On paper, it sounds amazing: Place a handful of beacons – those tiny gadgets that talk to your smartphone – around a car at a dealership, and create a connection point between the shopper who’s wandering the lot, and content about the car they’re looking over. In a flash, that person is treated to key model features, aftermarket options…not to mention financing and special incentives. The opportunity to actually connect a car to the systems dealers use to market, retail and process a vehicle purchase may well open a new chapter in the online to in-store evolution of automotive retail. It’s beyond RFID codes, and printed brochures. It’s an idea that could re-imagine that initial moment of engagement at the showroom, and help dealers create a more efficient, rich and connected sales experience.

But wait – not so fast. Beacons, sensors, gadgets…whatever the name, they’re a part of the Internet of Things, otherwise known as the IoT. According to Webopedia, the IoT “refers to the ever-growing network of physical objects that feature an IP address for Internet connectivity, and the communication that occurs between these objects and other Internet-enabled devices and systems.” A more specific explanation might go something like this: take a car, embed it with a sensor, and enable it to exchange and share information across a network. As a result, you connect the physical and virtual world via a controlled and designed environment. The things that make it happen are very small connectors that use Bluetooth low-energy (BLE) technology to identify the location of a customer and deliver content to them. It works through the use of an app: the signal pings the phone, which pushes the appropriate content based on the location of the person. That creates a more content-rich and private environment, which results in a better consumer experience. The downside, however, is that the customer has to download the app and opt-into the experience.   

Retail Trends

That doesn’t seem to deter major retailers from employing beacons and sensors to more deeply engage with customers. Indeed, according to eMarketer, the use of “proximity marketing” is growing – and fast. The number of beacons deployed by proximity providers has grown from 3.3 million last year to over 8 million in 2016. In a survey conducted by Unacast, “50 percent of organizations connected to the retail, shopping mall, hotel and tourism industries use some form of proximity technology in their marketing efforts.”  Far and away, the most popular device to implement is beacon technology, followed by GPS. Still, though – there are hurdles for all retailers, including automotive. For example, a recent benchmark report by Retail Systems Research found “only 25 percent of respondents had wifi available for employees on the selling floor, and another 19 percent had wireless available for customers.” The study also cast a cautious eye on the issue of consumer privacy in terms of rules, guidelines and opt-in rates.   

The Automotive Internet of Things

Despite the challenges, the automotive industry is applying this technology in literally hundreds of ways, across virtually all aspects of the business. From factory productivity to showrooms, aftermarket and in-car infotainment, sensors that connect vehicles to data and networks are driving a new world order of connected cars and technologies. Gartner, in fact, sees that world growing to 250 million vehicles on the road worldwide by 2020, which adds up to around one-in-five cars. Possible applications run the gamut from enabling urgent medical assistance to advertising, vehicle diagnostics and much, much more.  In its 2016 The Internet of Automotive Things report, eMarketer researchers found that “IoT will give industry marketers more ways to communicate with target audiences, more data to target personalized messaging, valuable feedback about what they are doing right, and more ways to enhance customer service.” On the showroom floor, the technology is steadily gaining more attention. Last year, Ford tested beacons on dealer lots as a way to introduce key features about a specific car. The idea? Create a seamless bridge from research being done online to the showroom experience – a continuation of the online to in-store evolution of car buying.

Connecting the Experience to the Workflow

It all sounds exciting and promising – but then most new technological advances do at first, right? Sometimes, so called “transformative ideas” end up not being as amazing as initially thought. So it will be interesting to see how this connected reality unfolds at the showroom in terms of actual process, dealer adoption, and engagement. It may be that the use of beacons creates an opportunity for dealers to more closely connect sales workflow to car and customer. It may create a richer, more tightly aligned experience in which the dealer maintains control and is able to provide a flexible and nimble sales experience. Those little beacons might one day make it possible for a vehicle on a test drive to be instantly connected to fundamental aspects of the dealer workflow, easing the path to purchase – and creating a significantly more efficient and customer-focused experience.

There’s no doubt that beacons are connecting the physical world of things to the virtual world of content experiences. The only question is how they will be most effectively used at a dealership fitted with integrated retail systems. After all, one of the most compelling possibilities behind the Internet of Things is that it may create a complete retail journey from start to finish -- no matter where you start, engage, or finish the deal.  

