Technology is disrupting the way most products and services are sold, and automotive retail is no exception. Car buyer expectations have grown exponentially over the past several years because of the power they hold in the palm of their hands – and their expectations are being shaped by experiences in other retail verticals. Plus, with pervasive vehicle quality improvements and the multitude of great product choices consumers have, it’s becoming more difficult for manufacturers and dealers to differentiate themselves.

Hyundai is tackling the need to differentiate head on by making the car buying process faster, easier and more convenient. They hired Root & Associates to research customer pain points and to get feedback on an industry-first program they were considering, designed to create a better retail experience.

The Approach

Root & Associates spent last summer visiting consumers in their homes and documenting how they researched and shopped for new cars. We drilled down to the emotions that guide them as they choose auto brands as well as one dealership over another. For busy consumers today, much of their frustration is related to the inconvenience of buying a car; it’s more stressful and more time consuming than purchasing most other products.

“Frictionless retail is happening all around us,” says Dean Evans, Hyundai Motor America’s CMO, But the “elephant in the room” is that car buying “doesn’t always pass the frictionless test” especially for millennials, who want to handle as much of the process online as possible. “Speed is the number one consumer demand today,” he added. That insight was then used to refine Hyundai’s new program, Shopper Assurance. It’s designed to make the car buying process more frictionless and make it simpler and less time consuming for customers. The four components of the Shopper Assurance program are:

• Transparent Pricing
• Streamlined Purchase
• Flexible Test Drive
• 3-Day Money Back Guarantee

 
Hyundai’s goal is to create a better car buying experience by making it faster, more convenient and more enjoyable. And to ultimately give their dealers tangible ways to differentiate themselves from local competitors. 

The Results

Does this improved buying convenience resonate with buyers? Hyundai asked that question too. We were surprised by what we heard during the concept testing; 84% of consumers told us that if all other things were equal, they would purchase from a dealership that offered these services over one that did not.

The consumes who were responding to the concepts initially did not know what brand was evaluating them. Once consumers learned who was behind these programs, consumers who said they would consider the Hyundai brand tripled (going from 20% to 66%), beating out volume brands like Honda, Toyota and Ford. That’s powerful.

After the initial concept testing, Hyundai piloted the program in four markets and Root & Associates surveyed buyers who actually experienced Shopper Assurance in action, as well as those who learned about it while at the dealership.

The results? Of those who used one or more components of Shopper Assurance Over half (56%) said that it played a role in their decision to purchase a Hyundai.

For both the dealer and the brand, trust, confidence and satisfaction dramatically increased. Of those who used a component during their purchase, 70% loved the process of buying their car and 65% said it was much better than their previous car purchase experiences.

With those kind of results, it’s not surprising that Hyundai’s Shopper Assurance program is rolling out nationally.

Like anything new, it’s not perfect in every way, but it does illustrate that focusing on improving convenience in the automotive retail shopping process goes a very long way with consumers. For Hyundai, it means that focusing on convenience and improving the consumer experience is not the exclusive domain of luxury brands any longer. For their dealers participating in the program, it is a tangible competitive differentiator and gives them the ability to compete on the customer’s experience.

Cheers,

Kevin

Looking for more original research articles? Check out my Insights Blog.

And Why We Should Care….

Seattle has recently experienced a decline in vehicle ownership and it’s something the auto industry should take note of it. Homeowners aged 35 and below (typically identified as “millennials”) are buying less cars, causing the overall car ownership in the city to drop 3%.

This is an important trend to watch because Millennials make up the fastest growing segment among vehicle buyers. Last year they accounted for 4.1 million vehicles in the US—about 29% of the market and likely will represent about 40 percent of the U.S. new-vehicle market by 2020 according to J.D. Power and Associates PIN data.

The decline in vehicle ownership was due to multiple factors common to urban dwellers regardless of where they live, such as increasing housing costs, improved public transportation, and growing popularity of car share services.
Perhaps the biggest is the financial incentive of not owning a car. Monthly payments, insurance, parking, and maintenance all add up to huge amounts over time. Millennials see car ownership as less important when they have a plethora of inexpensive transportation options available to them. It’s much easier to live a full life without owning a car than it ever has been in most modern cities.

Every leading US city has high cost of living. All locations are dense urban areas, and for many, key services are within walking/biking distance. This evolution is not happening by chance; it is being driven by demand.

