The connected showroom will revolutionise automotive

By July 9, 2015Automotive
The connected showroom will increase sales for automotive dealerships

 

Having spent many years working with automotive retail one thing has constantly surprised me: How showrooms have failed to match the technology innovations used in the cars, vans, trucks, motorcycles and agricultural vehicles themselves.

Our cars now have screens with multimedia interfaces, connected apps, live data links and more. The car often knows more about the driver’s preferences and behaviours than a dealership does. If you have seen inside the cab of the average tractor recently, you suspect that it won’t be long before even the driver is replaced by a hyper-accurate control system.

Daily, each customer brings into the dealership a highly interactive screen of their own, in their smartphone, which carries with it the possibility to engage them and in return receive rich data about their preferences and buying patterns. Additionally, the costs of deploying tablet devices in showroom and service areas is now so minimal compared to the benefits delivered to customer, dealership and brand, there is no reasonable excuse not to be doing so.

Yet in many dealerships, often the only screen to be seen is the TV in the service reception waiting area, often still tuned to a kids channel after the AM drop-off traffic.

It’s time to think about what benefits, in particular the business cases for the dealer and brand, can be delivered by engaging consumers via mobile devices.

For the customer

Customers with smartphones can benefit from receiving time-saving and value-driven communications that are more timely and relevant than when delivered by other channels, such as email. For example, if we know a customer is waiting to be served in Service Reception, a timely notification that a discounted Winter Check is available is far more likely to convert to an immediate sale than an email or even SMS received a few days before.

Using an app to both book a service and notify the dealership that the keys have been dropped off in service reception (and the bay number the vehicle is parked in), saves time for both customer and service staff.

Consumers are actively seeking engagement via their smartphones so it makes sense that, whilst in the dealership, the brand uses the opportunity to communicate loyalty-building and product education content.

From countless mystery shop visits, we also know that, using mobile apps, the sales process can be greatly enhanced for customers, from quickly identifying which member of the sales team is best equipped to help them (crucial when the sales process is driven by the salesperson’s commission and private and business customer need to be quickly segregated) and also in providing self-help and semi-guided tours to the showroom.

A well-executed tablet app, left with the customer as the salesperson checks stock availability or is conducted a part-exchange appraisal, can also be far more effective in selling value-added items such as GAP Insurance and over protection policies, thanks to optimised content that quickly educates on the benefits and helps convert more customers to these valuable dealer revenue streams.

For the dealer

Some estimates put the percentage of sales floor visits that do not end in a sale as high as 80%. It is a fact of life than many people are reluctant to deal with salespeople at the best of times and, while we are not suggesting that technology should replace the human touch a professional salesperson delivers, dealers know that many potential customers would prefer to ‘self-serve’ for as much of the transaction as possible.

Indeed, with more content available through TV, magazines and online channels, the consumer is now much further down the decision-making process than ever before and may simply be there only to feel the goods, with a dealer now only given one bite at the opportunity. This is the reasoning behind BMW’s Geniuses, who have a clear mandate NOT to sell, but to help the customer find the exactly model that suits their needs, before handing off to the F&I people when the customer has chosen their car and is ready to commit.

Faced with ever-tight margins and the fear of not hitting volume bonuses, some dealers may also seek to replace relatively expensive sales people with more affordable product specialists, backed by information technology aids for each model. They will certainly do it if the process actually converts more visitors into customers.

Let’s be very clear though: Technology cannot fully, and should never be expected to, replace the human touch in the showroom. In Autotrader’s Car Buyer of the Future survey from March 2015, “Eighty-four percent of consumers in the study indicate they want to buy a car in person. 54% percent say they would buy from a dealership that offered their preferred experience over lowest price. Additionally, 73% report that they are willing to drive farther for a great salesperson, versus 65% who are willing to drive to get the lowest price.”

