no barriers) Data and Insight. Understand what shifts and movements there are in your customers and your business.   You may think you are in the car business, but you are I the customer experience business. Focus on needs management over leads management. Take Action. Early, often and always. Do not wait for change to come to you, change what needs to be ahead of the curve. Consider your business as a platform (not a static and rigid set of transactional processes), with dynamic capabilities that can flex and pivot to meet demands and needs. These may sound high-level and unachievable for a dealership. But they are not, and they can’t be. They must be driven into the culture of your business .   In more tactical terms, your business must consider, deal with and optimize the ability to: Sell and service different (online, offline, omni-channel, mobile, and anyway the customer wants it.) Assess and determine new business models that can be viable for your customers and market: Subscription models Rental / car sharing models Other access and financial models to enable customers to access mobility Charging stations  The dealership as an experience center not as an inventory hub or “sales office” EV versus ICE customers service and overall needs More personalized build-to-order to overcome shortages Service as a service (more of a Geek Squad model) than a service bay model Be flexible to accommodate all different kinds of customers and their needs A tall order indeed. But if we think of and build our dealership business model more as a dynamic platform of capabilities and assets to accomplish the above and more, we can succeed in multiple paths of revenue streams.   It is not easy to accept that our business must be under a constant state of transformation.   But in order to continually survive, thrive and innovate we must always be in that continuous state of transformation. Be comfortable with being uncomfortable. Because one thing is certain, the future is exactly what we think it will be. The key take-away again, DISRUPTION IS THE NEW NORMAL.   Get used to it and realize we have to deal with it continuously and forever. Capitalize on the fact that if done right, we can enable our business to dynamically flex in new directions and new models to support and thrive in multiple paths. Put focus and effort on the notion that are business is a platform of capabilities, not a rigid set of workflows.   With the focus on the North Star of customer experience driving your business, the capabilities can be dynamically developed to withstand all change and disruption.

