Special Focus: Digital Trends

With a raft of digital products available, how can dealers pick the right ones and use them to drive profits?

The use of data in automotive has become a daily endeavour for retailers, be it keeping tabs on price fluctuations or analysing customer engagement and response rates. With so much to look at, Motor Trader reached out to key industry figures to find out how dealers can best use these tools to drive profits.

Catherine Faiers, COO at Auto Trader highlighted a growing demand for omnichannel services, with buyers being well prepared by the time they hit the forecourts. She said: “While the data shows that growth of end-to-end online retailing is stalling as lockdown conditions well and truly disappear in the rear-view mirror, we’re seeing growing demand for an omnichannel service, which seamlessly blends the best of both the digital and the forecourt experience. Many still absolutely want to experience the car, to test drive it, or get advice from a product expert, but our research shows that people want to do more of the jobs necessary to purchase it online. Whether it’s checking availability, sourcing a valuation, booking a test drive, paying a deposit, or organising finance, 60% of car buyers have already done, or want to do most car buying ‘jobs’ digitally.

“This readiness means most decision-making is also happening away from the forecourt, highlighting the need for retailers to adopt to a digital-first approach. This also has a knock-on impact of changing the needs of consumers arriving at the forecourt, highlighting how critical a tailored approach to each customer has become, rather than a standardised one size fits all sales process.”

When it comes to driving profits through digital, Faiers said that it’s more vital than ever for retailers to stay on top of pricing to maximise profit and improve speed of sale and using data. She added: “Firstly, live market data shows daily movements in valuations so it’s vital to monitor this closely. Secondly, the most effective way to maximise profit is to work back from the Live Retail Valuation, this allows retailers to control desired profit margin at the point of purchase. Finally, data integration across all their platforms will empower data-driven decision making and help to drive operational efficiency.”

Jeremy Evans, chief executive at Marketing Delivery said that customers seem more willing to engage with digital prompts than previously. He said: “We’ve witnessed a significant increase in the number of service bookings made in response to email reminders; 34.5% of eligible customers made a service booking in response to an email reminder during the first five months of 2023, compared to 24.2% during the same period last year. Analysis of this trend has unearthed that the increase is highest among owners of older cars, rising from 12.2% last year to 24.1% year-to-date for vehicles over seven years old.”

Recording, analysing and using data can open new opportunities to drive profits by identifying additional reasons for contact, Evans told Motor Trader. He added: “Those on the waiting list for a new car could be made aware of relevant accessories to enhance their new purchase; customers who are yet to commit can be kept up to date with changing stock or pricing; aftersales customers could be contacted regarding recalls or seasonal vehicle health checks; and EV customers could receive information about the latest models or charge points.

“Each communication provides a chance to update existing customer data, maintains a constant dialogue and helps to foster trust and enhance reputation. Clean and accurate data maximises the effectiveness of advertising by targeting the right customers at the right time and producing a better return on advertising spend.”

Simon Donegan, commercial director at carwow emphasised the importance of data for dealers to make the smartest business decisions. Dealers, he said, can use data to help source the best stock and carefully balance new and used volumes.

He added that the key data to look at is response rate, as it said that dealers who respond to a message in under one hour see a 30% higher conversion rate, and text messages or emails are 25% more effective in engaging customers. So, dealers should consider how the physical and digital retail environments differ and at what point conversation is most effective.

Donegan said: “While an impressive 60% of consumers tell us they would consider buying a car fully online, we need to acknowledge that two-thirds still have concerns about doing so. That’s because most consumers want to test-drive the car before buying, seeing the car in person and being able to get their money back if they change their mind.”

For Rob Severs, senior VP, products and insight, iVendi, the key trend for this year has been huge dealer interest in how technology can be used to help meet the requirements of Consumer Duty. He said: “Since the FCA first announced the new measures, we’ve been looking at ways our technology can power compliance, especially when it comes to essential points such as the four outcomes covering products and services, price and value, consumer understanding and customer support.

“It quickly became clear that having an online self-serve vehicle purchasing journey for customers would probably be the most suitable solution – and that is proving correct now that we are seeing dealers adopt these measures in practice.”

Nick Pratt, business development director at Tjekvik highlighted a major increase in aftersales customers choosing to use automated check-in and check-out solutions. He said: “Our rolling 12-month data shows that the proportion of customers favouring the digital approach is increasing rapidly. During the first five months of 2023 we saw over 887,000 customer engagements via digital-only check-in and check-out, compared to 450,000 in the same period in 2022.

“While some of this increase is driven by growing rates of dealer adoption, the number of customers who were offered and then selected a digital experience currently stands at 43% for our home check-in solutions, and 25% for in-dealer kiosk check-ins. These figures are up on the same period in 2022, where we saw 30% at home and 20% at the kiosk. Don’t play at digital, go all in. Make digital options available to everyone to maximise opportunities.”

Alistair Horsburgh, group chief strategy officer at CitNOW Group said that dealers can drive profits with digital by understanding and tracking which metrics have a direct impact on revenue and efficiency as well as achieving a single view of all activity. He added: “The major benefit is the ability to drive standards, set clear benchmarks for performance, and give each site the same tools to view their own and other locations’ performance against the same metric. This supports the improvement of standards across a site or group. It also highlights if processes are working as well as expected. This enables the team to resolve any inefficiencies and enhance and promote areas that are doing well – aiding implementation of proven best practice.

“Using data well also saves time for retailers. Aftersales managers can complete one-to-one reviews for technicians and service advisors in seconds. Senior group contacts can get instant access to a single view of every metric, group-wide, according to each franchise and down to a site level.”