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Could COVID-19 speed up digital transformation of automotive retail?

While the automotive sector has undergone dramatic digital transformation, the sales process has remained the same with the customer quickly funnelled into the showroom. Coronavirus has changed all that.

Innovative and forward-thinking dealers are deploying digital tools more extensively, while by the second week of the lockdown some suppliers had accelerated product development and scaled up operations to accommodate remote working.

As the realisation sinks in that it isn’t necessary to conduct much of the purchase process in the showroom, the likelihood of a return to old practices is already looking unlikely.

In the first week of lockdown, Auto Trader figures (March 27) showed classified traffic down around 41% over the previous week, compared to the same period last year, while its 1.1 million average daily users dropped to around 755,000 on March 23 when lockdown was announced.

Richard Walker, data and insight director, said: “The fact that between 8,000 and 10,000 adverts are still being saved by consumers every day  suggests that while consumers can’t easily buy their next car now, they haven’t stopped looking.

"It’s therefore vital that, while physical premises have had to close, digital forecourts remain very much open.”

Similarly, online garage Regit, which has 2.5 million registered car owners, reported test drive requests had dropped 90% in the first few weeks of March, but there had been a 300% uplift in web traffic from March 23.

Requests to ‘keep me informed’ and ‘request a brochure’ had never been higher, car valuations increased from 35,000 to 50,000 (although that could be skewed by those needing to divest) and its live chat concierge facility is handling around 1,000 new car buying conversations.

'Coronavirus experience will boost consumer confidence in e-commerce'

Chris Green, co-founder and chief revenue officer, believes buyers will emerge post crisis with a new-found confidence in doing e-commerce with automotive retailers.

He said: “The statistics show not even 1% of vehicles in the last five years have been bought online but we will see a shift as consumer confidence grows.

"There will be an uptake in buying used cars online as a result of this pandemic.”

Messenger platform Liveperson is also handling more online conversations, following an initial drop-off of around 30% when lockdown was first announced.

Some brands are seeing a 40-50% increase in messaging volume, a pattern which is repeated across all its B2C verticals.

An audit across its 8,000 dealers, analysing all conversations, identified the top ‘intents’ in the last four days of March as: deals currently available; can you deliver; buy now pay later; can I still purchase; when will my new car be delivered; can I reserve and can I buy online?

Liveperson’s messaging volume had been growing by 25% year-on-year but over the past four weeks, that figure had leapt by 90%.

Richard Ward, global head of OEM, said: “COVID-19 has fast-forwarded the sector five years for every vertical but particularly automotive.

"Consumer behaviour has changed forever; people will expect to buy online more rapidly.

"Messaging underpins every part of the purchase journey because it allows people to interact.

"Everyone uses messaging but dealers for a long time have got away with pushing people through phone and email, which is not how consumers want to interact.”

This fast-forwarding is evidenced by one of the biggest manufacturers in the US scaling up its messaging abilities, which saw Liveperson enabling 11,000 dealers worldwide not already on its platform to use the system in just six days. 

Marketing Delivery also saw evidence of customers wishing to continue purchases within days of the pandemic gripping the country, while social activity also showed huge increases in traffic and engagement.

One medium-sized group experienced a doubling of page impressions as COVID-19 took effect – 1,179,615 from March 16-25 compared to 656,070 the previous week. 

Managing director Jeremy Evans said: “If customers were interested in a car before all this then they are still interested, it’s just the lead times will change.

"We are still getting servicing requests, it’s just that people are booking for May rather than April.”

Around 90% of Marketing Delivery’s dealer clients are continuing communications – albeit with tweaks – but Evans believes the crisis will result in long-lasting changes whereby sales executives will have to respond to customers enquiring electronically in the same way. 

He said: “That will be a permanent change.

"Not all customers will be confident and competent doing it but those who are will be pushed further down the sales funnel before they see a physical dealership.

"It will become the new normal for some people and that percentage will grow once dealers and customers realise this isn’t a bad way of doing business.”

The change in the sales execs job skills 

Evans also predicts demand will grow for digital skillsets with a move away from the traditional sales exec who sits people down and negotiates face-to-face.

Meanwhile, ‘service to you’ will be given a boost as consumers realise dealers are able to facilitate drop-offs and pick-ups for test drives and servicing.

When Marketing Delivery updated the wording on its emails to ‘visit our virtual showroom’, it produced instant click-throughs. 

Likewise, video platform provider CitNOW and digital documentation specialists MotorDocs accelerated the launch of new products to accommodate remote working.

In pilot stage as the coronavirus outbreak occurred, CitNOW’s remote part-exchange valuation live video stream was opened early to some retailers.

Ollie Parsons, head of UK sales and client services, said: “What this current situation has enabled us to do is leapfrog a considerable amount of time that it otherwise would have taken to get some of these in place.”

Meanwhile, as people embed and work from home, video conferencing is becoming much more commonplace.

Parsons said: “We are going to emerge from this considerably more comfortable with live video chat.”

Chief executive Alistair Horsburgh added: “We believe when social distancing measures are relaxed, customers will still want a more contactless experience.

"We will see video being used for a smoother experience, if customers avoid going to a dealership.”

Workshops facilitating a contactless drop-off will use video to put a face to a name and the showroom will increase video interactions beyond responding to enquiries, such as home-drop test drives, which will require confirmation of details, how to operate the vehicle or virtual test drives and demonstrations.

The digitisation of paperwork

MotorDocs brought forward the launch of its iShare module, enabling documents vital to the selling process to be managed digitally, going live with two dealer groups and a used car retailer by the second week of the lockdown.

The used car centre signed up its first customer using the system in the first weekend, while the deal was already in process.

Joint managing director Andy Mee said: “We did in a week what would have taken us a few months because it focused our time and attention.”

MotorDocs estimates there are between six and eight documents which need to be signed as part of the sales process which iShare facilitates remotely.

Mee added: “The ability to have distant selling signature capabilities will come to the fore once we come back.

"It will be about how you are digitally enabled from a dealer point of view to transact at a distance, not just being able to order online but undertaking all the paperwork too.

"Until this point, you had to come into the showroom to sign everything.”

Dealers operating Arena Group’s mstore digital documentation system have been able to continue the sales process remotely.

When normality returns, mstore will allow the workload to be shared across dealerships to cover short-term absences, while sales process efficiencies will save costs in a slowing market.

Neil Maude, director of technology, said: “Digitisation makes business continuity more possible across a range of scenarios.

Where it then works well is to streamline the buying process and provide more flexibility that adapts well to the requirements of social distancing.

“As more customers will be looking online to purchase their next vehicle, it’s vital all the required paperwork can be processed electronically so only the final handover needs to be done face-to-face with the customer.”

At Rockar, new clients were wanting to significantly accelerate plans to move their businesses away from lead generation dependency, to full end-to-end e-commerce.

Managing director Martin Sewell said: “This means during the second half of the year and into 2021 you will see an acceleration of this transformation.”

While face-to-face interactions won’t disappear when normality resumes, Sewell added: “I think customers would love to do as much as they can online – they just haven’t been able to do so until now.

"I’m afraid the industry defines e-commerce as ‘lead generation’, which means they have to interact with someone to complete a transaction.

"Smart strategic thinkers will have true e-commerce in their sights; the crisis has brought the need into sharp focus.

"It’s about evolving consumer interactions and embracing true e-commerce to become relevant in the omni-channel world we live in – and stop hanging on to the past.”



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