Commentary & Insights

Communication Has Changed: A Conversation with Joe Shaker

By

How do you interview someone who is truly an industry heavyweight, a Massachusetts Dealer of the Year, the CEO of a Tech Company, and who has been interviewed so many times before? You prepare. And then you scrap your prep notes and questions and you allow magic to happen.  “I think the first-mover advantage is the first person to learn, right? Whoever learns first, has the advantage, and we've learned a lot.” Meet Joe Shaker , owner of the Shaker Auto Group and the CEO of TruVideo . Someone who is “trying not to be famous,” doesn’t exist on LinkedIn and openly shares his story with honest excitement, energy and a formidable presence that, honestly, left us invigorated.  Below is his story, in preparation for CXAUTO2022 . When I tell the story, I tell it from a point of: these are the real problems, this is what we've learned and this is what we did when we learned it. And then guess what? We learned something else. So when I say it's genuine, it's actually true. I wanted customers to see what they're paying for. What is being disrupted, what is changing? Communication is changing.  I think one of the key things that I like to remind people, and what I've learned myself, is that we forget about the big picture. Sometimes when we're talking about service or sales we get focussed on details that don’t matter. I tell Dealers: don’t change the way you do business, change the way you communicate.   Overall, 95% of customer experience is largely embedded in how well or how poorly you communicate. So we need to really focus on how we communicate and what it is that we are communicating. I like to joke around with the OEMs. I love it when I go to the meetings and people talk about trust and transparency or when the marketing team talks about meeting people on “their terms”: Yeah, just a quick question. How do you deliver on that? How would I execute that? Oh, you don't know. You're just saying that. Okay, great. Thanks for the punchline. So what we end up doing is going back to the theory without an execution model, but we can solve these problems! The stars have aligned for TruVideo and the reason I say that is because texting is the most used function on a phone and 10 billion videos are being watched daily on Facebook alone. Customer behavior has fallen inline for us, and with phones now taking high quality video, there has been an alignment between consumer behavior and technology. Asynchronous communication is how customers want to communicate. They love it, they click on it, they open it and, if you want to do business with a customer, it's the best way to maintain a relationship based on all the data and stats. Also, because of where we are in this journey, we can now also see how customers are interacting with the communication.  If we take it a step further, focussing on the customer experience, CX personalisation is probably the strongest underpinning right now. Video has provided this personalization which has allowed these communications to explode on the customer experience front as well as dealer revenue. Simultaneously, you get to take two bites out of the same apple. “TruVideo really took off within the sales department of forward thinking Dealers” We have a case study that analyzed 16 stores, within a large group, during December of 2020. The case study showed that when you sent the video to a customer that personalized their experience, the appointment set rate and show rate, both increased. We all know that when we are talking about leads and customers, we are looking at how many leads were generated, how many appointments were made, how many were confirmed and how many customers showed up to those appointments. The next layer, percentage wise, is how many vehicles were sold after this whole process. Any change on any level, with any of those factors, makes the number at the bottom go nuts because it’s a multiplier.  Well, with the case study group, they sent out just under 7000 videos and sold around 560 more cars during COVID than they did prior to the pandemic in December 2019. We started to realize that so many people were watching the videos over and over again and sharing them, we realized this data is actually more valuable than the website data. We can send videos, we can scrape words and phrases, we can really grab all this rich analytics and data and reach customers.  How are you able to manage your duties within Shaker Auto Group as well as deliver on your goals as CEO of TruVideo? One of my favorite quotes is: “Commit to the process, and surrender to the result.” Our Business, the car business, has been largely built around processes. When we hire, we share our process, our system, which we are willing to hire into. It is not a blank slate. We are willing to hire you to work within this ecosystem and we have spent a lot of time creating a systems and process driven environment. This means that hiring correctly and training people to thrive within our environment, really is our big picture.  We do behavioral profiling so that we get the right fit within the environment and we also have a different way of paying our people versus other Dealers. The reality is that someone like me is usually buying more stores to grow further. I have chosen to diversify what I do and how I do things through software and technology. I have a great management team that we have cultivated in order to run the process environment and this allows me to grow in different ways typical to the industry.  In an environment where everybody is focussed on training, how do you truly integrate training into your environment? Theory without execution is hallucination, and I don’t like to hallucinate. People do and say things, buzzwords, but don’t execute on them. When people say they do training, I want to know what that means. Usually, theoretically they are right but I want to understand how they execute on these things. And I think that's really the secret; we won't sign up with vendors if we don't believe we, as the dealership, can execute on it. There is a difference between those who flippantly use  training  as a component of their operations and ourselves. It’s part of our system, our process, it’s a religion with us. What can we expect at CXAUTO2022 TruVideo has really been an incredible experience for us and some of what I'll be talking about at the Event is  conversational commerce ; what it is and how we found ourselves there. We knew we were doing something different but found out that the concept existed, we were just executing it in a very unique way. When we started learning about the communication chain, we realized everyone was getting the same message. We had to fix that and, then, that’s when we really started learning. We spent the first few years really focussed on solving the customer problem. The word  engagement  slips in all the time but when we really think about it, has the message been delivered and not just the text lines? Maybe we know the open rate of an email, but do we really know anything else? “I want to talk to the Doctor, not to the Receptionist” In 2021 we released the ROVI Report; We wanted to share data from our first 7 million videos. One OEM partner that shared data with us showed us  a 1.1 million repair order sample. The ROs that had video were $55 more, and, simultaneously increased CX scores. Customer “Intent to Return”, went up 4 points on the Net Promoter Score and “Value for Service” went up 3 points on NPS. Some of our OEM partners have exploded on the JD Power Service Index; so we are truly seeing the impact on the customer.  Following the data has shown us that we can not only eradicate doubt, but fix the communication chain. We realised we had data when we saw 35% of videos being shared in service. The inspection from the technician was no longer diluted by going through various people. The same transparent message was now going to the advisor, customer and any friend or confidant.  What matters about data and analytics is: how do we make it actionable? How many times are people watching, sharing, what is the real time data? We can show that through our dashboard, allowing managers to know what they need and allowing the Dealer to control the communication.  Our high-energy conversation ended with us sharing our personal views on how the world needs  more . More communication, more technicians, more perspective, more creativity and more acceptance of differing skills. Especially when it comes to breaking negative cycles through inclusive thinking.  See Joe live at the CXAUTO2022 in Marina Del-Rey next month! We would highly recommend it!

