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Michelle Denogean

Michelle Denogean CMO

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Top Automotive Retail Predictions for 2020

In a world where it feels like every industry pundit has provided their 2020 predictions, we wanted to hear directly from those who hold the purse strings — dealer executives responsible for running dealership operations day in and day out. So, we interviewed some of our top dealer partners to see what they had to say. We asked them what trends they felt would come to fruition in 2020. How will the sales process evolve? Will Digital Retailing continue to grow? How will dealers attract top talent? What will help them maintain their competitive advantage? What else do you think dealers need to prepare for?

Here’s what they had to say:

PREDICTION 1: Digital Retailing Adoption Will Continue To Grow

Ok, in all fairness, we did only ask people who are using Digital Retailing today. However,  we think it is important to hear WHY they think it will continue to grow BECAUSE they are using it.

Christian Storm, Training & Development Manager at Planet Automotive in Colorado believes that the growth in Digital Retailing will be driven by customers reading reviews about the experience it enables and coming to dealerships expecting that type of experience.

Our research backs this up as well. As of this year, millennials will make up the largest segment of car buyers at over 40% of the car shopping population. And if there is one thing we know -- Millennials tend to buy things online. In fact, according to a UPS Pulse of The Online Shopper report, 54% of all millennial purchases are made online. With that said, when it comes to car buying, they still want to test drive the car over 60% of the time, according to a recent MSN Study. So, dealerships need to be prepared to enable customers to do some or all of the process online before they get there. Pair that with the fact that almost all Millennials read local business reviews online and you have a winning recipe for Digital Retailing success.

Jeff Miller, GM at Mark Miller Subaru in Utah, spoke about how continued adoption of Digital Retailing will be fueled by OEM requirements. The development of OEM Certified Digital Retailing programs took shape over the course of 2019, with Audi, Mercedes, Lexus, Toyota, Hyundai, VW and Subaru leading the pack. 

Of course, it doesn’t hurt that some of these OEM programs subsidize a portion of the cost. In a world where profits are declining, every little bit helps. Especially for tools that can assist dealerships with expediting the purchase process, leaving time to introduce the customer to incremental profit centers such as F&I, accessories, and service.

Brendan Harrington, VP at Penske Motor Group, thinks Digital Retailing will help the industry make progress toward more transparency. While many dealerships have become a lot more transparent, there is still room for significant improvement. As customers experience transparency via Digital Retailing solutions, the dealerships that do not fully embrace transparency will suffer.  

Brendan also believes that the spotlight on customer experience means investing in longer return policies and providing customers with the ability to test-drive vehicles from the comfort of home -- both trends that align with the retail industry evolution outside of automotive.


PREDICTION 2: Technology Will Evolve The Sales Process

In many of our recent dealer interviews, friction amongst staff has surfaced as a huge pain point related to employee & customer satisfaction. As anyone who has worked in a dealership knows, the long line of salespeople queued up next to a sales manager’s desk is not the most efficient use of anyone’s time.

Both Brendan Harrington and Mike Ebrahimian, GM at VW Sunnyvale talk about this pain point as the problem to solve in 2020. As Brendan states, the ideal process would include further empowerment of the sales professional.

Our belief is that when this becomes more commonplace, managers will be free to get up from behind the desk, interact more with customers, and coach their teams to drive incremental sales.

Mike talks about how we can also reduce friction by empowering the customer to execute the whole deal from beginning to end in one place, ideally on the dealer website. The idea is to enable the customer to do much of the work ahead of time and finish it in-store; reducing much of the back and forth, as well as time spent completing the transaction. Putting these two strategies together is a power punch, leading to significant efficiency gains.

Of course, there are other areas of the process worth tackling. Brendan & Jeff talked about quicker and more accurate trade valuations, e-contracting, and digital paperwork as linchpins to completing the deal 100% online. Christian also talked about the power of video both online and in-store as a significant differentiator for dealerships to explore.

All of these viewpoints reinforce the fact that digitization of the sales process is here to stay and 2020 will be the year that more dealerships will embrace it.

