Commentary & Insights

Curing your COVID Hangover

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If you ordered a new vehicle and were told it could take a few weeks to come in, and all you had to do was leave a deposit and wait, you’d be pretty excited right? Well, what happens when a post pandemic global chip shortage starts to squeeze automakers’ abilities to deliver their vehicles to their dealer network? Dealers are now delayed in scheduling retail deliveries with their customers, and have to disclose missing items. The chip shortage is creating catastrophic wait times, crippling dealers’ ability to offer vehicles containing the high-tech features many customers want. The outward-sensors are controlled by microchip processors and therefore some manufacturers are building vehicles without the features altogether. Others are simply pausing production. Either way, it’s not a happy problem to have. There are a variety of anomalies occurring in the automotive industry currently. The biggest challenges we face include: managing customer expectations, factory constraints, and used vehicle valuations skewed by current market conditions. The values, because of low supply, are at an all-time high. Meanwhile, increasing delays leave some customers wanting to back out of their orders. The others customers remain waiting weeks and months more. When they do finally take delivery, the sales process suffers greatly. In the customer’s mind, they were lied to and ignored. They are extremely frustrated. They are anxious about getting their new vehicle. Increases in MSRP and egregious dealer addendums, have customers feeling squeezed by the charlatans. After being ignored by their salesperson for the last few months, they have no patience left for our process and they certainly aren’t interested in spending extra time in the business office listening to our pitch. The customer has the cashier’s check in hand, made out to the penny, and can’t wait to torch you on the factory survey. Those customers are also highly likely to leave a really nice 1-Star Google or DealerRater review. Did I miss anything? Vehicle sales plummeted to some of the lowest levels at the start of COVID and now that we have sold through the bloated inventory, we struggle to build back up again. We are reminded that after enduring what we have all experienced during this pandemic, including its shortage repercussions, people’s psyches have changed. Not only our employees, but our customers too! It’s time to re-adjust our approach, our attitudes, and our actions.  To fix this, we start with an attitude adjustment and increasing the amount of engagement. Simply reach out periodically with updates, and let your customers know what’s happening. It makes people feel nice when you call or text them. It makes them feel like a priority. They are happy you didn’t forget them and they know someone is paying attention to their vehicle and its arrival date. We change our negative attitudes regarding low inventory, it’s low everywhere. Next, pay attention to our appearances and the vibe we give off. When people are dropping $100,000 on a new Escalade, they want to know we care about their purchase. Finally, take action! Start realizing one of the biggest perks our industry is experiencing - low volume and high profits.  How fortunate are we? You’ve never had to sell fewer vehicles for more gross profit in history. Commissions are at an all-time high and life is pretty good considering. Get excited about having more time to spend with each customer. During busy times when we give cars away for little to no profit, we are always rushed. We never seem to get quality time, connecting with them and solidifying meaningful relationships. If you spend extra time with customers now, you can set clearer expectations. This allows you to manage communication more effectively during the waiting process. This ensures the delivery is more successful and brings the customer back again for their future purchases in sales and service. It’s time to get re-connected with our customers and stay there.  
