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Using Data to Connect on-Line and in-Person Car Shopping

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Connected Car Opportunities in Parts and Service There has been a lot of attention paid to opportunities for Connected Car technologies in Sales and F&I, with ideas like personalized shopping, deliveries, and data-based F&I products. But there are also several opportunities for dealers to use Connected Car technologies to improve quality of service, performance, and efficiency in the delivery of both Parts and Service. Quick Background... This topic is relevant now because Connected Car technologies are finally reaching “critical mass.” Well over 90% of all new cars and trucks sold in the US in 2021 will come with built-in abilities to transmit and receive data, remote software, and vehicle commands. This means that key data about each vehicle’s mechanical condition, driving usage, and precise location can be collected and used to improve operations at the dealership. As always, it is critical to remember that customers must be fully informed and provide their consent for any Connected Car services to be utilized. How Connected Car Data and Commands Can Affect Parts and Service: 1. Current Operations In the near term, there are several opportunities to improve day-to-day operations of the Service and Parts departments, while also improving the customer experience.   The highest ROI current opportunity is to use data from the vehicle to determine when maintenance and service events need to be scheduled. The vehicle “knows” what its mileage is, when it needs an oil change, and when it has diagnostic codes that indicate different needs for service. Customer outreach using this vehicle data is much more timely and often more effective than outreach based on customer behavior modeling or “estimated” mileages.   A connected car can also facilitate advanced planning. By checking periodically on maintenance needs, dealers can anticipate approximately when a customer will need maintenance. The dealer can then plan ahead to schedule service at a time that is both convenient to the customer and efficient for the dealer, smoothing out service operations as well as monthly top and bottom lines.    Finally, an advanced review of a vehicle’s maintenance and service needs can facilitate advanced ordering and stocking of parts to ensure that they are available when the vehicle is scheduled for service. In short, dealers can more efficiently utilize their personnel and operations, while providing more reliable and convenient services for customers. Several OEMs now include automated maintenance reminders within their Mobile Owner Apps, and similar service reminder programs are offered as well. These types of programs have been shown to increase both customer service satisfaction and retention. The dealer plays a critical role in ensuring that all new vehicle purchasers have their Mobile Owner Apps activated during delivery, along with enrollment in automated maintenance reminders. If your OEM has not yet enabled these services, or for older vehicles, dealers should also look into third-party platforms, which not only offer service reminders, but also theft recovery, emergency assistance, and other services. 2. Advanced Service and Parts Opportunities Connected Car technologies will allow more advanced capabilities, too. We have already seen extensive use of Over-the-Air software updates by Tesla, but Tesla is not alone in adding OTA capabilities. Every major OEM is working to expand their abilities to update major vehicle systems this way, as well as how to share these responsibilities with their dealers. Tesla and others have also shown the potential for additional revenue from software-based “accessories” and feature subscriptions. These are optional software enhancements that allow the vehicle to be customized versus a base factory configuration. OEM Service and Parts departments will soon be able to recommend and deliver these accessories to an increasing number of vehicle owners. OEMs are also increasingly developing more predictive service algorithms. These programs process data from large numbers of vehicles to develop models that can accurately predict service problems before they occur. As confidence in these programs increases, dealers will be encouraged to contact customers to schedule service well before a breakdown occurs. Finally, Connected Car technologies will enable many new remote services. It is easy to locate vehicles and to provide digital keys to give access to an authorized technician. This will facilitate both services at the customer’s location as well as easy pick-ups and exchanges with courtesy transportation vehicles. The Connected Car will bring dramatic changes and opportunities to all parts of the modern dealership!
Streamlined Metrics, Open APIs, in-house Marketing, Oh My!

