There are now more avenues for car dealerships to sell their vehicles than ever before but has the part-exchange process truly embraced the transparency of a truly omnichannel customer journey?
The smartphone, for example, has made it easier to capture high-resolution images and videos of vehicles, and upload them in a matter of minutes.
And yet, despite the latest advances in digital technology, accelerated by the COVID-19 crisis, when it comes to trade-ins there’s often a disconnect between the valuation the dealer offers in-store and what’s available online.
Why is this? And what do motor retailers need to do to provide a seamless omnichannel customer experience?
There are multiple tools available online for consumers to get a swift trade-in valuation.
By entering their car registration, mileage and details about the vehicle’s condition, they can get a quote in minutes. But, often they are only indicative and aren’t actually binding.
“The point of online valuations is that nobody guarantees them, even if they say they do,” says Alistair Horsburgh, chief revenue officer at CitNOW, which launched Tootle, an online part exchange platform, last year.
He adds: “The concept of guarantee depends on the consumer giving you the correct information and the buyer not wanting the price to be reduced because the vehicle is the wrong colour or specification, or it’s not in the condition previously stated.”
Another problem with guaranteeing the online valuation is if it’s subsequently discovered at the dealership there’s an issue with the vehicle. It can result in an awkward conversation with the customer. Worse still, the retailer can be forced to absorb the cost, with some even putting aside funds to cover such oversights.
“The danger is that it can create a negative customer experience,” says CitNOW’s head of sales Callum Wood. “If the wrong details have been input that can lower the vehicle’s value and often the dealer will have to swallow the cost.”
Carwow chief executive James Hind believes it’s more important to provide an accurate valuation than guarantee the price. For example, because the Sell Your Car platform sets realistic and fair expectations, more than 95% of customers received the price they were initially offered, he says.
“Buyers shouldn’t feel pressured into overpaying on vehicles to tie themselves in a knot for the sake of offering a guarantee,” says Hind. “Digital valuation tools have been proven to give dealers all the information they need to give accurate valuations in the first place.”
Cox Automotive insight and strategy director Philip Nothard takes a different view. He says that, provided the valuation process is simple enough for the consumer to understand and there is no ambiguity, there’s no reason why the price quoted shouldn’t be guaranteed.
“Subject to the normal declaration of information, as long as the consumer follows the correct process and completes the online appraisal then there’s no reason why the price shouldn’t be honoured,” he says. “That’s because the valuation will have buffers built into it to deal with any anomalies.”
Duncan McPhee, chief operating officer of Lookers, says that online valuations should be guaranteed, provided the vehicle condition is the same as described by the customer. But he adds that there needs to be some leeway, given the current longer lead times for vehicle orders.
“It’s all about managing expectations,” says McPhee. “Ultimately, if a customer obtains a valuation online, the dealer should absolutely guarantee that, provided nothing significant has changed with the vehicle.”
The key for dealers is to provide an omnichannel experience, whether that’s in-store, online or a hybrid of the two. However, it may not be viewed as truly omnichannel if the consumer has to visit a dealership for a trade-in appraisal and the online valuation they received then changes.
“At the moment, this is an area of concern for both consumer and dealer,” says Nothard. “But, in the future, the consumer should be able to get an online valuation and then drop it off at the dealership or arrange for it to be collected without the need for an appraisal.”
In theory, the consumer should also be able to walk into a dealership and receive the same valuation as they would online, as well as the same level of transparency.
But it doesn’t always work out that way.
“The on-site and digital appraisals should mirror each other,” says Nothard. “And, if a consumer has to bring in their vehicle after doing an online valuation because a secondary valuation is required, then that should be done in exactly the same way.”
The biggest problem is consumers value their vehicle at more than it’s really worth, with 76% of retailers citing customers overvaluing their existing vehicles as the biggest problem with part-exchanges, according to a recent CitNOW survey. Then there’s the issue of providing the wrong information or insufficient detail.
This is because either the consumer doesn’t know what content they have to supply or they are trying to hide something about the vehicle.
To get the most accurate valuation, if consumers are doing a self-appraisal, they need to provide the dealer with the relevant details as well as photographs and videos to show proof of mileage and the vehicle’s condition.
But online valuation providers also need to ensure the process is easy to follow and as transparent as possible for the consumer.
This requires, for example, providing answers to commonly asked questions.
'Most' consumers are honest
“It’s human nature for sellers to not want the value of their vehicle to go down, which is why it’s important that processes are clear and expectations are set,” says Hind.
“The ambition should be for dealers to get complete information, to give a foolproof valuation from the comfort of their desk or smartphone.”
Despite the opportunity to try to hide any defects, Nothard says that, on balance, most consumers are honest about the condition of their vehicle.
In fact, they are more likely to be upfront about any issues when doing the valuation online as opposed to in-store, he believes.
“The majority of consumers tell us about any marks or damage to their vehicle,” says Nothard. “We trust that they will be open and transparent in declaring this information.”
Being truly omnichannel means enabling the consumer to do the trade-in using their preferred method. They also want the flexibility to be able to use any channel at a given time.
Whichever platform they choose, however, it’s essential to carry out a proper appraisal.
If, for example, the customer doesn’t want to go to the dealer, the dealer can come to them and inspect the vehicle before taking it away or they can do it virtually by using a video to show them around the car.
The pandemic has caused many people to move to online because consumers feel safer doing a valuation in the comfort of their own home rather than going into a dealership.
This is reflected in the fact that 57% of buyers said they would be more inclined to buy a car from a dealer after receiving a remote part-exchange valuation, according CitNOW’s survey.
“Any retailer that elects not to use a digital process to give a part-exchange valuation is missing out on a big opportunity,” says Horsburgh. “If they don’t adopt the technology, the chances are the customer will simply go elsewhere.”
Author: Alex Wright