Information TechnologyCommentary & Insights

Information Technology
The Biggest Disruption of All: The Quiet

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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 . 
Communication Has Changed: A Conversation with Joe Shaker

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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!
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.    
digital transformation
Digital Transformation in the Automotive Industry

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76% of CEOs, in every industry, agree their business models will be unrecognizable in 5 years. Think your dealership is immune? Technology touches every part of our lives. From the Alexa alarm that wakes you up to the UberEats app that brings you lunch, technology has radically shifted the way we live our lives and conduct our businesses. Forrester Research surveyed the world’s top CEOs and found that more than three-quarters of CEOs across every industry expect their business model to change in the next five years. After a year of explosive growth for automotive e-commerce companies like Carvana and Vroom, it’s time for dealerships to make their move.  Age of the Giants Depending on where you or your dealership clients are located, it’s possible that you’ve already felt the presence of tech-first dealerships like CarMax, Carvana, and Vroom. These companies have entered the market nearly a decade ago and have seen their growth explode thanks to shifting consumer attitudes about online car buying, especially over the last year.  Digital dealerships have seen large success because they make it easy and transparent for shoppers to get the information they need to make a confident purchase decision online. Fortunately, it doesn’t take millions in raised capital or shareholder money to create the type of online shopping experience that converts. Instead, it takes a digital transformation. The Tech Takeover Technology has been traditionally considered its own industry, but Forrester analyst, Jay McBain, predicts that soon the “tech industry” will disappear as it becomes ingrained in overall business strategy. McBain had this to say on a recent episode of The Ultimate Guide to Partnering podcast,  “…you used to compete against the person across the street and in your industry, and do things 10% better. Well, there’s a set of startups somewhere in the world right now that are thinking about ending your industry. So, every company has had to become a technology company. And every day, you’re reading about car companies having to look more like Tesla, you’re reading about almost every industry, you’ve got these big changes underway. So this technology is no longer a part of a company. In many cases, it’s becoming the entire business model…” Some of the most notable companies are already leading the charge in this change. Tesla is a technology company at its core and just happens to produce automobiles. Uber is not a taxi service, but rather a tech company that allows consumers to leverage technology to solve transportation problems. As consumers insist on more personalized and on-demand service, dealerships will profit from reinvigorating their business models with the new IT strategy. Your New Most Valuable Real Estate A lot of dealership owners think that their physical car lot is their most valuable piece of real estate. Dealers put a lot of attention into their dealership’s physical location and designing their showroom experience with special thought and planning, but neglect their mobile digital customer experience.  But consider this: how many customers visit your dealership showroom every day? Now consider how many people visit your website on a mobile device every day. The first experience a consumer has with your dealership before they walk into your showroom is your website. Consumers are doing so much more research on their own, likely on a mobile device, going through the selection process and eliminating dealerships to visit. As a result, they are visiting fewer dealerships. Does your website give consumers the experience you would expect as a car shopper?  Digital transformation is not just a new digital retailing tool or a video and 360° walkaround tool. Instead, it’s an overall adoption of digital technology by a dealership to enhance the car shopping experience while improving business processes and profitability. Leading the Digital Transformation Has your dealership business model changed in the last 5 years? What changes are you planning to make in the next 5 years? Dealers can only be successful if vendors invest in partnerships, integrations, and guide dealers through mobile digital transformation. Software companies, software integrators, service providers, marketing agencies, trainers, and consultants have a massive opportunity to help dealers meet customers online by partnering and connecting the right tech solutions together.
analytics data
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?