Your dealership’s biggest financial risk may be a data security breach. It’s a reality about doing business in today’s retail environment – especially the automotive space. Skeptical? Consider that, according to the Ponemon Institute, nearly half of all Americans had their data exposed through cybersecurity breaches in 2014. And that the number of successful cyberattacks in the U.S. has grown 144 percent in the past four years, over 60% against small to mid-size businesses like yours.

If that doesn’t get your attention, perhaps this will: The FTC has ruled that data breaches can constitute unfair or deceptive acts under Section 5 of the FTC Act, with potential fines of up to $16,000 per day. That was the hot topic of conversation at our Day One NADA Workshop: Data Security Breaches — A Dealership’s Biggest Risk. Hosted by Henrick, the workshop went into detail about the risks of cyber security, required actions and the essential “Ps” of security: Process, People and Patchwork. As a result it spurred serious questions and discussion around three key topics:  

1. Are you operating on current systems and are they fully patched? Tip: Most hacking events leverage old flaws that already have been addressed, but proper patches have not been applied.

2. Do you have a tested incident response program? Tip: Have a certified security professional you can call in immediately if there is a breach incident, and identify employee responsibilities and daily action steps.

3. What kind of culture and employee training are you doing to cover yourself from a data breach? Tip: Over 60% of data breaches result from employee negligence or intentional misconduct.

The conversation continues today at his workshop, scheduled for 10:30 am -- and at Dealertrack booth 1124C. If you have a question, Henrick will be at the booth on Friday, April 1 from 2-4 pm; Saturday, April 2 from 10-12 noon and 2-4 pm; and Sunday, April 3 from 10-12 noon. It's a good chance to get an expert's take on the issues of compliance and data security. 

Change is now the rule when it comes to the world of retailing cars. It has been since 2008-09, when the Great Recession and its terrible consequences created an Automotive Depression never before seen: too few buyers, too many cars for sale, sitting on lots, not moving, not selling, just collecting rust. I recall flying into Detroit during the worst of those years and seeing row after row of unsaleable new cars parked on airport lots. Just parked.

The entire industry was parked.

Today, we’re well back from that dark place – and then some. The year’s sales are on a torrid pace; dealerships are renovating and automakers are expanding model lines. Still, as a partial result of those years, change seems now to be in constant overdrive. No matter what side of the business you’re in, we all sort of look over our shoulder a bit at what that might mean, and to get a glimpse of what might be coming.

This time, that change is centered on the very way cars are sold. From progressive retail ideas and methods to the Tesla “revolution,” the way dealerships approach consumers will one day be different than it is today. Heck, it’s evolving now.  There is no longer room for the three-hour sale.  

Instead, consider that the sale of a car could be enabled by the practical use of digital tools, and finished by an amazing showroom experience supported by digital connections and data knowledge. Just think: those two key components -- digital and showroom -- working together to create a personalized and efficient purchase experience. Is it pie in the sky? Maybe. But many people are probably already doing it. A customer visits a dealer website, configures their car, saves it – and takes care of financing approvals and pricing via a combination of texting, chat and digital tools. Then they set an appointment, test drive their car and take delivery with a splendid showroom experience that creates a local and solid relationship, a connection that’s paid off in service calls and future business.

It’s an evolution. Not a revolution.

And it seems that we’re headed down a path that takes us somewhere like that. After all, hundreds of current studies suggest that people are spending more time researching online and less time visiting dealerships. And if that’s so – if consumers, armed with smart phones and tablets, are able to winnow down that dealership decision to “1.34232”, then the digital experience is the driving force from top to bottom.

Is it treated that way at your dealership?

I think a dealership website is the most important sales and marketing tool of all because it combines two great assets: people and cars. As such (and proven by strong close-to-sale ratios compared to third party and automaker sites) they should execute at a level of refinement consumers expect from major retailers. I think that dealership teams should be well-versed in digital best practices and consumer behavior. And that there ought to be a person at a dealership who knows how to create the kind of content that properly represents the cars, the brand, the people and the role the store has carved out in the community. Not to mention the values that help define how business is done.

Stephen Covey once spoke about how digital devices were just tools, and should never become masters of our time. In that spirit, it’s the same for automotive retail: digital tools help create a positive experience for consumers, who in turn buy cars and come back for service. Those dealerships that use those tools to create one experience, blending the power of digital tools with a friendly and engaging local showroom experience, why, they will create a winning combination and may one day become leaders of the change in front of us today. Those innovators are not slaves to digital currency. They are the masters of it.