So where does technology fit in? It’s not just customers who can benefit from showroom tools like iPads that qualify the customer’s requirements or take them though the features of a car using interactive experiences. The dealership can quickly see which models have highest demand (this may be very different from the models that are actually being sold by the sales team, who may have put stock availability and a quick sale ahead of the customer’s best interests); the dealership can learn more about the individual customer’s preferences; and of course they can increase conversion more readily by using optimised customer journeys. In my own mystery shopping visits I have struggled to find a single salesperson who has explained GAP Insurance well enough for me to quickly understand it (they all have their own unique way, despite being heavily trained). Yet a simple interactive film on an iPad could increase conversion, especially when introduced at the optimum time in the sales process.

However, on my last visit to a dealership, when I pointed to an iPad on the salesman’s desk (we had established by this point that I worked in technology), he cheerfully pointed out, “Oh, that? They gave them to us but all we do with them is watch films during quiet periods.” If that sales guy knew his lack of use of a business tool – that could help him convert more enquiries – was being tracked by both the dealership and the OEM, I suspect he would be a far more successful salesman. The trick is to prove that technology can now play a valuable role in the sales process.

The automotive industry is already waking up to the challenge. In McKinsey’s Innovating Automotive Retail whitepaper, it’s noted that, “OEM’s and dealer groups have started to rigorously restructure, consolidate, and improve their dealership networks by implementing new processes and standards. These include efforts to set and closely-track performance measures – such as metrics on conversion rates through the sales funnel or average discount per car – to identify laggard performers and actively monitor and manage dealer performance.”

For the brand

Arguably the biggest winner is the brand. The ability to retrieve valuable, highly accurate insight data from the sales floor should not be underestimated. Dealer benchmarking, feature popularity, the traction being achieved by promotions vs conversion-to-sale can all be seen in real time. And, as the human factor for error or inaccurate reporting has been removed, the brand has a more accurate picture of dealership activity than ever before. This, combined with insights from customer’s use of in-dealership sales tools and apps on their own devices will lead to efficiencies in operations and marketing ROI.

Consumers are now almost universally starting the decision-making process online. OEM’s should consider making the choices made during this journey (on their website) available to the sales floor to help convert the customer as efficiently as possible. This requires a seamless integration of CRM and web analytics data (what we call ‘past data’) with the choices being made in the showroom – inputs into sales tools, movement around the location (what we refer to as ‘current data’ in our Location Intelligence model). The combined profile of previous browsing history and current choices will help the OEM understand, influence and enhance the customer decision journey.

It will also help the brand move from a conquest model to a loyalty-based relationship with the customer. Crucial to this will be to adopt a single sign-on for the consumer that will enable them to engage with the brand no matter which device they are using and for their data to be held in the cloud, enabling the transition from living room research mode to sales floor purchasing mode to be seamless. As purchase decisions become ever-more involved due to personal preferences, wide-model choices and complex financing and insurance programmes, the reluctance of a consumer to move away from a brand ‘that knows them so well,’ will become as much of a barrier to switching as lethargy in switching bank accounts or energy supplier. Loyalty is not just about experience anymore, it’s also about where the consumer chooses to ‘home’ their data.

As McKinsey pointed out in its white paper, there are three clear steps in the transition to the connected showroom:

  • Build the foundations of dealer excellence by measuring and managing performance
  • Test innovations that define a new, enhanced consumer experience
  • Roll out new retail formats based upon the innovations that deliver the best consumer experience and therefore conversion-to-customer ratio.

In summary

It is early days for the connected showroom, but as virtually every other industry has discovered, when the digital revolution starts to happen, it happens at incredible speed. Dealers and OEM’s that don’t act on this are highly likely to lose out to those that do as there are clear benefits for all parties involved.

It is not a step to take lightly though. There is no one-solution-fits-all, as dealership-generated and existing CRM data needs to be integrated, often from disparate legacy systems. Each brand should take the basic information available, such as live showroom analytics, and build test cases with a few select dealers. From a process of trial-and-learn, the operational and marketing efficiencies that occur will form the basis of a platform of digital enhancement and experiences that will serve the consumer, dealer and brand well, and profitably, into the future.