What does ‘digitisation’ really mean for dealers?

By Paul Smith, Director, Traka Automotive

Going digital or ‘digitization’, as our US friends prefer to term it, means very different things to different people. For some it means putting a website out there and detailing all your latest stock on there. Others will offer an App-linked pop-up screen on their website offering browsers the opportunity to book in a test drive of the car that they are checking out online.

Others are putting live web chat facilities on their websites to help browsers with any queries after they’ve been on the site for a set amount of time. These are all good examples of digitisation in our market and they should be commended. They offer the dealership the opportunity to cut time to, and cost of, sale considerably and improve online customer experience.

However, according to leading management consultant McKinsey & Co, the proliferation of digital tools thus far is just the tip of the digital iceberg. The car market will see a ratcheting up of ‘digital intensity’ over the next few years and some of these changes could prove seismic. So it’s best to begin devoting budgets to planning for digital intensification ahead of its arrival.

Let’s have a quick look at what’s happening in our market right now. There are 3 key changes afoot.

  1. Macroeconomic changes: In Europe we’ve seen a slowdown in sales of new cars, most notably in France, Greece, Spain, Italy and Portugal with total new car sales in 2015 rising 9.3% year on year to 12.8m but still 30% down the heady pre-recession days of 2007. The UK has best results of the whole of Europe with growth at around 11%. McKinsey & Co predicts that between 2016-2020 we will see growth percentages roughly halve globally to settle at around 5% by 2020.
  2. Simultaneously, we are seeing technology-driven disruption (or should we say innovation) coming through in spades. Uber and other e-hailing and car sharing services are hitting the streets all over the world and this will inevitably create an environment in which less people will be inclined to go out and buy new cars. McKinsey & Co again puts some projected numbers around this – estimating that changing car usage behaviour and the explosion of what they call ‘mobility services providers’ could mean an aggregate reduction of up to two million new cars being sold worldwide each year by 2030. Interestingly early adopters of mobility services drive themselves 20% less after they’ve used a service like Uber and the next generation of consumers – the Millennials – are of course early adopters of these services.
  3. Also on the technology side, we are seeing intelligent cars on our roads in increasing numbers, as the forerunners of autonomous vehicles which will not be seen in significant numbers for perhaps another decade. After that - who knows? In the meantime, intelligent cars will offer increasingly sophisticated assisted driving and parking capabilities. They may also offer car to car communications (for collision prevention) and will be packed with infotainment offerings, sensors, software and networking capability. 

We are beginning to see the first glimpses of where all this new technology and digitisation could take us, with Uber’s first driverless taxis going live in Pittsburgh just last month. We are also seeing the inexorable move from diesel and petrol dominated drives, to hybrid and all electric vehicles coming through in the next 10 years, pushed along by EU legislation which may well mandate minimum 60 miles per gallon vehicles by 2025.

But if at first glance this looks like a recipe for ‘disruption overload’, fear not. What the management consultant wonks are saying is that the UK is better equipped for digitisation than even the US, because more of us are happier to buy more stuff online already. And providing online processes are well joined up, many of us are even prepared to buy our cars through the click of a mouse, as long as we have a nearby dealership to show us the car options and help finance, service and support the mighty purchase.

So how should dealers respond now to impending digitisation? The first thing to think about is properly segmenting your customer-base by value and behaviour traits, or ‘personae’ in the digital marketing jargon.

Once you’ve defined customers’ value and digital ‘savoir fair’, the next element to consider is tailoring digital customer experience according to these digital personae. It is important to look at every online process with a view to delivering a joined up customer experience. If there is scope for an online-only process to break it almost certainly will as the clicks multiply.  Very often when firms begin deploying new digital strategies they find massive spikes in calls into the contact centres as people hit blockages in ill-thought out systems.

To illustrate what I mean, I recently bought car insurance through one of the well-known online platforms. I found one of the cheapest having provided all my vehicle and driver history information. However, I found the handover to the selected provider was clunky and I had to fill in some details for a second time. And then, having spent nearly 45 minutes online, I got to the point of paying before I was blocked by a pop up giving me a reference number and telling me that I had to call the call centre number, which was the standard 0800 number the selected insurer had. So I went from being at the point of taking delivery of the policy into a very long queue - only emerging 20 minutes later, when I got through to an agent who told me that the problem was a no fault accident that my wife had had some years before and I hadn’t mentioned in the application (it should not have affected the policy pricing - I thought). Once this new information was inputted I was told that the price had gone up by a further £35. Not only was I fed up with the process taking so long, I was scandalised by the revelation that no fault accidents do actually increase your insurance costs after all. A disjointed online sales process had cost me more time and now more money than I bargained for. The insurer very nearly lost the sale on the strength of it.

So there is a lesson here to make sure you have a seamless multi-channel customer experience. You must monitor cross-channel journeys for pain points and opportunities to improve, and then devote budget to tightening systems wherever possible.

So in addition to rapid adjustment to front-line feedback you also need a clear top-down digital strategy and senior level management support to make it happen. You will need IT budget to help you invest in the technology to migrate. Right now 60% of firms have no digital migration budgets at all which is starting to become a real problem as digital sticking plasters won’t do for very much longer. 

Some may go for more radical solutions. For example, Daimler in China has introduced its own car sharing services under the banner Car2Share across four major Chinese cities. For others it simply about working out how to convert more, different types of sales, to digital thereby reducing costs of sales and improving margins.  So now you’ve seen how successful your app for booking test drives works in terms of increasing bookings and subsequent sales, it is a good idea to plan out the next stages of your digitisation plan.

You might be encouraging more browsers with digital savvy personas to browse and select the car they want, even specifying it online, selecting F&I packages and even after sales packages. You might well be able to offer discounts for closing out sales online, with some web chat support perhaps. This way you are passing on a little of the substantial savings you are making by taking orders via your website.

For many, that plan is just far too much, far too fast. For them it may be a good idea to take digitisation in bite size chunks, focusing on joining up processes and improving the online customer experience by so doing. So if an existing customer has selected and bought an after care package, wouldn’t it be great if you could not only deliver the PDF policy document via email, but also a Frequently Asked Questions page linked to the policy they’ve taken out?

They might even be advised of your mobile app to help them with any servicing queries, together with an opportunity to book in a service or receive early push notifications of pending servicing issues. In this way we are starting to move into the world of digital self-service. And we all know if it works we keep coming back and keep talking about it positively – and by so doing convert others to doing the same thing. The DVLA’s road tax renewal purchasing system is just one great example of where digital self-service is so much better, quicker and cheaper than the old way. So much so that people sing its praises regularly. Can you make your dealerships’ online customer experience anywhere near as good as that?