Best Practices

How to Sell More Cars When You Don’t Have Enough Cars To Sell

By

Talk about disruption! 5 years ago I wrote an article here in Dealer Marketing proclaiming that the car business as we had known it was long dead, showing that the business had changed more in the last decade than it had in the previous centuries, and predicting that the next 10 years would make the last look like smooth sailing. Turns out it only took a few years for the car business to get turned upside down again. In 2017, the average new car dealer had between a 60 and 90-day supply of new vehicles out on the lot getting suntans A volume dealer in a big metro dealer might have hundreds and hundreds of new cars in inventory on any given sales day. Cars that customers could come to the store and see, touch, feel and drive. Last month, Honda World of Louisville had six new Hondas in stock. Not six hundred. Six. Period. Dave Clayton at Pawley’s Island Ford says he gets asked every day whether or not the dealership is going out of business because of the empty sales lot. Car dealers aren’t going out of business, though. They’re selling cars. A lot of cars. The question is how? “We had to pivot from the standpoint of we used to carry about 600 to almost 700 cars in new car inventory, and that's no longer the case,” said Chuck Morelli from Honda World .  “I have no more inventory than my competitors now so we have to make sure that that experience is there. Like I told my team, the customer has no reason to come here anymore because I don't have the inventory that they're going to drive off in so how are we going to make the customer’s experience better and make it different than our competitors?”  Providing a better customer experience, a friendlier, faster, fairer, more fun buying experience, has been the secret sauce all along, and it still works The 6 new Hondas Morelli has in stock works out to about a 1-day supply because his team is still selling hundreds of new Hondas a month and delivering a world-class buying experience. They were just named DealerRater ’s Honda Kentucky Honda Dealer of the Year for the 7th year in a row because treating your customers well never goes out of style. What successful dealers are doing now is helping customers and salespeople look past the immediate gratification of driving a shiny new car or truck off the lot today. Some dealers are devoting entire new websites that allow customers to pre-order their car their way. But making custom ordering a vehicle so easy even a caveman could do it is only half the battle. The simple fact that customers aren’t going to get their cars today is practically forcing dealers and salespeople to stay in touch with their customers for longer periods of time before the deal is done, forcing them to have difficult and disappointing conversations, forcing them to build a better relationship and most importantly, earn the customers trust. They  sell more cars  by looking past the easy money of today’s sale and playing the long game for lifetime customer value. “We're not putting market adjustments on our cars.  Where we're focusing daily and talking about with our associates daily is the guest experience,” says Morelli. “We want the guest experience. We want them back. We want their friends back. We're very transparent. I don't go a day without talking to a guest about a car. And I'll just be honest with them, and I'll apologize to them, and say I know I'm giving you bad news, but I want to know what's going on. And on these deposits -  if they back out, we don't say anything. I had two customers back out today, and I immediately had them filled so I don't fight it.” Building and maintaining that level of trust and those deeper relationships comes with an added benefit - more used car inventory. “Probably 90% of our business overall is from repeats. We've been in business for 42 years so we've got that repeat business. They've always come to us,” says Clinton Bramlett from a GM store in Texas.  “We're getting our used cars from our repeat business. We do their service. We do their maintenance. We do all of that. We know all the history of their cars without a CarFax. And that's where we're getting all of our stuff from.” By incentivizing the sales teams and a little technological help, dealers have boots on the ground to mine relationships and their database, helping to keep used car inventories respectable when auctions have been unable to fill the demand.  Meanwhile, almost every dealer has aggressively turned to buying used cars “off the street,” building websites, producing radio and TV spots, and in some cases, even building separate car buying facilities. The only thing in this whole world that’s ever been certain is that things are going to change.  Disruption is inevitable. And in the car business lately, it’s par for the course. By concentrating on the customer, by finding a way to give the customer the vehicle they need and the experience they want, by building the trust that brings about an avalanche of lifetime customer value, dealers can continue to thrive and be the pillars of their community no matter how many cars are on the lot soaking up rays.