New global market research released today by Solera Holdings, LLC (“Solera”), the global leader in vehicle lifecycle management, reveals the increasing demand for digital-first automated claims, with trust in AI-driven claims and repairs soaring to 79% globally. The annual survey also identifies rapid acceleration of AI adoption among global car insurers, enterprise body shops and Original Equipment Manufacturers (“OEM”) dealer networks to deliver on consumer expectations.

Digital-first channels are revolutionizing how claimants manage their motor claims and repairs. Half (49%) of consumers now desire fully digital self-serve experiences and 43% prefer a hybrid model blending digital tools with human contact. As a result, more consumers are now willing to change their insurance provider to one that offers digital claims technology (70%) and nearly two thirds (65%) would choose a repairer using AI to minimize the risk of error when conducting work on their vehicle.

“Digitization is now an integral and expected part of the claims cycle. Our research shows the pace at which consumers now actively seek automated self-serve models that meet their needs for digital convenience, speed, and accuracy,” said Bill Brower, VP Industry Relations, Solera. “It’s clear that those implementing cutting-edge technologies like AI will gain critical customer retention, efficiency, and resilience.”

Digital transformation projects have been fast tracked to optimize processes and solve challenges accelerated by the global pandemic. In the last year, repair shops and OEMs saw the highest return on projects through improved profitability (52%), increased staff productivity (50%) and employee efficiency (49%). Insurers saw the highest return on digital transformation projects through improved business resilience (58%), faster decision-making (55%) and increased staff productivity (55%).

In line with this shift, the use of digital claims technology has also increased rapidly. Solera’s survey revealed over a third of claimants have now completed a motor claim without speaking to a person and over half have taken images of their vehicle and uploaded them onto an insurer’s platform.

Despite the progression of AI-driven claims and repairs, this ecosystem is still facing critical adoption barriers. Global car insurers continue to cite cost to implement and upskilling the workforce (73% and 65% respectively) as their biggest AI challenges. Repair shops and OEMs face similar drawbacks, as cost remains the largest barrier to AI (75%), up by a third year-on-year. However, there is a clear path for future AI investments. Now, nearly two thirds (64%) of global car insurers and 43% of repair shops and OEMs are highly confident their AI goals will be met within the next 12 months, ranking 8 out of a maximum 10.

“Covid was clearly the tipping point for customer adoption of digital services. Insurance customers are clearly ready for digital options especially when they have the opportunity to quickly access an adjuster in person as needed. The optimism among industry decision makers to achieve AI objectives is a huge vote of confidence, but more needs to be done to realize its value for stakeholders and customers. There are inevitable barriers in the journey towards full automation, but the message is clear. Now more than ever, organizations must leverage first-class technology partnerships to streamline this transition and maximize the return on AI investments,” added Brower.

For more information and findings click here.

About This Research Survey: Solera’s research series was conducted by Coleman Parkes in November-December 2021 with 1,500 tech-savvy consumers and senior decision makers from over 500 global car insurance companies, enterprise body shops and OEM dealer networks across North America, Europe and Asia Pacific.

Service Absorption Goals

Dealerships and their service managers are constantly trying to solve the problem of their customers defecting and servicing their vehicles at aftermarket locations. OEMs pay dealerships bonuses based on the number of OEM customers registered in their primary marketing area, compared to those OEM customers who continue to service through the dealership. In general, dealers need approximately 70% of the total brand vehicles servicing with them to get their bonus.

Solving the Defection Problem

What can service managers do when service cycles are getting longer and longer, and dealerships are unaware that customers have defected until it is too late? A considerable defection period occurs when a new vehicle’s warranty expires, and the customers start to service in the aftermarket instead of returning to your dealership. When that vehicle is sold to its second or third owner, the dealership must wait until that vehicle is registered in their primary marketing area and will not know who the owner is unless they have the registration data or if that customer decides to visit the dealership for service.

So, how many of your customers are defecting to the aftermarket? If you could capitalize on these known defectors, and “in the market” for service customers, how much closer would you be to hitting your OEM’s benchmark for servicing vehicles in your primary marketing area?

Who are these Known Defectors? 

Known Defectors are people who own a particular make of vehicle, and who live within a certain radius of your dealership. By using proximity targeting, dealerships can now identify when a mobile device has been to an aftermarket location. Proximity targeting uses latitude and longitude information to determine if a mobile device is at an aftermarket location and can track the length of time they are there. When a customer is at an aftermarket location for over 30 minutes, they become a “known defector.”

In addition, data partners have the ability to scrape credit card statements in aggregate to see if customers have charges on their credit cards from aftermarket locations and can even see what service was provided. Using this data, these audiences can be specifically targeted with Facebook and display advertising, which can bring them back into the dealership when it is time to service again.