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Let's finally talk about it.  The automotive industry as it stands today will never be tech-first-- and dealerships will not operate as technology companies (refer to Mckinsey recommendation  here )-- if we don't fix some of the biggest problems with its digital ecosystem.  It's complicated . It's complicated mostly because there are layers of complexities that do not exist in all industry verticals-- manufacturers setting guidelines for dealerships big and small, rural and urban, and vendor partners setting different standards and metrics for dealerships to swallow. And, as  Isaac Herzberg  from Napleton Cadillac explains, there are dealers that rely on first touch attribution only and others that have the infrastructure in place for multi-touch attribution, making the KPIs from dealer to dealer extraordinarily different. This is why when dealerships make the "risky" switch to a new SEM provider, for example, the first 30 days often sound the same--  we don't know how to assess performance because our previous provider marked leads differently . Or,  you're driving traffic to our site that we then can't track because the traffic converts on iframes.  Sometimes, there's even a disconnect between the dealer's expectations and the vendor partner's strategy that doesn't align because there is no benchmark or baseline for the industry to fall back on.  Streamlined metrics  Imagine a world like this : dealerships, OEMs, and vendors alike have streamlined metrics for what a lead should be--  and I'm not talking VDP views or impressions.   Now, of course, different dealerships have different agendas.   Colin Carrasquillo  from Nielsen Automotive Group explains that when he manages new dealer rooftop locations, he's all about sending as much traffic to that site -- it's about impressions and clicks to set a footprint. Only after, can he optimize for conversions. In both instances, it's critical for Colin to track success realistically.  Streamlining metrics for the industry doesn't mean dealerships can't optimize for different strategies and goals; It's quite the contrary: if everyone calculates leads, cost per lead, cost per click, etc. with the same dimensions, dealerships (and partners) will actually be able to enrich strategy and assess performance more accurately. We won't be tripping over what constitutes as a lead or a click anymore as an industry.  I know what you're thinking.   Streamlining metrics in the automotive industry is impossible because some dealerships are able to track leads through multiple touchpoints, while others may not have this infrastructure set in place (see the comment from Isaac Hertzberg above). While it's extremely difficult to connect all the dots and achieve 100% real, transparent attribution, open APIs would certainly bring us a lot closer.  Open APIs If you look outside of automotive, the biggest software management companies have open APIs, a publicly available interface that allows developers to sync data in order for two platforms to communicate with each other. With most automotive data transfers relying on FTPs and ADFs-- not to mention monetizing data to make it unattainable-- it's impossible for the industry to create a seamless digital experience for the customer that the dealership can also then track. Another way to think of this is that APIs allow for an ecosystem that grows in value for both dealers and vendors: value built by one company can be leveraged by other companies, ultimately adding up into a sum that is much greater than its parts. How do we even start?  Besides for vendors opening up API access so we can work toward streamlined metrics and connected data as an industry, OEMs should consider reworking partner regulations. Does the certified vendor have transparent reporting? Does the certified vendor have an open API so dealers can not only provide unparalleled customer experience, but OEMs can also track aggregate data and draw smart, data-driven conclusions?  And, to manage it all, dealerships need to make sure there is a talented marketing manager working  for  the dealership. In-house marketing manager Don't underestimate the marketing position.   As recently emphasized by  Glenn Pasch , every dealership needs to hire a digital marketing manager. There's really no debate. Why? Because you need someone at the dealership that owns and controls the data. You need someone at the dealership that manages the vendor relationships (preferably fewer vendors, as it's quality, not quantity), and you need someone who can manage the streamlined metrics and APIs to ensure connectivity for both the dealership and the customer experience.   Having an in-house marketing manager finally puts the agency vs. in-house debate to rest since it allows dealerships to have the flexibility of a nice combination. According to  Kyle Mountsier  from Nelson Mazda, you need to employ the right people that will own and understand the dealership's analytics and educate on "digital platform ownership" across the industry. Once we achieve this, investing in the right technology for digital marketing managers to manage spend efficiently will be easy, not to mention also a step toward streamlining metrics... So, let's get to work, friends? 
Your Dealership's New Unforeseen Competitor. How Will You Keep Up?

