What if I told you that Netflix didn’t kill Blockbuster and that Amazon didn’t kill big box stores? Considering that Toys-R-Us filed for bankruptcy this week and many blame Amazon, this statement may seem bold. But stay with me for a moment. I’m not arguing that the success of companies like Netflix and Amazon didn’t have an impact on the success of these other companies. Instead, I’m arguing that their company strategy — and unwillingness to embrace a changing industry — ultimately led to their death. This week I had the opportunity to share my thoughts on the state of online retailing in the automotive industry with dealers and vendors at Digital Dealer in Las Vegas. While many are hinting at the need for change, it’s time we take the next step and start taking action to ensure that the automotive industry doesn’t meet the same fate as these other epic failures.

When we look at the companies that have lost to the new tech giants, there’s one thing that becomes exceptionally clear. The problem isn’t the technology —failing to be customer-centric kills an industry or a company.

Let’s take a moment and look at three industries and companies that are embracing change, adapting their strategies and adopting new technology with one goal in mind: to better serve their customers and ultimately, survive.

Airlines

The airline industry is a close comparison to the automotive industry. Both center on emotional purchases, have to deal with margin compression and are $900+ billion dollar industries. Both industries also face negative feedback about the customer service offered.  While airlines haven’t quite mastered the customer service aspect of their business, their online and purchasing experience offers valuable insights to the automotive industry. One of the greatest lessons we can learn from airlines is their focus on choice and transparency. When customers are shopping, they have the ability to compare prices and options, while also having the opportunity to bundle different items like travel insurance, hotels and car rentals to create greater discounts.

Amazon

Amazon has long been seen as a leader of customer service, specifically related to how they use their online platform to better serve the customer. While a car shopper will likely never buy a car with one click, the automotive industry can learn a lot from the retailing giant. For instance, Amazon provides a lot of relevant and helpful information for each product that helps the consumer make decisions. In addition, they predictively suggest additional products that might complement the one they’re already buying. Dealerships can similarly suggest warranty or service packages or other accessories and upgrades during the buying process based on consumer behavior.

Insurance

It’s fascinating to see how the insurance industry has embraced the online process, especially considering how complex purchasing insurance is. But because it’s so complex, they’ve gone out of their way to make the process of buying insurance as simple as possible. One particularly helpful feature is the guided selling feature many companies use to walk someone through the process, calling out additional ways to save and asking clarifying questions along the way. In addition, they provide the ability to chat with someone — not intrusively, but just in case a customer needs that personal touch.

So, what can dealers do today to embrace online retailing?

1. Embrace online

First and foremost, it’s time for all dealers to embrace online retailing for what it is – inevitable.

2. Always mobile first

It’s not enough to just embrace online retailing, you also have to ensure that your online retailing platform is set up to meet customers where they already are — on mobile. 

3. Transparency

Customers are extremely price sensitive and want to know exactly what they’re getting. Show clear pricing online.

4. Accuracy is essential

The best online retailing technology will go nowhere if the payments that customers create online don’t follow them into the dealership. Make sure that your online payment building process translates to your showroom down to the penny.

The shift to online retailing is well underway, but we still have to continue to pursue better processes and not just better tech. Are you learning and moving fast enough to stay ahead?

Fixed operations is the backbone of a dealership. Whether car sales are hitting record highs or frightening lows, repairs and maintenance will always be required.  While a dealership’s new car sales only compete with other dealers, the service center has to compete with other dealers plus national service chains and independent service providers. Just how much of a concern is the competition? A recent CDK Global dealer survey revealed that, on average, dealers lose over 40 percent of service customers after warranty and more than 80 percent of dealers are concerned about losing customers to independent service providers.

Most dealers think that price is the main reason customers are defecting, but that doesn’t tell the whole story. In a 2016 repair satisfaction study by AAA, two-thirds of U.S. drivers said that they don’t trust auto repair shops. This is especially true of younger generations. When compares to Baby Boomers, Gen Xers and Millennials were both 20 percent less likely to have a trusted repair shop.With mistrust so high, digital impressions become especially important. The internet is one of the first places customers turn to when searching for a provider. According to Google Think, 70 percent of people visit a retailer website when they have a want-to-buy moment. An effective web site can have a significant influence on where that customer chooses to go for service.

In order to understand how customer questions are being addresses online, CDK conducted a study comparing the web site features of 776 independent service providers and national service chains to 750 dealerships. Every major volume and luxury brand was represented, along with 203 designated market areas (DMAs) from each U.S. state. The CDK Retail Insights team evaluated service pages from a list of criteria under three main customer satisfaction categories: cost, confidence, and convenience.

