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Are you being served? The US and the digitalisation of dealerships

Chris Smith, CarKeys.co.uk

Following a trip to this year’s annual NADA convention in Las Vegas, chief executive of The Lead Agency, which owns CarKeys.co.uk, Anton Hanley saw how the need for face-to-face interactions in the car buying process is even more limited than in the UK.

VP at Autotrader US, Doug Keim took to the stand and brought home the realisation that the majority of interactions between manufacturers and consumers are now done online, or at the very least it’s where initial conversations begin.

He recalled a recent statistic which highlighted that back in the 1980s, new car buyers would visit around 10 dealerships looking for the best product and price. Fast forward 40 years and that same figure has fallen to (on average) 1.6 dealerships in the US, according to McKinsey.

This, however, is not a threat to dealers, but rather an opportunity.

At NADA, we heard how the total dealership revenue eclipsed 2014 by 6.9% to reach a new high of $862bn (£592bn). It simply highlights that buyers are more informed and closer to a point purchase than 40 years ago, driven by the research moving off the forecourt and onto the internet.

The priority for brands and dealers needs to be on ensuring the right tools are being used, at the right time and in the right way to inform and engage consumer attention before they even set foot on the forecourt. And this is where the gap between the US and UK automotive industries begins to shine through.

Anyone who has ever visited the US will tell you, the focus on customer service and the customer-brand experience is overwhelming – something car rental firm, Enterprise understands well with their juxtaposition of an American and British salesman in its advertising.

Wherever you go, you are greeted with smiling faces, personalised offers and people wanting to write your name on fancy iced-coffee.

Undoubtedly, the US has built up one of the most sophisticated markets in the world when it comes to after-sales, consumer lead handling, response times, price transparency, and consumer engagement – especially when targeting millennials.

This is something which has had a massive impact on its automotive industry for decades, and has inspired the UK and other markets around the world.

The customer experience along the entire path to purchase was also highlighted at NADA’s ATD Industry Luncheon urged the industry to ‘connect and communicate’ with consumers in more inventive and up-to-date ways.

What we are seeing, in particular, is that American car dealers are far more open to embracing new technologies which can enhance both sales and the consumer experience for past, current and future customers, and this is impacting positively on their figures.

At the NADA convention, we were seeing huge buy-in from the automotive market as a whole to mobile technology and mobile marketing strategies, with particular emphasis on real-time chat and quicker response times as part of consumer-centric strategies.

Beginning to see first-hand the extent to which US dealerships and manufacturers are already embracing digital marketing strategies across platforms such as Facebook, Whatsapp and Snapchat, further cements that this is the future of the industry.

This idea is backed up by research by IPSOS which found that 45% of millennials are now conducting research online when making purchase decision.

And yet, the UK automotive market as a whole has been slower to adopt this digital disruption which is increasingly, and unarguably, affecting every industry today.

CarKeys’recent study into consumer research and purchasing behaviour in the UK revealed that only a third (36%) of car buyers now use their mobiles to research a purchase decision on the forecourt.

As we see this growing shift towards building better and more valuable relations between consumers and brands, a number of iconic brands within the US automotive market are beginning to embrace this mentality into their CRM and CEM strategies.

Most notably, TrueCar announced at NADA a move to create better relationships within their dealership network by working with dealers and manufacturers to create an informative and user-friendly consumer experiences by radically overhauling the car-shopping site – whilst supporting the industry and pricing as a whole. Something their new CEO is particularly focused on.

However, whilst a number of European brands are beginning to push ahead in the new digital space, with BMW and Jaguar recently announcing online purchase platforms, Uber-style car hire services and a general focus on the importance of content; are dealers keeping up with their US counterparts?

Despite the UK market’s far superior position in the automotive sector in terms of financial regulations and online financial and lending tools, it is this focus on reaching the customer at the very start of the purchase journey and making the whole purchase experience as easy and informative as possible which is pushing the US slightly ahead.

A recent article in Marketing Week, citing NPMG Nunwood’s latest US Customer Experience Excellence report, highlighted that on the whole US companies beat their UK counterparts by an average of 2% on the customer experience score – with personalisation and resolution showing the biggest gap.

What the report ultimately revealed, is that the UK is currently around ‘four years behind the US on customer experience’ and it only seems to be growing.

As digital disruptors such as CarGurus and AutoAlert continue to launch across the UK and Europe, growing both the consumer and industry focus on data and technology, UK dealerships need to focus on creating a customer-focused experience from beginning to end in order to compete in the marketplace.

By creating a seamless and personalised customer experience which adds value to their experience with the brand as well as to the purchase decisions by utilising the wealth of data and channels available, dealers can create a pool of informed and engaged potential sales leads.

Yet, this will only be available to those willing to break the current boundaries of customer relationship management and engagement by looking to the new digital frontier of the automotive industry. Answering that all important question - are your customers being served? 

Author: Chris Smith, head of CarKeys.co.uk

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