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Your dealership isn't competing with the dealer next door, it's competing with Netflix. The fight for digital real estate is real. In-market car shoppers are also in-market baby clothes shoppers, or Netflix-obsessed parents, or perhaps college seniors looking for their first apartment. With every Google search comes a story -- a digital footprint-- that tells the internet who that person is and what they want to see.  This means that the in-market shoppers landing on your website, searching for cars in your inventory, or even needing an urgent oil change, have other non-auto related interests.  Shocker, right?  So while you need to make sure you're #1 in your primary market area, your dealership is also competing against some of the biggest e-commerce giants in the world to gain real estate on every page possible at just the right time.   So... will that newly promoted mother of three see the Carter's clearance ad for the onesies she was eyeing or will she see your lease special for the Suburban she's always wanted? This is where the real competition lies in 2021.  How will you keep up? It's obvious that dealerships need to operate as technology companies in order to compete with technology companies like Netflix. Manual, thin-on-tech digital marketing will no longer cut it when competing with the big guys. Is your dealership optimizing ads in real-time? Are your inventory ads VIN-level specific to match shoppers' interests? Are you running your A/B tests on autopilot? Below are the top three principles that your dealership should be abiding by to play at the same level as the "big guys." Speed There should be no lag time when it comes to updating your ads and campaigns. While going in manually to adjust pricing and disclaimers used to be acceptable, if you're not operating at lightning speed, you're creating irrelevant customer experiences with outdated targeting and messaging. Changing and optimizing your campaigns in real-time will give your dealership the proper leverage to compete at any time of the day, yes, even at 3 AM.   Scale The expression don't put all your eggs in one basket has never been more true when it comes to vehicle-specific ads. Picking 5-10 models to focus on each month will limit your targeting range. Your dealership should cast a wide net, leveraging every single car to target the right people at the right time so that you can scale your marketing. Leverage technology to market every car as if it's your only car, creating scalable optimization tests that run on autopilot to give every vehicle a chance to find its buyer. When you can scale your A/B testing to tens of tests simultaneously, and you can create algorithms to combine the best keyword strategy to find the cheapest quality leads, you're operating on a competitive level.  Specificity  When your dealership has the speed to optimize 24/7 and the scale to market every car with personalized messaging, you're then able to make the specific matches between shoppers and inventory, ensuring that your message will be prominent for the buyer at just the right time. This granular 1:1 targeting means that your ad will always show up for that newly promoted mother of three, beating out Carter's every time.  When it comes to marketing in 2021, it's critical to adopt these principles and operate as a technology company so you can beat out the competition and stay on top of mind -- and top of Google search pages-- for your shoppers. 
Let Data Be Your Guide: Navigating an Uncertain Sales Environment

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There's no denying the automotive industry has had an impressive recovery from the early impacts of COVID-19. However, nearly a year after the initial shutdown, we also know that the landscape we're functioning in now is different than it was prior to the pandemic.  Having now survived two major downturns in the last 12 years, what's an automotive dealer to do? Not only do dealers want to understand how to adjust to the current landscape, but also how to anticipate changes so they can plan accordingly.  While there isn't a crystal ball that will answer all these questions, there is a powerful tool that can help dealers accomplish these goals: Data.  We know data can be overwhelming but looking at trends on both a macro and local level can inform strategies and guide implementation.  Looking at the big picture Take for example vehicle registrations. While there are seasonal ebbs and flows in registrations, what are the other factors that can impact volume? In Experian's new  Automotive Market Insights dashboard , we layered in economic indicators with vehicle registrations over time to better identify any correlations, and a number of them emerged.  For instance, about a month after gas prices go down, vehicle registrations begin to increase. A good example of this was in February of 2016 when gasoline dropped to $1.89/gal, and vehicle registrations began to rise a month later. The trend works in the reverse, too. In October 2018, gas prices were at $2.92/gal, and then we saw vehicle registrations drop in November.  Figure 1: Registration figures overlaid with gas prices on the Experian Automotive Market Insights Dashboard Applying this knowledge can help you identify how aggressive you need to be with marketing. You can ramp up as gas prices increase and then scale back as prices lower when people are more naturally inclined to purchase a vehicle.  This is just one example, but there are many. Layering vehicle registrations with additional economic indicators such as interest rates, unemployment, consumer sentiment can also be informative. Dealers who understand these correlations can then better anticipate shifts in the market based on paying attention to these economic trends.  