How does this work exactly? Take a real-world example: Peggy recently got an oil change at Jiffy Lube. The proximity targeting data determines that her phone was at the aftermarket location, in your dealership’s primary marketing area. Also, data partners see the charge for the oil change on her credit card. Peggy then receives advertising for a special offer that brings her back into the dealership for her next service instead of going to the aftermarket location the next time she needs an oil change.

How Do You Identify a Customer Who is “In the Market” for Service?

Data can also help dealerships find people who own a particular make of vehicle, live within a certain radius of the dealership, and are “in the market for service”. When customers visit different dealership websites and aftermarket websites, or are searching online for service parts or locations, that information can be tracked. This online activity indicates that the customer is in the market and then they can be sent a Facebook or display ad as well to encourage them to visit your dealership. Now you can entice the customers with digital ads and special and special offers that can bring them into your dealership.

For example, Doug’s car just broke down and he needs a new alternator. Data informs the dealership’s marketing team that Doug owns a Toyota Camry in the dealer’s primary marketing area. Doug gets his vehicle towed and calls his friend Ryan for a ride. They go back to Ryan’s house to start researching prices and more information. They might google “prices for alternator” and start visiting aftermarket websites like Jiffy Lube, AutoZone, to price out alternators and the cost of getting one installed. This online activity moves Doug into the “In the Market for Service” audience and is shown advertising for service at the Toyota dealership in his proximity. Doug then receives exceptional service from the dealer and becomes a loyal customer of that dealership for future service and vehicle purchases.

Does This New Technology Work? It did for a Luxury OEM!

Since this technology is new to the marketplace, a luxury OEM recently ran a pilot to determine its effectiveness. The pilot ran in the OEM’s selected store’s primary marketing areas for two months. Nine total stores participated, ranging from small to larger stores targeting owners of vehicles for this luxury OEM. who were defecting or in the market for service with advertising. On average, dealerships got $18 back for every $1 spent on advertising. Small stores reported an ROI of $16 per $1 spent. Medium stores reported an ROI of $18 per $1 spent, and large stores reported an ROI of $22 per $1. After the pilot, this luxury OEM is now rolling out the technology to all their stores across the country to continue capturing these known defectors and use the data for maximum service absorption.

If your dealership is interested in learning how to capture Known Defectors, and reach customers currently in the market for service, you can learn more at solera.com/knowndefectors.

Author Bio: Madison has a diverse background in automotive marketing, focusing on seamless integration between Tier 1 and Tier 3 marketing strategies. Madison has experienced marketing from various perspectives from working with the OEMs and dealerships directly, to now serving the automotive industry from the technology and vendor relations side of the business. Currently she serves as the Lead Marketing Business Partner at Solera, where she strives to elevate consumer experiences and enhance dealership value at every stage of the vehicle lifecycle.

To avoid an inventory problem, you need a plan of action that covers merchandising, your plan for per-unit profitability, and all the critical stages in an inventory unit’s lifecycle.

Inventory success in 2019 will depend on how you answer the following question: Do you have a policy or plan when it comes to aging inventory. Most dealers will say they have a policy when a unit reaches 60 or 90 days, but a policy isn’t a plan. What’s the difference?

Well, what’s the process when a vehicle reaches 15, 30, 60, or 90 days? What will you do differently to merchandize units? How are you going to price those vehicles? Are you going to place those aging units in different spots on your lot? Bottom line, what are you going to do differently with a unit as it ages through its lifecycle?

The answers to those questions need to be in your written plan.

Virtual Merchandising

You also have to look internally and ask the following: How long does it take to get photos on a car? What about a description? How long do you price a unit competitively? If your inventory management system can’t report on those statuses, you’re operating blind.

We have very successful dealers who can have a vehicle they just took on a trade merchandised on their site within two to three days. And what they’re doing is giving themselves an extra week or two to sell the car. It may not be frontline ready, but it’s available virtually to everybody in the market.

Profit vs. Turn

I want to finish up this piece with one other trend, which I think is critically important. See, one of our competitors in the inventory management space announced a major change in philosophy earlier this year. See, the biggest difference between us and everyone else leading up to that announcement is that we, here at DealerSocket, have always looked at how well a dealer performs on a particular unit. And for those vehicles the dealer does well on from a profitability standpoint, well, there’s no reason to get down in the gutter with every other dealership engaged in a race-to-the-bottom pricing war.

See, DealerSocket has always believed every lot unit deserves a chance to be sold at a profit. We’re glad our competition has finally come around, because a race to the bottom is no way to conduct business.

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.