Image Source: seattletimes.com

“As Seattle builds up these transit alternatives, the need to own a car starts to go away. And the financial incentives to get rid of your car are huge,” says Mark Hallenbeck, the director of the Washington State Transportation Center at the University of Washington. (Source: Seattle Times).

“Seattle residents have voted to tax themselves for urban transportation three times over the past three years.” (Source: Urbanland)

Those who live in the city are growing more accustomed to shared transportation. The more alternatives there are to get from point A to point B, the less incentive there is to own a vehicle.

“It’s very exciting to be a mayor of a city that said yes to the largest increase in bus transit, and then we went back to the voters the next year . . . to build out our bike trails, to build out our sidewalks, and to repair our roads and the voters said yes again,” says Mayor Ed Murray of the 2014 and 2015 votes, in an interview with Streetfilms.

Car share services make ditching vehicle ownership simple. Vehicles go anywhere you like as long as you like but, when you end your trip, it must be left inside the “home area” in an approved parking space. This usually includes residential streets, so you may even be able to park the car right outside your house when you’re done driving. For services like Car2Go, there is no annual fee and they charge by the minute if you choose, which is convenient for short trips such as errands and shopping trips.” Finding parking in dense urban areas can be a problem which is where ride-sharing services become the attractive alternative mode of transportation for trips where a car is needed.

It is interesting to see how the city of Seattle is divided on the issue of car ownership. According to an ongoing survey by Autolist, a slight majority of respondents (52 percent) seem to lean towards the no-car camp.

• 27 percent of respondents said that “you can get by without a car”
• 14 percent said they “don’t really need one”
• 11 percent responded that there is no need for a car in Seattle

While those on the other side of the argument (49%) lean towards traditional vehicle ownership.

• 27 percent said that “it’s nice to have a car”
• 22 percent said that a person “must have a car”

The fact that the spread is this close should send a signal to those in the industry to pay close attention to this trend as it moves from possibility to reality in key urban areas across the country. Manufactures and suppliers are adjusting their strategic plans now. How about the dealerships in those urban areas?

Cheers,

Kevin

Read more of my expert analysis here

Without relying on the sales reps – or anything else!

It is a Sunday afternoon. The dealership is closed. A couple pulls onto the lot and spends time looking around, comparing models and prices. They leave, but with several unanswered questions. The dealership has no record of their visit…

That opportunity is not completely lost. With AutoPulse Insights, many of these unknown prospects can be identified and with a great deal of information including their name, street and email address, plus the vehicle they own. More importantly, all this information is what marketers call “permissible” which means the consumer has provided their consent to receive a marketing communication.

To make this even more interesting, without anyone at the dealership doing a thing, a personalized email can be sent to that prospect as soon as the day after the store visit. The message can include product information, competitive benefits or perhaps incentives to return to the store. Think about that. All this can be done without the dealer or OEM doing a thing once the campaigns are set up. The ability to recapture what would otherwise be a lost opportunity – with no effort on behalf of the dealership – is a game changer.

Every day, dealers lose valuable contact information for prospects who visit their lot. Today, technology exists that enable lost opportunities to not only be identified, but automatically contacted on the dealer’s behalf with an offer to bring them back to the store.

This same data set also enables dealers and OEMs to identify customers who own a particular make and who are shopping competing dealerships. This can be used to send conquest messaging or test drive incentive offers as soon as one day after they visit the competitor’s lot.

How does it work? Geo-fencing or beacons? It’s a lot more sophisticated than that. Precise mapping must be set for every dealership. Next, dealership location data is combined with shopper mobile phone location data. Then rich consumer data from over 90,000 websites and apps are combined. Fragments of available and permissible consumer information are stitched together from over 200 different data bases to create a record of an individual visiting the store.

All of this data alchemy is being executed by a new firm called AutoPulse Insights. AutoPulse Records are the result of this data being carefully merged together and combined with location data that is sourced from a shopper’s cell phone. Every dealership in the US and Canada have the AutoPulse tracking in place today and traffic counts go back to 2016.

What kind of insight can come from this? There are a variety of uses including: Identifying the number of shoppers on a dealer’s lot, tracking the change in traffic month over month, and measuring marketing and advertising effectiveness. Manufacturers and Dealer Groups can also compare traffic from store to store either within a market or from brand to brand. OEMs can now track brand defectors (those who own a brand but are shopping for another) as well as loyalists (those who are shopping for the same brand they own).