Focusing on local  Of course, nationalized data will only take you so far. For dealers to be successful, you need to understand what the trends look like around your store, including the opportunities that already exist. This means going beyond your CRM database and looking for new customer acquisition strategies. One of the simplest ways to gauge opportunity exists around your store is to understand how many vehicles are coming off-loan or lease or moving into positive equity. Reaching consumers even before they're in the market gives you the opportunity to highlight why your vehicle could be a better fit for them before they even think about checking out the competition.  But that's not enough on its own — you need to know  who  your customer is, and  what   matters  most to them. Layering in additional data can help pull these insights out. For example, Experian recently did a study that found millennials and Gen Z are the only age groups seeing growth in vehicle registrations. Even within these two age groups, there are differences in what and how they are financing.  Gen Z is more likely to finance a vehicle than millennials. Additionally, Experian's research found that older millennials (ages 40-33) are more likely to purchase passenger vans, while Gen Z tends to prefer sedans. Understanding these generational nuances can help tailor your marketing strategies with more relevant messages that resonate.  Data is only useful when it's used to draw out actionable insights. Looking at both macro and local trends will help you refine your strategies and implementation. Understanding the impact of economic indicators on vehicle registrations can help you adjust your strategies to better prepare for what's ahead. Localized trends will help identify who your customer is and what matters most to them. Ultimately, reliance on data will continue to help dealers manage the current environment and continue to move the industry toward recovery. 
steve jobs quote
Auto Retailing: Customer Experience Transformation Starts with The Basics

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The Steve Jobs quote has never rung more true. There has been so much conversation of late about digital transformation, auto retail reinvention and the "new normal." I have contributed to much of it. But what does that all really mean? What can a dealer or dealership really do to transform? What does "transformation" even mean? I believe a dealer needs to go back to basics and not get caught up in the hype of Digital Transformation. There is no silver bullet. In good automotive retailing, it has always been and will always be about delivering an exceptional customer experience. Technology is one enabler to support that effort. But it is not the end-all and be all. In today's high-tech world, we often approach an issue in the manner of  "the answer is technology, what's the question again?"  A dedication and execution of processes that are seamless, frictionless, integrated, omni-channel and personalized are ultimately what enables the orchestration of a customer experience. We have been swept up in Digital Retailing, Internet Sales, eCommerce and Mobile Delivery as a pursuit of shiny objects. It is all retailing at the end of the day. To the customer, there is one retail experience (sales and service and ownership journey). Their experience. Online or off-line and through every channel, the customer wants what they want. A Frictionless Experience As a consultant and an avid forum member in many groups, I have heard the word frictionless evolve over the last year or so as it pertains to great customer experiences. To be honest, the word first hit me as rather crass and not fitting for the concept of customer experience. But in actuality, it is the perfect description. What a customer really wants is seamless engagements, personalized recognition of their need and ease of interaction (through any channel, any time and without pause or reaffirming context each time). Frictionless also is more a result of a solid and integrated process as opposed to just a simple technology. I personally don't even like the phrases digital transformation and digital retailing. It is just transformation and it is just retailing. The idea that if something is "digital" or has a "digital" component that it is better or works well is not necessarily true. The technology or digitalization still is part of or encompasses a full process. That process has workflows and steps and sometimes humans that must all work in concert for the same alignment and direction to deliver the experience through that process, including the technology. Current State Many dealers have increased their technology spend and digital efforts significantly over the last few years. An average dealership now often has: Call Integrated Voice Response (IVR) systems,  Lead Management and CRM modules Internet Inventory, Search, Price and test Drive Requests and Lead Submissions SMS / Text capabilities Online Scheduling (sales and service) Online self-help or virtual assistants/chatbots Mobile Delivery and Service (Customer Pick-up and Drop off) Yet, with all those technologies and recent expenditures, the auto retail industry's general CSI scores compared to other industries have not risen and in fact fallen behind in relative comparison to other industries. In many cases the same issues and customer dissatisfiers prevail now as they did a decade ago. The following is just a compilation of some recent Consumer Reports and Forum posts on common customer issues: Why is it so hard to buy a car over the phone? Can't I complete the deal