Mobile Shopping is Impacting Online Parts Sales

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For millions of people, shopping online has become the preferred method, especially over the past two years since the start of the pandemic. However, just because things have begun to look more normal doesn’t mean people are giving up their shopping habits. The rise in online purchases across all retail industries has caused many retailers to pivot their strategy to a fully optimized buying experience. This pivot has not escaped the automotive industry as new franchised dealers turn to eCommerce to drive additional revenue. However, recent data also shows that if dealers want to maximize online efforts, they need to keep the mobile experience in mind.   Don’t Ignore The Data A recent report from  RevolutionParts  that looked at the shopping behavior of over 100 million online parts shoppers showed that nearly 59% of consumers shopped for parts through a mobile device, marking a nearly 5% increase in mobile shoppers from 2020. Mobile users spent an average of $168 in parts orders and made up a little over $204k in total revenue for dealers signed up with RevolutionParts in 2021.  Not only were more shoppers searching for parts through mobile, but they were also purchasing more often, with 1.2k transactions made through mobile compared to 1.1k transactions made through desktop.  Although in 2020, we saw more shoppers searching for parts using mobile. However, 2021 marked the first year more consumers completed their purchases through mobile devices. What Does This Mean For the Parts Department? The dealership’s online parts business needs to be mobile-friendly. This rise in mobile purchases means dealerships will have to include mobile shopping in their online parts strategy and understand their customer’s mobile shopping experience.  Building an online parts business where the mobile experience is lacking will cost the parts department sales. Ignoring the data in the report mentioned above could lead to losing half of the department’s potential online sales. To ensure customers have the best online shopping experience when shopping from their mobile device, you need to make sure that the mobile version of the parts web store meets specific criteria. Otherwise, when a customer lands on the parts website, they may not know how to navigate the site to find what they are looking for, or they may have difficulty inputting their information and checking out. A poorly made mobile version can also confuse mobile shoppers, especially if it is visually unappealing, the text is difficult to read, or links don’t work. When building an online parts business, there are certain qualities you want from the mobile version of the website:  -       Easy to navigate  -       Quick load time -       Text is easy to read -       Visually appealing on a small screen -       Links are easily clickable -       Forms are easy to fill out Ensuring an online parts store is mobile-friendly is a must. A mobile-friendly parts site with these qualities is more likely to increase parts sales and deliver higher customer satisfaction.  Mobile shopping isn’t the future of shopping; it’s already here and growing. If the parts department wants to build a successful online parts business and capture more sales, the data shows that implementing a mobile-friendly shopping experience is a must. Get the Full 2022 eCommerce Shopper Behavior Report The RevolutionParts  2022 eCommerce Shopper Behavior Report  gives parts sellers insight into the behavior online auto parts customers, devices they shop from, how much they are spending, and demographics. To view the full report, visit: https://www.revolutionparts.com/  
How Combining Agile Thinking and Acknowledging the Individualism of the Customer is Disrupting Auto Finance

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In the post-pandemic world, the, in some ways forced, adoption of digital has had resounding effects on the purchasing process. The pandemic created an increased sense of digital comfort amongst consumers. As consumers began to rely on digital platforms for everything from shopping for groceries, to meeting with friends, to job interviews, one of the more profound developments has been the upward surge in consumer driven research capabilities.  With access to information through digital applications more prevalent than before, the new, digitally comfortable customer, can educate themselves prior to making any form of direct engagement. This greatly impacts the playing field and changes some of the traditional metrics previously held as decisive factors when it comes to digital marketing. In preparation for his upcoming presentation at CXAUTO2022 , we met with Lewis Scott, the Director of Marketing: Digital and Field Performance, at Byrider. Along with sharing his story, Lewis gave his expert opinion on the current state of the industry, as well as what him and the team at Byrider are doing to solidify their presence (and the future of automotive) through vertical integration, redefining the customer and the full customer journey.  Growing up in Southeast Michigan, Lewis was destined to build a career in automotive. Having interned at Chrysler’s parts division, MOPAR, Lewis moved on to join Chrysler Financial once he had graduated from St Joseph’s College with a bachelor’s degree in Business Administration and Management. In 2012, Lewis and his family relocated to Indiana and, with the Byrider Headquarters situated in Carmel, it seemed like the perfect place to settle down and establish a root structure. Byrider’s in-house proprietary approval platform and in-house financing, has supported the establishment of 32 company stores and 114 franchise rooftops. Lewis has spent the last decade with the Company, moving up the ranks from an underwriter to where he is now, directing marketing for digital and field operations.  