Who is behind this data? We are pleased to announce that Root & Associates is partnered with Digital Data Solutions. Stay tuned. We will have much more on this in the following months.

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Cheers,

Kevin

Read more of my expert analysis here

Google, Apple and Microsoft are all reported to have large scale Virtual Reality projects in development. Google had announced that their Daydream VR platform will join Facebook’s Oculus and Samsung’s Gear VR in the mobile platform provider space.

Google’s announcement is significant. As a platform provider, they have the ability to create a standard – a kind of Android operating system for VR. This will likely lead to more mainstream adoption by developers and consumers and that will usher in a whole new marketing tool for a variety of retailers including automotive OEMs – and dealers.

Much has been written about how the automotive OEMs are using or plan to use Virtual Reality. Audi rolled out their VR system at CES this year and reports they will install the system in a number of locations worldwide. Volvo already offers consumers the ability to take test drives of the XC90 using Google’s low cost Cardboard VR headset and Toyota let visitors at the NY Auto Show test safety features using VR.

So is VR the next marketing fad or a serious tool? The answer may lie in how consumers feel about using it. We set out to answer that question and in March, Root & Associates agile research team put it to a panel of 700 in-market car shoppers.* We wanted to go beyond the gee-whiz factor of a pretend drive along a curvy coastline and understand if VR could provide actual value for real vehicle shoppers.

The scenario we developed involved a consumer downloading a dealer-provided VR app to their smartphone which enabled them to walk around the vehicle, open the back doors of a sedan, look at the grain of the leather and the stitching on the seats, then reach for a virtual child’s car seat and put it in place. Then get into the back seat next to it and evaluate the amount of available room. Next they could compare another model the same way – all from the convenience of their home or office.

64% of in-market car shoppers said they would definitely or probably use it while only 20% said they would not.**  More importantly, 70% said they would choose a dealership website that offered this capability over one that did not.**  Some sub groups, including Asian Americans and IT professionals, were decidedly more likely to feel that VR-assisted shopping could help select a dealership from which to buy a new car.

Our study also found that consumers with higher levels of education and those with children expressed even more interest in VR-assisted auto shopping. The stated benefits center around the convenience of narrowing down a make or model before arriving at the dealership.

So while VR today is more of a novelty than a marketing tool, what are the real chances of seeing widespread adoption? That will rely on consumers acquiring headsets. Bloomberg’s Intelligence analyst Jitendra Waral estimates that headset sales may top $1 billion this year and reach $21 billion by 2020. This is something that has not escaped the attention of leading auto technology providers. “It could happen as early as late this year or next year” said CDK’s Max Steckler, VP Global Product and Solutions, when asked when he thought VR-enabled dealer websites might become reality. “Content will drive the best consumer experiences for the foreseeable future” he added.

Why would dealers want to embrace such a tool? Efficiency. Savvy dealers are actively looking for ways to reduce the time consumers have to spend in the dealership to purchase a car. VR-assisted shopping has strong potential to help consumers greatly narrow their selection before they arrive at the showroom, which will improve overall efficiency for both sales reps and shoppers.

My bet is that we will see VR-enabled marketing tools at more than one booth at NADA in 2017.  Time to expand the marketing tool belt.

Cheers,

Kevin

Read more of my analysis on my Insights Blog.

**Source: Root & Associates, Agile Insights, Automotive Website Concept Evaluations March 2016

Some prognosticators say that within the next decade the human population won’t be able to tell if they are conversing with another human or a chatbot. Despite setbacks and historic failures, chatbots have been used in applications earlier than you may think—the first chatbot, ELIZA, was created in 1966 by Joseph Weizenbaum and was touted as the first natural language processing computer program.

Today, chatbots may even advise you in your own home by the alias Alexa, Cortana, Siri, or Google. Chatbots are proliferating on the messenger app Telegram and range from trivia bots to poker game bots. Some bots even connect users like a dating website would.

In automotive, Carla and AutoEQ have bas developed by Carlabs. As a product, Carla has been wowing critics and inspiring hope for the auto industry. Why would a chatbot inspire hope? The auto industry has seen their sales process evolve over the years driven by a heightened focus on improving customer experience. It is here that chatbots may provide the greatest benefits for the in-dealership experience.