The change that’s coming is going to happen, one way or another. And probably sooner than we think. The only question is whether or not we’re ready to move forward, or oxidize while parked.

Change is now the rule when it comes to the world of retailing cars. It has been since 2008-09, when the Great Recession and its terrible consequences created an Automotive Depression never before seen: too few buyers, too many cars for sale, sitting on lots, not moving, not selling, just collecting rust. I recall flying into Detroit during the worst of those years and seeing row after row of unsaleable new cars parked on airport lots. Just parked.

The entire industry was parked.

Today, we’re well back from that dark place – and then some. The year’s sales are on a torrid pace; dealerships are renovating and automakers are expanding model lines. Still, as a partial result of those years, change seems now to be in constant overdrive. No matter what side of the business you’re in, we all sort of look over our shoulder a bit at what that might mean, and to get a glimpse of what might be coming.

This time, that change is centered on the very way cars are sold. From progressive retail ideas and methods to the Tesla “revolution,” the way dealerships approach consumers will one day be different than it is today. Heck, it’s evolving now.  There is no longer room for the three-hour sale.  

Instead, consider that the sale of a car could be enabled by the practical use of digital tools, and finished by an amazing showroom experience supported by digital connections and data knowledge. Just think: those two key components -- digital and showroom -- working together to create a personalized and efficient purchase experience. Is it pie in the sky? Maybe. But many people are probably already doing it. A customer visits a dealer website, configures their car, saves it – and takes care of financing approvals and pricing via a combination of texting, chat and digital tools. Then they set an appointment, test drive their car and take delivery with a splendid showroom experience that creates a local and solid relationship, a connection that’s paid off in service calls and future business.

It’s an evolution. Not a revolution.

And it seems that we’re headed down a path that takes us somewhere like that. After all, hundreds of current studies suggest that people are spending more time researching online and less time visiting dealerships. And if that’s so – if consumers, armed with smart phones and tablets, are able to winnow down that dealership decision to “1.34232”, then the digital experience is the driving force from top to bottom.

Is it treated that way at your dealership?

I think a dealership website is the most important sales and marketing tool of all because it combines two great assets: people and cars. As such (and proven by strong close-to-sale ratios compared to third party and automaker sites) they should execute at a level of refinement consumers expect from major retailers. I think that dealership teams should be well-versed in digital best practices and consumer behavior. And that there ought to be a person at a dealership who knows how to create the kind of content that properly represents the cars, the brand, the people and the role the store has carved out in the community. Not to mention the values that help define how business is done.

Stephen Covey once spoke about how digital devices were just tools, and should never become masters of our time. In that spirit, it’s the same for automotive retail: digital tools help create a positive experience for consumers, who in turn buy cars and come back for service. Those dealerships that use those tools to create one experience, blending the power of digital tools with a friendly and engaging local showroom experience, why, they will create a winning combination and may one day become leaders of the change in front of us today. Those innovators are not slaves to digital currency. They are the masters of it.

The change that’s coming is going to happen, one way or another. And probably sooner than we think. The only question is whether or not we’re ready to move forward, or oxidize while parked.

Say this for J.D. Power: They know the digital space, and few organizations have the credibility to report on the digital trends that impact the likes of Ford, GM, Toyota and others. They boast strong analysts who know brand-level automotive marketing and digital topics, and can communicate their findings in a concise and compelling way.

Take their most recent study, the J.D. Power 2014 U.S. Automotive Media and Marketing Report. The organization claims that it “provides a comprehensive strategic perspective on the factors that influence new-vehicle purchases, as well as attitudinal, lifestyle, recreational and media consumption behaviors.”  That pretty much means – I think – that it reports on what most influences car buyers to sign on the line. This year’s study includes digital media habits, from search to display, social and more.  To read the summary for yourself (do so), click here.  The study is based on a nationwide survey of 31,200 principal drivers of purchased or leased new vehicles between November 2012 and October 2013.

From my perspective, it’s a mishmash of obvious findings, such as this little diamond….

Instagram, LinkedIn, Pinterest and Twitter (listed in alphabetical order) are among the top five social media sites most often visited by new-vehicle drivers.