PREDICTION 3: Employee Retention Improved With A Streamlined Sales Process

As mentioned above, the digitization of the sales process is the name of the game, and this can have a positive effect on both recruitment and retention. Mike predicts that digitization will help better define employee expectations, leading to happier customers, happier employees, and less turnover. He is already experiencing this himself as the time to onboard new employees has shrunk from 2-3 weeks to just 2-3 days.

And what about retaining employees? Christian says that defining a career path for people entering the industry is the key to success.

And who are the companies that dealerships will lose staff to? According to our Millennial Job Satisfaction Study, Amazon and the Apple Store make the top of that list with 94% of millennials saying that technology plays a critical role when choosing their ideal job. To retain employees, dealerships should focus on reducing high pressured sales tactics, moving to a more salary-based compensation plan, and offering flexible work schedules. Not only will this help retail employees, but it is a significant driver in attracting new talent.

Of course, there are other factors -- Brendan feels strongly that people flock to success and that dealerships need to position themselves as the place that the best flock to. This starts with being clear on what success means to you and sharing your dealership’s goals and achievements with your entire workforce. Not only can this bring staff closer together, but it will nurture a culture of growth and positivity.

PREDICTION 4: Continued Focus on Customer Experience, Consolidation, and Electric Vehicles

While these themes are not new for 2020, the fact that retailers see a continued focus on them is very telling. We believe that customer experience will continue to be the overarching theme that dealerships around the country need to focus on for the foreseeable future.

As such, weaker stores who do not adopt this mindset will start to struggle more. According to Brendan, the strong will gain market share while the weak will be sold, consolidated, or shut down.

Christian believes that efficiency even extends into our vehicle selection with EVs continuing to grow in popularity. He urges dealerships to embrace this new technology by being able to speak the EV language. Vehicles are already being held on to longer, and EV technology will elongate this further. Sustainability is not a topic to be overlooked as it relates to serving your future customers.

Serving future customers is at the center of it all. And the best way to ensure a great customer experience is to standardize it. This speaks to our final prediction, which is one of our own -- Dealer groups will take a much more active role in standardizing process across all of their stores to ensure a consistent and seamless experience. People who cannot get on board with their vision will find it hard to maintain their place within the group, no matter how successful they have been in the past. 

So there you have it-- the retailers (and Roadster) have spoken. We would love to hear what you think. Anything we missed?

Martins Ville

Here's something all you automotive experts have never asked your customers. Ever. And you're here trying to tell us how to run our car business? Haha! 

When was the last time any of you experts or dealers ever sent every one of your current, prospective or past customers a survey asking them about how your website performed, or does perform, and if they even like it, how is the navigation, how was finding what you were looking for in the quickest amount of time,  did it aaccomplish everything you wanted, what can we fix and how can we make it better for you???

Digital retailing, really!!? If that's what you want to do then go get yourself a landing page at PayPal for free and avoid paying hundreds of thousands of dollars over the next 10 to 15 years paying a service that's not sincerely invested in your bottom line like you as a dealer are.

None of you have ever done this so please and I really mean please stop telling experts like me what the heck this industry really needs because none of you know because none of you have asked your customers what they really want.

And for those very few of you who have done this then I apologize to you. 

When are we going to get serious about our business?

William Phillips

Interesting 

Listen to Manufactures who don't retail, on how to retail??

Focus on millennials living at home on the parents income without focusing on their ability to buy??

Focus on Electric cars that are in 2020 a small part of the market and your inventory ??

Let a vendor who wants the customer to avoid the store you built, and your staff, tell you how to make progress???

Focusing on the future when you have not mastered the current is progressive failure.

Lets here from founding owners who built  their business from nothing 

 

 

Michelle Denogean

Thanks everyone for the constructive feedback. The dealer executives quoted in this article are some of the most progressive thinkers and are indeed evolving their businesses to offer better customer experiences right now. Their predictions are around what's next given what they have accomplished thus far. The thoughts expressed in the post are theirs, some may agree and some may not. However, they are definitely doing something right given their current success.

As it relates to surveying customers, that is something that we do regularly to better understand the experience (both online and in-store). We are seeing customers who have interacted with digital retailing functionality recommend these dealerships to friends and family members at 2-3x the industry average (+85 NPS vs. +39 Average Automotive Retailer).

R. J. James

Michelle... GREAT article!  It is the type NUDGE that helps some dealerships digest and adopt forward-looking trends.

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