over the phone and Internet and just go in to pick it up? Why do I have to go into a dealership to get a price? How come I keep getting shuffled around the phone system and back to the operator? Why can't they honor the online price or quote? Why do they pretend not to know the correct sales tax or other fees? Why does it take 4 hours from the time I say I want the car? No matter what time I schedule to come in I always have to wait. It seems almost impossible to get an update on my vehicle in service. The final price for service always seems a lot more expensive than the original quote. I don't feel they really know what I need in a vehicle but they sell me what they want. Do any of these sound familiar? Technology or digitization has been added in most sales, service, and dealer operations areas, yet these issues persist. In recent IBM research, Millennials overwhelmingly stated they would rather go to the dentist than a car dealership. Perhaps the issue and root cause lie more in the overall mission, process and measurement of success for the customer experience. In some hopeful news, 65%+ of Millennials also stated they would be willing to pay more for a good experience. Basic Steps Forward The journey of transformation should start with a focus on basic processes and never stop evolving. Eventually, 90% or more of a dealership's workflows and processes either touch the end customer or affect their experience in some capacity. Those processes must be scrutinized to remove friction.   In order to maximize the transformation to a value-driven customer experience, start with some basic steps. The following is a framework to approach an honest view of your dealership process issues and potential resolutions. Define Success  - Of course, the ultimate goal is sales and profit. But what other measures define success for your dealership and your customer experience. What is the North Star vision you hold up as your customer experience? Can you define it? Can you measure it? If it can't be measured, it can't be improved. Customer satisfaction is too transaction and rudimentary. Deeper measures around customer engagement, information of value, time to interact and value of contact need to be assessed. Outside-In perspective  - Look at any process or workflow from the perspective of the end-user or customer of that process. What is it they are ultimately delivered in terms of interaction, value and personalization? Identify Barriers  - Assess what barriers exist from your dealership delivering the customer experience you have defined and laid out above. Is a process too complex? Does it have too many hand-offs? Does it require approvals or time to process? Root Cause  - Once barriers are identified, assess the root causes. Root causes could include lack of technology but often may be more about process definition, training, administrative complexities and lack of operational focus on what matters to customer experience. Process Improvement Loop  - As processes and barriers are assessed and changes and improvements are made, they should be documented and measured. But they should also never be at a finished state. The evolution of customer experience driven by customer-focused processes is an ongoing journey. This will continue to evolve the dealership in a more agile and flexible way. There is no "big bang" or "silver bullet" or technology that will solve all the issues. It takes a continuous and iterative process that starts with the basics. Summary Start with the basics. Do not be swept up that a technology or quick fix exists to change the actual dealership DNA of customer experience. View the processes, barriers and friction from the customer's point-of-view. What do customers want and expect that is not being delivered? Then work can begin on evolving the WHAT is expected and WHY it is not currently being executed. Make or keep your North Star of customer experience as the target of all processes, and continually work on evolving them towards that goal.
Smartphones Becoming an Essential Marketing Avenue

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Among the many ways that COVID-19 has changed our lives is the rapidly rising profile of the smartphone as an automotive marketing and selling tool. Certainly, American consumers relied on their phones long before the pandemic reared its ugly head. But in the midst of the health crisis, the smartphone has become the one indispensable tool in an era when personal interaction has become far less commonplace and, in many areas, is being actively discouraged by the government.  Today the phone is being used to purchase necessities, to gather information, to commune with others virtually via social media, and to while away otherwise boring hours by playing games. When viewed through a marketing lens, all of those activities present opportunities to those who are in the business of selling cars. "I think it's a fascinating space to watch," Jonathan Harrop, senior director of global marketing & communications at Dallas-area-based AdColony, told us. "Anyone who's in the auto dealership space should definitely take another look at how people are using their phones to shop for cars. And if your business isn't looking at that as a viable channel to drive some sales, then take another look because you may be surprised by who you can reach that way." AdColony is a Century City, Calif.