Hint: It involves implementing a digital retailing strategy with messaging woven into it. And we’ve got a guide to help you make it work. SEE HOW
Lou Bregou from Driver’s Village is a progressive New York dealer who saw the writing on the wall. With computers, smartphones and tablets always within reach and changing the way consumers access information, it wouldn’t be long before vehicle buyers demanded more than just inventory and pricing on his websites. They would want to complete more of the vehicle purchase steps online, a process known as digital retailing. Lou followed his gut and implemented a digital retailing strategy on his dealership’s 10 websites, along with a solid back-end sales process.
As Lou predicted, Driver’s Village buyers immediately adopted both the strategy and the added website tools. Consumers didn’t just go online to search for vehicles or look for a simple price. They were calculating payments, getting an exact trade-in value and receiving financing approval, often performing these functions together as part of their shopping process. Many shaved the in-person part of the deal down to only 30 minutes. The tools also benefited Lou’s operations. He’s seeing closing ratios for digital retailing leads hitting 26 percent. That’s double the closing ratio of the group’s standard website leads, and three times that of third-party leads.
A decade ago, dealers were discussing if displaying inventory and pricing online was prudent. Today, up to 90 percent of shopping starts online. Now, the question has become how much of the buying process can be completed on dealer websites. Early movers such as Lou are validating the value of digital retailing, and hundreds of other dealers across the country are testing and often turning the corner with a digital retailing strategy. Initial results are encouraging in terms of meaningful ROI and sales conversions. Just check out the following year-to-date stats derived from Dealertrack Digital Retailing Suite:
Over six million monthly dealer-controlled payment requests on dealer and listing sites – A digital retailing payment tool is not a generic calculator. It’s an online ‘First Pencil’ that allows shoppers to conveniently interact with real loan/lease rates and combine them with current incentives, all while understanding financing and affordability options that suit their needs. The dealer controls the financing process and reserve settings, while giving shoppers real numbers.
Thirty-four percent of unique visitors who view payments and open a finance form submit a full finance lead –Buyers get comfortable with the online ‘First Pencil’ so it’s natural for them to apply for financing. When they apply for financing, they automatically become a highly qualified lead. Now when the buyer visits a dealer’s showroom, they have a good understanding of the vehicle they want to purchase, as well as a grasp of what they can afford and have been approved for.
Driver’s Village has noticed that the online financing tool moves shoppers closer to purchase because it delivers real approval from the comfort and privacy of a buyer’s home. While credit applications generated from a dealer’s website have historically been filled out by sub-prime customers, there is an increasing trend for prime buyers to apply for financing online as well. Lou explains, “We come back with real approval, so it takes away the fear for someone with low credit scores that they will come into the shop and not get financing. We also have people with good credit scores filling out credit apps and they like that they don’t have to give a sales person their salary and credit score. For them, our online process feels more secure.”
Digital retailing leads have over a 25 percent lead-to-sales conversion ratio. That rate jumps to 43 percent when buyers complete all three steps (payment, trade-in, finance) – Digital retailing draws buyers further into the sales funnel, dramatically increasing closing ratio. Driver’s Village is averaging a closing ratio of 26 percent. Compare that to eight to 10 percent for OEM leads, six to eight percent for third-party leads and 12-13 percent for standard website leads.
Twenty-eight percent of unique trade-in visitors who opened the trade-in form completed a full appraisal to receive a specific dealer offer – The digital retailing trade-in tool includes a comprehensive condition report that lends transparency to the process. In multiple surveys, buyers have expressed a strong preference for obtaining dealer trade-in offers without having to visit the dealership. This preference is reflected in the fact that the trade-in form conversion rates for a detailed condition report and appraisal on a dealer’s website are reasonably high. Initial metrics point to a six to eight percent trade-in lead-to-sales conversion ratio, which will only increase as dealers enhance their processes to handle these leads slightly differently than standard Internet leads. While the consumer gets the experience they are looking for, the dealer receives a highly qualified source for inventory and another channel for new potential customers.
Technology is only one piece of the puzzle. BDC and used vehicle process enhancements, along with salesperson training to handle digital retailing leads, are equally important. For example, Driver’s Village codes digital retailing leads so steps completed online are not duplicated at the showroom, and distributes them to trained salespersons to drive conversion and a superior customer experience. The team continuously measures and fine-tunes their workflows to ensure they are adapting to consumer behavior.
It’s exciting to see dealers starting to embrace and benefit from the digital retailing philosophy, tools and processes. But for Lou, this is just the start. He tells me often, “The millennial buyer will push us to think beyond inventory, appraisals and approvals online.”