This is the second in a four-part series taking a deep dive into the challenges and opportunities of consumer auto financing for lenders, dealers and consumers.
The shift to digital-first auto sales
Two out of three shoppers will likely purchase their next automobile 100% online, according to a Cox Automotive study. In 2020, COVID-19 has accelerated the shift to digital.
Digital solutions in the past few months “have shifted from ‘nice to have’ to ‘essential’ for dealerships,” reports Dealertrack. “In fact, according to Dealertrack sales and transaction data, between mid-April and mid-July 2020, interest in e-contracting grew 94% while the number of contracts signed remotely rose by 97%.”
That’s a massive shift.
Truth is, consumers are driving change across all fronts in the auto industry, from driverless cars to direct-to-consumer auto sales. Along with almost every other industry, automotive has had to figure out how to replace face-to-face customer relationships with a satisfying digital-first experience. To stay relevant with consumers, dealers have had to adapt fast, with mixed results.
So what does that look like? What should dealers be paying attention to when crafting a digital-first customer experience?
Crafting a successful online customer journey
The first and most important concept to grasp in the digital-first experience is a customer-first experience. While it may be awkward to stand up and walk out of a dealership, it’s very easy to click off a web page. And that is exactly what a customer will do if the online experience is annoying, repetitive or frustrating.
Every step in the buyer’s journey must be understood through the lens of the customer experience. Not all customers are alike, so having a clear understanding of the target market is a critical first step in a successful digital first strategy.
Let’s talk about websites: It’s time to stop thinking about the dealer website as a storefront. Think of it more as a funnel designed to engage customers at the top, give them all the information they need to make a decision, and then provide them with the tools they require to make the purchase on their own terms.
Remember, it’s very easy to lose a customer when all they have to do click off a webpage. That’s why it’s important to give customers the opportunity to engage with the dealership on their own terms, whether by telephone, SMS text or on-site chat.
The role of auto financing in increasing online sales
When it comes to auto financing, the online experience must also be seamless and stress-free. Allow the customer to be in charge of structuring the deal. Be transparent about the different options available and make it easy for them to purchase additional products or aftermarket services like warranties.
The evidence is clear: When a consumer makes their purchase from the comfort of their own living room, they tend to spend more on their vehicle. The more comfortable the customer is, the more money they will spend.
Once a customer is ready to sign, they should be able to do that with an e-signature. So, too, with fulfilment. Make it easy for the customer to upload the required documentation to take possession of the car.
The delivery of the vehicle is another area where a dealership can really stand out and make it a celebration for the customer.
Finally, for after-sale service, customer retention campaigns keep the customer engaged going forward for lease renewal, servicing and when it comes time to buy a new car.
The great news for dealerships is that studies have shown that closing ratios double and triple if the customer journey minimizes friction — in other words, when the online experience becomes customer- focused. Dealerships can only do that with an open mindset, the right technology and automation and, when necessary, human connection at exactly the right time.
Delivering the experience: partnerships and technology
In order to succeed today, dealerships need to partner with a wide array of forward-thinking lenders who incorporate digital-first financing processes into their online shopping experience. The key to the future is in making savvy technology investments and adapting new processes to bring lending companies and dealerships together, increasing the number of deals you close.
Bryan Smith is head of customer growth and strategic partnerships at Inovatec Systems. JAVELIN by Inovatec is a modular lending platform that helps lenders drive efficiencies through automation, while only paying for deals that are booked.