Prior to being promoted to Director, Lewis worked on the Franchising side as a Franchise Consultant, which, along with the exposure gained throughout his tenure in the industry, uniquely positioned him to understand the complex nature of consumer behavior within the automotive industry.  The Metamorphosis of the Customer The customer is educated: they want their answer online, virtually, remotely, digitally. Before they decide if they want to give you their business and buy a car from you, they want to understand if they can get approved. In the old days, circa pre-2016, customers would call your store, look at newspapers, look at automotive ads, come up on the lot, “kicking tires” so to speak, and right now, customers are comfortable with and require an experience that is digital and remote.  Our ability to build relationships and engage in experiences online has become the expectation. Customers want an experience, they want to know what you have, what you stand for; they want to know about the business. Customers now want to understand the journey upfront, what is the approval process like and before deciding on whether or not to commit, they want to understand both the pre- and post-sale experience.  Digitalists versus Traditionalists When we consider the sales methodology, I am a product of both.  My background is firmly established in the traditionalist model of sales however, it is my role to ensure that my team understands the importance of incorporating a digitalist perspective. At Byrider, this means equipping ourselves to recognize the potential embedded in a consumer through digital engagement.  A hybrid model means that, whilst we acknowledge that the traditionalist process still takes place, just later on down the line, digital is here, now. That is what we are seeing, a mixture of both approaches but a transition or shift in terms of the sequence of the engagement and process.  Although it will likely be two to five years before we see the full spectrum of digital adoption across the board, the facts remain, 85% of our engagement comes from digital, mobile specifically.  My role is really about the sales funnel, above the attributed lead or captured lead. Leads are no longer what is in our CRM, those consumers landing on the website, looking for information - by definition, that is a lead. How do we get that customer more engaged in a sales funnel? The answer comes down to overall brand engagement. We are able to engage customers through sharing knowledge of who we are and what we do.  Byrider has 32 company stores and 46 individual franchises that account for over 114 rooftops. We come from many cloths including traditional dealerships, some have been key employees from traditional or captive finance, some come from entrepreneurial backgrounds and there is success in this combination. However digital is forcing traditional to realize you can no longer come at this from a purely traditional route. Consumers want to know if they are pre-approved, can they get approved, whether they qualify for the vehicle, all before they come see you. That is a digital mindset and a digital scope. From the perspective of managing the anxiety that comes with a hybrid approach, training and development can ease the transition. Historically, we were able to deal with objections while a customer physically sat in our cubicle, we now find that we need to handle these objections from afar through telecommunication and digital channels. On the upside, those customers who are calling, are doing so because they have seen our vehicle online. Those submitting information to you, are showing deeper engagement from a consumer intent to purchase. In terms of managing the gap, Byrider has embraced web chat and by doing so, we work towards meeting the digital needs of our customers.  What we are focused on, is determining which communications with customers can be automated, what can we do to support the activities of our customers in order to make them comfortable to self-serve.  The ability to buy and get approval, the ability to finance, incorporating the reality of bad credit, new credit, no credit and facilitating real life scenarios such as job gaps, multiple jobs, non-traditional employment; these are all the things we can take into consideration. Through our in-house financing, we are the dealer, the underwriters, the service shop. All entities of our vertical integration are managed with the customer ownership experience in mind, and this is what makes Byrider different.  Our operations are uniquely set up to truly be there every step of the way and keep our customers on the road. Through these three pillars of vertical integration, sales, underwriting and service, we can support the customer at the most critical steps of their journey.  From start to end, Credit For Being You is an agile approach to an inclusive offering. The beauty of vertical integration is the agility that we can employ, we are able to consider the ability and willingness to pay which is not possible through a traditional model. We are able to consider our customers through a lens which is not afforded to them when it comes to an automated credit platform.  As Lewis and I neared the end of our conversation, we reflected on the sense of honor that came with working in a Company whose principle business operations meant that he could proactively play a role in people lives, knowing that the Team at Byrider are the reason that some families can get to work in the mornings. Themes of accessibility and the ability to approach the customer from an individualistic perspective, whilst driving business forward, is what happens when you apply agile thinking to a community driven industry.  We also got some crib notes on the “top secret ideas” that Lewis will be sharing at CXAUTO2022 . We highly recommend seeing him in person.  See more about Lewis here