Convenience

In today’s world convenience is king. Few people have the patience to be slowed down by inefficient processes and a lack of amenities. This is where dealers should have a particular advantage over independent service providers. Most dealers are much better equipped to provide benefits that independents can’t, but it was shocking to see how few dealers showcased them. Here are the results of three important convenience features from our study:

1. Alternate transportation (dealers 42 percent, independents 22 percent)

Getting auto service can be a particularly stressful, since a vehicle is often essential. Offering alternate transportation, like shuttle service and loaner vehicles, allows customers to continue their day with less disruption. The old saying “time is money” means that waiting around at a service shop can cancel out any savings from a cheaper repair price. Yet over half of dealers fail to showcase this on their service pages.

2. Automated Scheduling (dealers 76 percent, independents 4 percent)

The benefits of automated scheduling shouldn’t need explaining. Setting up a confirmed service appointment from your phone while waiting in line for a coffee is a huge convenience. It’s a simple digital tool that one in four dealers aren’t taking advantage of.

3. No-appointment service (dealers 23 percent, independents 4 percent)

Whether it’s trying to avoid a challenging manual appointment form or having to address a surprise problem right away, many customers want the option to show up unannounced. According to our dealer survey, nearly all dealers offer some kind of no-appointment service –even if it’s just for basic service like oil changes. However, a large majority of dealers are not properly featuring this sort of offering online, causing a large perception gap among their potential customers.

Confidence

With so much distrust among customers, it’s important that dealers promote confidence in their service center on their service pages. This is where independents are doing best at meeting or beating dealers online. In particular, customer trust can be earned through three distinct elements:

1. Genuine OEM parts (dealers 79 percent, independents 11 percent)

Using genuine parts reassures a customer that they will get exactly what is needed to get their vehicle running right. Despite the fact that dealers trounced independents in this important confidence category, we often found it buried in a wall of text that most customers won’t read. It’s much better to call it out separately where it will get the customer’s attention.

2. Customer reviews (dealers 53 percent, independents 49 percent)

Reviews are increasingly important in the consumer decision making process – especially to younger shoppers. Featuring your positive reviews helps people understand what to anticipate at your service center and why they should choose you. Independents are nearly equal with dealers in delivering this on their websites.

3. Service staff bios (dealers 4 percent, independents 12 percent)

Staff bios are all about showing off their expertise. Customers want to know the job will get done right the first time. Listing years of experience, training and certifications creates customer confidence in your service technicians. A personal detail, like a hobby, can also appeal to customer’s emotional side.

Cost

Dealers aren’t wrong that cost is a major customer concern. Nearly three in four shoppers said they were wary of repair shops overcharging. It’s important to remember that cost isn’t just the dollar sign attached to the repair but includes the value provided by the dealer. There are two main features we used to measure this digitally:

1. Service specials (dealers 79 percent, independents 41 percent)

Offering specials is a good way to appeal to the cost-conscious customer. It’s important to use things like click to print or an email button so customers can easily access and use special offers. Pictures of specials placed in physical ads are difficult for customers to use and hard to read on mobile.

2. Value of service (dealers 72 percent, independents 56 percent)

Value of service is your chance to remind customers about the unique benefits they get from going to your service shop. Do you have a decked-out customer lounge where customers can use the free Wi-Fi to work and sit in comfortable chairs with snacks? Most independents don’t. Are there perks like free car washes or a promise of customer satisfaction? Highlight the value customers get from spending their time and money with you.

Action Steps

A strong online service presence that shows how you respond to customer needs and concerns is a key element in attracting customers. And don’t forget that independents and chains don’t have to share valuable digital real estate with a sales department. Here is a summary of our recommendations for how you can improve your digital service strategies:

• Provide a homepage link to automated online scheduling. Scheduling service online should be as easy as reserving a hotel room online.
• Show the value of your dealership’s service: Highlight factory training, genuine OEM parts and expertise in the brand. Independents service everything; you specialize in your customers’ cars.
• Promote the convenience of your dealership’s service: Feature amenities like
  shuttle service, business centers and no-appointment service. Time is money, and these conveniences can make up the difference in service costs.
• Include positive service reviews from customers on your website. Make them easy to find and separate them from sales reviews.
• Target service customers by advertising the benefits of your dealership’s service center.