2020 was a year like no other. Yet, despite its challenges, 2020 also brought a number of lessons for the auto industry. Preparedness, personalization, inventive merchandising, and aggressive marketing are just a sampling of how dealers learned to adjust to this new era.
While vaccine approvals are a reason for cautious optimism, the global COVID-19 pandemic is not disappearing overnight. Dealers should be prepared for the realities of the next-normal of selling cars in a highly digital environment. The car-buying journey has forever changed, and dealers must evolve with it.
Let’s dive into some of the key lessons learned by dealers in 2020:
Consumer behavior has changed – likely for good:
The COVID-19 pandemic turned many industries on their heads, auto retail included. Personal interactions once were a mainstay of the car buying process, but face-to-face connections no longer are a prerequisite to purchasing a vehicle. A Cox Automotive study shows 44% of customers took more car-buying actions online than in the past amidst COVID-19. In fact, two-thirds of shoppers are comfortable completing the entire process online, Cox reports.
As a result, dealerships must look beyond their traditional brick-and-mortar locations to facilitate consumers’ ability to browse, compare options, and finalize the purchase process. Digital transformation is an even more essential element for dealership adoption to reach new bounds of profitability and customer acquisition. It’s no longer a nice thing to have; it’s a necessity.
In the next-normal, find – and meet – car buyers where they are:
The driving force behind the change has been the speed at which dealerships had to pivot. Given this sea change of where and how consumers are shopping, dealerships had to quickly leverage online platforms to re-create the car buying experience and generate new business leads. Cox says more than three out of four dealers are conducting business beyond their physical location – from scheduling at-home test drives online to new tools, such as video chat, the most successful operations found new ways to virtually bring a customer closer to the dealer.
What is more, as many as 70% of consumers are unaware dealers are offering a more remote retail purchase process. This lack of awareness is a huge opportunity for dealers to educate consumers about the virtual options at their fingertips because ultimately, convenience sells.
Further, the past several months have underscored the importance of digital tools in finding potential new customers. Social media targeting, display ads, and operating within a trusted car-buying network are all musts. A sound digital advertising strategy will serve dealerships well into the future.
Leveraging access to find qualified customers likely to convert from a strong prospect into a completed sale is instrumental. Sophisticated data modeling provides intelligent and actionable insights into shoppers’ buying profiles – their individual preferences, personal habits, and other key data points. This insight allows dealers to drive quality interactions with potential customers and convert those leads into sales, making their business more efficient and more profitable.
Particularly in late 2020, dealerships across the country were faced with tight budgets and had to explore doing more with less. Tools such as Cox Auto Data Solutions allowed dealers to cultivate quality audiences through identifying true, in-market shoppers. They could then deploy various marketing tools to attract those shoppers rather than blanket advertising.
Define and defend your dealership’s position:
There’s always a silver lining and 2020 saw the demand for inventory continue to rise. According to new Cox Automotive survey data, the new-vehicle sales index rose to 66, indicating a strong market. This improvement was due in part to increasing consumer willingness to start spending again, and dealers should continue to aggressively defend their position in the marketplace and define their value with shoppers through innovative merchandising and marketing of their inventory.
Dealerships can help solidify their position through inventory acquisition. Auction prices saw all-time highs, and dealers looked to other options to fill their lots including through programs such as Kelley Blue Book’s Instant Cash Offer. Dealers also were doubling down on their CRM, proving an opportune time to reach out to past customers paying higher APR rates and offering them options such as moving into a newer model at a lower rate. This gives dealerships a trade-in vehicle for which, in many cases, they have all service records. It’s a win-win.
Importantly, dealerships can put a stake in the ground by leveraging all components of their operations, not just the showroom. Service and repair departments can be valuable revenue drivers for dealerships. The online-focused experience allows dealerships to build trust through transparency. Clear and simple pricing comparisons online reassure customers that they’re getting a good deal on their services and will return for future needs.
To succeed in today’s automotive market realities, it’s critical to have the right tools and resources available to help car buyers seamlessly research and shop as well as purchase their vehicles online. Dealers should stay focused on the same reasons they have always been there for shoppers. The road ahead will be won by dealers who capitalize on the spectrum of integrated solutions across both in-person and digital avenues.