Six (6) Perspectives On The New GLB Safeguard Regulations

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The new Gramm Leach Bliley Act (GLBA) regulations aren’t going away and become effective on December 9, 2022. You don’t have to agree, but you do have to comply. If you haven’t started already, it’s time to begin the work of parsing out how you will respond. I’ve asked various industry experts to chime in on how you should focus your efforts. Here’s what they had to say: Atul Patel CEO, Orbee  “Occasionally you get a nudge to rethink what you’re doing. While it might feel like it’s more an elbow to the ribs, the FTC Safeguard Rule that is part of the Gramm-Leach-Bliley bill is forcing auto dealerships to take their customer’s data security seriously. We find this to be the biggest opportunity for dealerships to   take back control over your data that is created on  your  properties, from  your  media investments, by  your  customers. When your shoppers give you their Personal Indentifiable Information (PII), they believe it was to you. But what is more likely is that it was to a third-party such as a trade-in tool, credit form, chat, and so on. We restructure the way data is created, stored, and activated. This offers the clearest path to Safeguard Rule compliance while benefiting your customer experience.” Jim Lawrence  COO, Sensitive Data Protect, LLC “There are 5 steps dealers should take to establish a good-faith compliance effort to address general cybersecurity, the FTC's Safeguard Rules, the ongoing battle against "phishing," and ransomware attack prevention:  Perform cybersecurity testing to find gaps in consumer facing IT infrastructure and behind your firewall.  Establish the policies and procedures and trainings to address the gaps and evaluate the investment options for ongoing IT security preventative measures. Make sure to review the difference between a "bundled" approach to cybersecurity versus a piecemeal, single-point solution.    Partner with an experienced automotive service provider who knows where the sensitive consumer data hides on your DMS and the third party software applications that share your client and prospect database.   NOTE : Dealers' are now responsible for their customer data. Their liability doesn't stop at the edge of their lot, it now stretches out to your third party dealer service providers. Approach your cybersecurity insurance provider about all this "Good-faith Compliance Effort" because they value and reward dealers with lower premiums and deductibles who attend to the needs of their cybersecurity in a "bundled" more comprehensive way.    SPECIAL STEP : If you're in the buy/sell due diligence process or even considering it, show your dealership's ability to protect its operational and sales value other dealers can't with the documentation of your good faith cybersecurity effort.” Michael Tuno President, ARMD Resource Group, LLC “In October of 2021, the FTC updated the 2003 Safeguards Rule to reflect the sign of the times.  While the industry is buzzing about this update as if it is something new, it simply is a rule that is reflecting the current state of the industry and the ever-growing risk to dealers with protecting customer’s information, both paper and  digital. The term “qualified” has been added to describe the seemingly elusive role in a dealership of a “CCO”.  The need to document all the digital audits and deploy the risk mitigation steps like multifactor authentication etc. have been added.  An incident response plan to document the dealer’s plan to deal with a breach has been added.  Vendor risk management continues to be a critical task, even since the 2003 days. The FTC is going to hold third parties responsible for any customer information in a more stringent light.  At the end of the day, on December 9, 2022, dealers are advised to document all these updates to the Safeguards Rule.  If it isn’t documented, it didn’t happen!    At $43,792 per day per violation, not to mention UDAAP or UDAP, (especially if you are using the FTC boilerplate privacy policy at your store), it can get very expensive very quickly if this law’s requirements aren’t met.  Déjà vu!” Hao Nguyen General Counsel, ComplyAuto “What we've seen is that the revised federal Gramm-Leach-Bliley Act's Safeguards Rule ("Revised Rule") continues to confuse dealerships across the country on how to exactly fulfill these new obligations. Many folks are talking about it -- their attorneys, state and national trade associations, and other dealers -- but none of them provide a cost-effective solution to meet the dealers' needs.  