-based service provider that works closely with advertisers and publishers to help them maximize their smartphone campaigns and integrations. The company began as a mobile game development house, but its leaders quickly saw the opportunity advertising to gamers and other smartphone users offered. So it pivoted away from game development and into a tech service. "On the one hand, we help all those free apps that everybody's used to nowadays, to make money so that they can stay free with our technology of displaying ads," Harrop said. "And then on the other side of that coin, we enable advertisers to reach users in those apps by letting them show ads. We have both the brand advertising side, which is where the auto side of things comes in, but we also do the app-install side of the business. So every time you're in one game and you see an ad from another, there's a good chance that's one of ours."  AdColony's recent study of consumer attitudes and behavior, Car Buying Survey 2020 (USA), details just how reliant consumers have become on their smartphones when it comes to shopping for a car.  Instead of treating their phone as a supplemental research tool, consumers rely heavily on their smartphones for every aspect of the car buying process. A strong majority of respondents to the survey said they use their phones to research car models and specs (66%) and compare prices (74%). Once they've narrowed the search to their top choices, they then use their smartphones to find dealership locations (60%). The 2019 edition of the survey only saw 40% of respondents using their phones to find dealership locations. Over the last year, this number jumped up by 20 percentage points. "This year we kept the questions more similar to the previous year so we could actually gauge how things are changing," Harrop told us. "Obviously for 2020 the answers are a little different but I'm of the belief that the shift that we saw in smartphone adoption this year and smartphone usage growth isn't necessarily just because of COVID-19." As with many others who serve the digital side of the auto industry, Harrop believes that Covid has accelerated trends that were already there. Consumer behavior pointed to a swing to more and more smartphone use, but the pandemic jammed its foot on the gas pedal. "If you were on the fence about ordering groceries from your phone at the end of 2019, it's a pretty good chance you're okay with it by now," he said, "especially if you live in California or some of the more impacted states." There is no doubt consumers are becoming increasingly acclimated to using their mobile devices to access important shopping and purchasing information. And that information can come from unexpected sources, like mobile-device games. This is an area in which AdColony has enjoyed significant success. "BMW has been one of our biggest customers, especially internationally over the years doing stuff both for the main marque and MINI," Harrop said. "We've done a couple of great creative units where, within the games themselves, users are actually encouraged to interact with ads in order to receive rewards from the game. Typically, coins or extra lives or what have you." That provides awareness and some degree of branding, but the information offered to consumers can go even deeper. "Users can tap on specific hotspots to learn more about safety features, performance features, what it's like to drive with the top down — little things like that sort of plant the emotion of purchasing a car rather than just straight facts, but also giving more detail than you would get from a traditional TV ad or radio ad or even a website because it's more interactive." Forward-thinking marketers are also using consumers' own smartphones to amplify advertising messages that are delivered by radio or television. "A lot of people use their phones while they're watching TV, and I say "˜watch TV' in the broad sense that could be Netflix, that could be Hulu, that could be broadcast TV," Harrop said. "So when you see a car commercial on TV, a lot of people will go straight to their phone. You know, let me learn more about this car or let me find a dealership for this car. That increase in usage is way up from last year's edition of the survey." The study found that consumers who research cars on their phones are likely to visit a dealership. More than two-thirds of respondents (70%) said they are very likely or likely to visit a dealership after researching cars on their smartphones, and that number is up 11% over last year's result. Of course, smartphone users are also getting more and more likely to buy a car with a phone in hand. While more car shoppers use their smartphones throughout the research process, AdColony is also seeing consumers use devices at the actual purchasing stage. Nearly a quarter of the respondents to the AdColony survey said they have used their smartphones to purchase a car. More than a third of respondents say they are interested in online purchase processes. Those marketers who look at a desktop experience as the key to reaching online shoppers might be sorely mistaken. Increasingly it is the phone, not the computer, that is the key shopping and purchase tool of choice. "The younger people are the more they view a tablet and a phone as all they need," Harrop said. "And if they do have a computer they've tended to have that separation. Now that a lot of people are working from home, they've been using their computer for work and when they're done with work, they like to just say, all right, I'm not touching my computer." But their phone is their lifeline, the heartbeat of their existence. From vehicle research to price shopping to dealer selection, Americans turn to their smartphones to guide the buying process. And on the leasing edge, more consumers than ever are using their phones to make a car purchase and schedule delivery. Not only can you research and buy a car from your couch in your pajamas, but now you can buy a car on a phone app just like ordering a specialty beverage from Coffee Bean.