…mixed with good insights and interesting indicators. For example, the idea that content apps are fueling consumption habits and that a healthy percentage of people now think nothing of watching a show on a mobile device means that people really are using mobile technology for all things. Olden time media like “newspapers,” “television” shows and “magazines” are now gaining critical mass via mobile devices, because – here it comes – PEOPLE DON’T CARE ABOUT THE DEVICE THEY USE. They care about the content and the convenience of the delivery, just as long as the device presents said content in an acceptable way. It’s proof positive that we should be thinking of digital as a device agnostic playground, if not already.  The study found that a majority of those surveyed (57 percent) used their smartphone to access the Internet.

It’s a shame that this little nugget was sort of washed over in the summary, because it seems more notable to me than the ultimate finding, which was…

Don’t switch your radio/TV/OOH budget to digital. Spend more.

Do this because people are consuming media of all types in a multitude of ways, i.e. not discriminating in their usage patterns for research, purchase or entertainment…marketers should make sure they hit all the important spots. It seems that the trend supports that: eMarketer projects that the automotive industry will spend around $7 billion on digital advertising in 2015.

That’s a pile of cash, and much of it is probably earmarked to fluffy attempts at raising “brand awareness.” Given that, perhaps the hidden lesson from the study is this: Digital is not a niche. It’s as mainstream as Main St., from search to social – and that the real meat and potatoes part of digital is happening, as they say, molo. That’s the tip from the hat of J.D. Power: The most powerful suggestion may be that digital media spending at the local, retail level should expand. That’s where it’s at: local and in person, on the site and on the lot, tethered together that take the transaction from dealership desk to the front seat of a new or used car.  The emerging power of digital marketing is not the power of a brand’s suggestion, but the power of powerful content, targeted and delivered at the right time – to the right device.

Say this for J.D. Power: They know the digital space, and few organizations have the credibility to report on the digital trends that impact the likes of Ford, GM, Toyota and others. They boast strong analysts who know brand-level automotive marketing and digital topics, and can communicate their findings in a concise and compelling way.

Take their most recent study, the J.D. Power 2014 U.S. Automotive Media and Marketing Report. The organization claims that it “provides a comprehensive strategic perspective on the factors that influence new-vehicle purchases, as well as attitudinal, lifestyle, recreational and media consumption behaviors.”  That pretty much means – I think – that it reports on what most influences car buyers to sign on the line. This year’s study includes digital media habits, from search to display, social and more.  To read the summary for yourself (do so), click here.  The study is based on a nationwide survey of 31,200 principal drivers of purchased or leased new vehicles between November 2012 and October 2013.

From my perspective, it’s a mishmash of obvious findings, such as this little diamond….

Instagram, LinkedIn, Pinterest and Twitter (listed in alphabetical order) are among the top five social media sites most often visited by new-vehicle drivers.

…mixed with good insights and interesting indicators. For example, the idea that content apps are fueling consumption habits and that a healthy percentage of people now think nothing of watching a show on a mobile device means that people really are using mobile technology for all things. Olden time media like “newspapers,” “television” shows and “magazines” are now gaining critical mass via mobile devices, because – here it comes – PEOPLE DON’T CARE ABOUT THE DEVICE THEY USE. They care about the content and the convenience of the delivery, just as long as the device presents said content in an acceptable way. It’s proof positive that we should be thinking of digital as a device agnostic playground, if not already.  The study found that a majority of those surveyed (57 percent) used their smartphone to access the Internet.

It’s a shame that this little nugget was sort of washed over in the summary, because it seems more notable to me than the ultimate finding, which was…

Don’t switch your radio/TV/OOH budget to digital. Spend more.

Do this because people are consuming media of all types in a multitude of ways, i.e. not discriminating in their usage patterns for research, purchase or entertainment…marketers should make sure they hit all the important spots. It seems that the trend supports that: eMarketer projects that the automotive industry will spend around $7 billion on digital advertising in 2015.

That’s a pile of cash, and much of it is probably earmarked to fluffy attempts at raising “brand awareness.” Given that, perhaps the hidden lesson from the study is this: Digital is not a niche. It’s as mainstream as Main St., from search to social – and that the real meat and potatoes part of digital is happening, as they say, molo. That’s the tip from the hat of J.D. Power: The most powerful suggestion may be that digital media spending at the local, retail level should expand. That’s where it’s at: local and in person, on the site and on the lot, tethered together that take the transaction from dealership desk to the front seat of a new or used car.  The emerging power of digital marketing is not the power of a brand’s suggestion, but the power of powerful content, targeted and delivered at the right time – to the right device.