We work closely with a dealership's IT company or third-party managed service provider ("MSP") as two halves to a pair of scissors to get the dealership fully compliant with the Revised Rule. We help create required documentation (the Information Security Program and all of the required plans that go with it), provide employee security awareness training, execute phishing simulations on employee emails, perform penetration testing and vulnerability scanning as well as risk assessments at the dealership, and help manage vendor requirements in signing Data Processing Agreements and completing vendor risk assessments. Not only will this help fulfill the Revised Rule but also potentially affect cybersecurity premiums. If your clients have not experienced it yet, dealerships across the country tell us that their quoted premiums have increased two to three hundred percent for this year. Implementing our services to bolster your data protection and cybersecurity protocols will go a long way in showing them that you place a priority on data security and will possibly reduce your cybersecurity premiums (or get coverage in the first place).” John Acosta  CEO, Vtech Dealer IT “Compliance is like a marathon. Come the end of the year; you want to be on mile 22 rather than mile 3 of the race. Some of the GLBA compliance requirements are major systems upgrades that take time to set up properly. Start planning now.”    Of course, he’s right.  Here are other GLBA considerations: Is all of your customer data encrypted? Do you have endpoint protection throughout the dealership? Do you have a data retention policy in place? Have you implemented multi-factor authentication (MFA)? Do you have a written “incident response plan?” Have you completed cyber training for all employees?  …and there’s more… To practice optimal risk mitigation, here, begin by figuring out where your biggest areas of vulnerability are and build out your program from there.  Feel free to reach out to any of these folks (including me) if we can answer any questions.  We are happy to receive your call.  Cheers!    
A Career of Disruption

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“True disruption means threatening your existing product line and your past investments. Breakthrough products disrupt current lines of businesses.”  – Peter Diamandis  Please allow me to introduce myself. My name is Owen Moon, CEO of FIXED OPS DIGITAL and a new Expert Panel Contributor for Dealer Marketing Magazine. For most of my 22-year career in the automotive industry I have considered myself to be a disruptor. My career started in early 2000 when I was hired to help an automotive focused advertising agency create and sell a comprehensive sub-prime program. For the next few years, hundreds of dealerships across the country utilized our program to break into what was at the time a relatively new, but lucrative market. This program included everything from Marketing, F&I, Inventory Management, Software, Leads Handling, and even BDC Training. I would spend the first few years of my career travelling around the country helping our dealer partners implement this program into their dealership culture. Looking back, I considered this experience to be the best education anyone could’ve gotten to learn the auto industry from the inside out. A few years later I once again found myself in a unique situation as one of the early adopters of personalized database mailers. At the time using variable data fields to personalize the information for each customer was a relatively new concept. I remember when we ran our 1st “buyback” direct mail campaign and helped a dealership sell 35 new KIA’s in a weekend utilizing a target list of 2,000 previous customers. In a weekend we helped sell as many new KIA’s as they usually sold in a month! Over the next few years, we would develop and execute multiple personalized database mailer strategies for dealerships across the country!  As technology began to evolve the “next thing” again presented itself. I was introduced to a new strategy called GeoFencing. Geofencing is a real-time location-based marketing tactic that uses geolocation data to target users within an established geographic area. Then delivering ads based on where they are or in what locations they have previously visited. I moved my focus to helping dealerships execute targeted geofencing campaigns. I also spent a lot of this time speaking at conferences and 20 groups showing dealerships the power of this new type of mobile marketing. Then came 2018. The auto industry was booming! Dealerships were spending most of their marketing budgets utilizing digital strategies and the industry was full of vendors and agencies who were more than willing to help! In such a crowded vendor environment I again found myself in a situation focusing on a new concept. This time in the service department. FIXED OPS DIGITAL was born and for the first 12-18 months there was just as much educating going on as there was executing. As FIXED OPS DIGITAL started to grow, we took pride as being the industry leaders in online service marketing. As 2020 rolled around we knew that service marketing was going to continue to get more attention. We had no idea that both Covid and the new vehicle inventory shortage would only magnify this! Today FIXED OPS DIGITAL is the Premier Service Marketing & Technology Company servicing over 650 dealerships in the United States and Canada.  Are you a disruptor?! Then I applaud you. Disruptors are risk takers. Disruptors are educators. The challenge with being a disruptor is that the first couple years are usually the hardest. Trying to educate and gain dealership adoption can be tough. As a new Expert Panel Contributor for Dealer Marketing Magazine, with the opportunities and challenges today’s automotive market is facing, I look forward to bringing my years of experience being a disruptor to provide valuable insight.      
