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Most marketing products sold to dealers are participatory. That is to say, what a dealer gets out of them is somewhat dependent upon the non-cash things put into them. Vehicle listings require vehicle merchandising. Search engine marketing requires ad layouts and landing pages. Leads require quick and complete responses. We continue to hear a lot of talk about whether or not a particular product works, but the fact is that most marketing products work for those who work them, and don't work for those who don't. However, savvy vendors are putting the burden of improvement on their own shoulders to make it easier for dealers to maximize their ROI from marketing and information system investments.
As vendors expand the array of products they provide dealers, some of the benefit is derived from new product features, as we discussed in yesterday's article. But some of the benefit comes from making products easier to work. A few years ago, Lindsey's just-turning-4 nephew showed her how to log onto the computer, get onto the Internet, and find his favorite online game site. Now, we know we're biased when we say he’s smart and even was back then, but let us remind you – he was four. Are the products you’re using easy enough for your four-year-old niece or nephew to use?
In our discussions with leading vendors, this focus on the ease of product use was paramount for some, like Dominion and ADP/Cobalt, but for others, the issue never came up. There is a big difference between an organization that uses the dealer's share of wallet as a top performance indicator and an organization focused on the value dealers extract from the products they offer. It is absolutely possible to keep an eye on both, but there is currently a great deal of variation between vendors.
Ask any vendor what percentage of their dealer customers receive at least 70% of the value they could receive from their product. We've asked this question to dozens of vendors over the years and get answers back ranging from zero to less than half. We have yet to find any organization selling to dealers that believes more than half its dealers utilize over 70% of the potential product value! News flash: That’s a problem. Still, the focus of many product teams is on developing new products and new product features, rather than providing the tools and training dealers need to extract more value from what they already buy.
Just as it is important that marketing products continue to offer consumers a better user interface (UI) and user experience (UX), it is also essential to improve the UI and UX for the dealership. The changes occurring in automotive retail shopping by consumers are more than many stores are able to keep up with; however, we have seen this play out before in consumer markets. Twenty years ago, there was a loud cry to make everyone "computer literate." Today, iPad applications are made to be so user friendly that children can use them long before they are able to read. That same drive toward simplicity must take place among the products dealers work with to maximize profits.
Fortunately that is the focus of some companies – and we suspect a growing number of companies – serving dealers. They look at product integration and ask how things can be made easier, simpler for those in the store. As we listened to George Nenni of Dominion, we heard the voice of a man unsatisfied with what has been achieved in this area, by his company or any other, but enthusiastic about what can and will be achieved for dealers over the months and years ahead.
It stands to reason that although new features will continue to grab headlines, what generates an ROI for stores is how well people in the dealership can execute with those features. Our industry is just starting to come to grips with the fact that consumers are trading in vehicles they still have not fully learned to operate, and it stifles loyalty and advocacy. Many consumers won't blame their lack of understanding the vehicle on themselves, just as many dealers won't blame their lack of understanding the products they buy on themselves either. Nor should they. It will be up to vendors to step up with products and systems that are more intuitive and draw on skills already obtained elsewhere. The good news for dealers is that vendors are beginning to not just get the message, but are working on a better response to it. The more dealers select systems based on the profitability they can really extract from them rather than the profitability that is theoretically possible, the faster vendors will adjust to the demands of the market.