We believe that the initial place for chatbots and digital assistants to provide the highest value is in augmenting repetitive tasks by humans, not replacing them. They will learn with experience and repetition, but perform best when applied to a particular focus area verses trying to address all things for all people. With that in mind, here are our opinions on where dealerships may benefit the most (technology solution providers: are you listening?):

1. Sales Reps – Some of the most frequent questions sales reps get are “is that vehicle still available?” and “what vehicles should I consider for $xxx per month?” By marrying inventory data with pricing parameters, combined with trade-in and simple financing guidelines, sales reps will be more efficient and effective in guiding consumers to the proper vehicles, which saves everyone time.
2. Trade-In Valuations – The UC or inventory manager today is armed with great inventory management tools, but they require a lot of manual interaction. That process could be far more efficient if those operating the mobile tools were able to speak to the application to enter basic trade info and then ask the application for input like price to market or supply and demand scores.
3. Service Scheduling – Scheduling and service loading have not changed much over the years. A chatbot for the consumer to interact with while requesting an online service appointment and a slightly different version for the service advisor to use while in the service lane—with the ability to advise and inform on the fly (think automated recall notice or previous declined service notification)—would be a welcomed addition.
4. F&I – The leading drag on reducing the in-dealership sales time is typically the prep needed by the F&I manager as they check the data to ensure the forms are correct. This starts with proper data input. While dealerships are involving the consumers more in that process, many don’t do it with the diligence they should (inputting their first name as “Bob” instead of their legal name “Robert” for example) and customers quickly become bored when faced with a screen full of questions. A friendly chatbot would certainly improve this customer experience and likely increase the accuracy of the data.

Will chatbots and digital assistants revolutionize the industry? No, not in the near term anyway. Will they play a role in incrementally improving the customer experience? They certainly will, if done with a fair amount of careful product development and usability testing upfront. This technology holds plenty of promise.

Cheers,

Kevin

(Image License: Creative Commons 3 – CC BY-SA 3.0 The Blue Diamond Gallery)

Find more original research and analysis on my Insights Blog.

My Insights Blog offers exclusive research and analysis from Root & Associates.

The average American worker spends 26 minutes commuting to and from work each day. And while that may not seem too bad on the surface, this adds up to about nine days each year that the average commuter spends in a car, on the bus, or on the train. Seventeen percent of us have commute times that are 45 minutes or longer. Collectively in America, each year we spend 1.2 billion days commuting—a staggering amount of squandered time—and it’s going to get worse before it gets better in most cities.

Because of this growing problem, the collective pain of commuting isn’t being ignored anymore and some of the world’s most powerful companies are investing billions into solving it. While we haven’t quite embraced fully operating autonomous vehicles yet, work has begun on the next generation of commuting: autonomous flying cars. By utilizing vertical transportation space, this technology could cut that average 20-minute commute down to less than two minutes.

While there has been talk of flying cars for decades, there’s actually a lot of promise in making these a reality in the near future. In fact, just this last month Dutch company Pal-V announced the opening of pre-order sales for the first commercially available flying car…if you have about $400K to spare. Before you write this off as something for only the 1%, consider that with scale, price per unit costs of production will dramatically fall and ultimately may be in line with common vehicle costs today according to experts and that’s for private ownership. Ride-sharing services improve the economics dramatically.

Making this technology available to consumers is key. That’s why Uber recently hired former NASA engineer Mark Moore to spearhead Uber Elevate, its latest initiative for short-range air taxis. Other companies have joined the cause, too, like Airbus with the Vahana project (see video here) and Google’s founder Larry Page with startups Kitty Hawk and Zee. Aero.

In its detailed whitepaper, Uber Elevate explains how it hopes to make on-demand aviation a radical solution for urban mobility. They claim that in about 10 years, large cities like New York could be equipped with flying cars that deploy from “vertiports” located through the city, transporting commuters from home to work in a matter of minutes, avoiding gridlock all together. Many experts feel that flying autonomous vehicles may be even faster to market than autonomous cars because they will be less costly than other heavy-infrastructure transit solutions.

Will autonomous flying cars completely alter the automotive industry in the near future? Probably not. Cars and trucks as we use them today will likely always have practical application, especially in rural settings. But by 2030 it is estimated that 60% of the world’s population will live in cities—10% more than today. For those living and working in crowded urban spaces, autonomous flying vehicles will certainly be life changing and if nothing else, will be an extremely interesting product rollout to follow.

Cheers,

Kevin