Dynamic Pricing: Can Dealer Operations Take Lessons from the Airlines?

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It’s not easy to run an Airline Profitably Many of us have had the experience while booking a flight, of watching the price for a seat change as the plane fills up as the time for the flight approaches. What we have experienced as consumers is an example of "Revenue Management," or "Yield Management" by the airlines. A simple definition of the practice is as follows: Yield Management  is a variable pricing strategy, based on understanding, anticipating, and influencing consumer behavior with the goal of maximizing revenue and profit from a fixed, time-limited resource. According to Robert Crandall, the former CEO of American Airlines, Yield Management is, "the single most important technical development in transportation management since we entered deregulation." Yield Management is one of the tools that airlines have used to achieve more consistent profitability, where sales of a few extra seats can make an enormous difference. According to  Forbes , US airlines need their planes to be well over 70% full just to break even. To make these systems work, the airlines need extensive  data  about their customers and their intentions. Over time, the airlines have built ever more powerful sources of data from frequent flyer programs, reservation systems and web search data. The airlines have also developed increasingly sophisticated  models  to predict how individual consumers will respond to changes in pricing and other factors. And finally, airlines have invested in  systems  to actively manage their revenue through ongoing dialogue with their customers. Application to Dealer Service Operations A dealer's service operations have some similar revenue management challenges. They represent large, fixed investments in facilities, equipment, and skilled people. They are profitable when they are full and quickly become unprofitable when they are not. And, like the airlines going through deregulation, dealer service operations are facing some big disruptions. The transition to electric powertrains is driving significant investment in new equipment and training. Electric vehicles are also expected to need maintenance less frequently and at different intervals. In fact,  Consumer Reports  finds that EV owners today are spending half as much on maintenance and repairs. Dealers will also see increasing use of Over-the-Air diagnostics and repair, as Tesla has demonstrated so successfully. Finally, dealer service operations will see disruptions from the ongoing consolidation of automotive retailers, with growing pressure from the large public operators. The time might be right for leading operators to take a page from the airlines' playbook. Connected Cars Provide Much More Data With a built-in connection to every car sold by the dealership, dealers increasingly have access to a rich source of  data . It is possible to know when each vehicle needs service and what kind of service it needs. It is also increasingly possible to use data from the vehicle to predict when a breakdown will occur well before it happens. Predictive Diagnostic tools have been announced from both OEMs like  General Motors  and from startups like  Preteckt  or  Pitstop . The development of this data and these tools creates the potential for service events to be planned more proactively, rather than purely in reaction to customer calls and drop-ins.  Better Data Can Produce Better Pricing Models With better data about vehicles’ service needs, it is possible to start building  models  to predict what it will take to bring individual customers in for service at a time that is most profitable for the dealership. Which kinds of customers can be persuaded to come in sooner or wait until a less busy time? How much of a price incentive (or other kind of incentive) will it take? Pricing models are built by trying out offers with different types of customers with different service needs. Over time, models become increasingly accurate and pricing becomes increasingly targeted. Better Systems Can Produce Greater Profitability Many dealers already have scheduling  systems  in place, but the next step will be to use these systems to more proactively plan service visits in a way that maximizes utilization of service operations. Dealers will use customer data and dynamic pricing to anticipate when a customer will need service. Next-generation scheduling systems will be able to present precisely targeted offers, designed to bring vehicles in at the optimal time for profitable service delivery. It is a dynamic, exciting time in the auto business right now, with disruptive technology and business trends well underway.  motormindz ’ Connected Practice has the experience and insights to guide you through these challenges and find effective and profitable paths forward.