With the advancement of technology and sudden wave of consumer adoption, the automotive retail sector is experiencing a global revolution and that can only be attributed to digitization. Thanks to digital platforms and solutions, dealers have experienced many recent changes.

Total retail sales in the United States are projected to be upwards of $5.94 trillion by 2024 . Digital applications have reshaped the customer’s shopping experience. Consumers can now make decisions quickly and informatively online, while also enabling retailers the ability to interact with customers at key touch points while they are making shopping decisions.

The automotive industry has been improving operations and focusing on customer experience. Digital retailing strives to eliminate the friction in services by offering advanced technologies and tools to create more personalized customer experiences.

Digital transformation covers a more comprehensive and effective range of revenue opportunities for dealers. Retail has had to rapidly adopt digital retailing solutions in order to revolutionize the entire process. These new business models help retailers focus on an astute sales strategy rather than a single technique or approach.

Advances in technology, such as artificial intelligence, automation and analytics have made their way into even the most basic sales strategy. Thus, processes have become more streamlined and efficient, which will help deliver better results to the customers.

The digital transformation has started to compliment traditional technologies' limitations allowing dealers to be more responsive to the current online shopping trends and consumer demands.

One of the most important aspects of a digital retail solution is an attentive and engaging customer experience. Car shoppers want transparency. We have known this for over a decade and the digital shopper is no different. The consumer that chooses a digital path to a car purchase wants advanced tools and applications that can answer their questions before they ever set foot in a dealership. Operations have to become even more customer-centric in order to capture that sale.

Thanks to digital transformation, the retail industry is being completely revolutionized. The way consumers shop has changed for both in-person and online platforms. Far fewer consumers are deciding between the two and embracing at least some if not all digital functions along their shopping journey. The process of shopping has become more convenient, seamless and easy for the customers with the use of a multi-channel approach and advanced methodologies

Nowadays, the automotive Industry is moving beyond mobile and connecting more devices. Technological adoption has completely changed how people shop. Even the in-store shopping experience has transformed with as some dealerships now provide screens or iPads to view product specifications and provide sales information.

Retails changing nature makes it necessary to integrate advanced technologies into operations to maintain a competitive edge. The digital transformation is continuously evolving with the infusion of evolution of new technologies. These technologies have majorly contributed to changing the retail industry dynamics and simplifying operations to a great extent. Dealerships should strongly consider adopting more avenues within the online sales process to keep up with the experience that consumers are increasingly getting used to and demanding or they may find themselves scrambling to catch up when customers move on to another dealership.

I am incredibly humbled that David Kain took the time to learn about PAVEInspect last week.

"David Kain, President of Kain Automotive interviews Steve Southin, Co-CEO of DiscoveryLoft about their new vehicle inspection tool, PAVE INSPECT. PAVE INSPECT allows dealers to send a link to a customer that guides them through a self-guided photo shoot that then processes the photos and creates a real-time inspection. This creates a high impact, credible way for dealers to provide quality feedback and accurate vehicle values."

COVID-19 has reformed and redefined the customer experience (CX), and now dealers need to think beyond short-term fixes and look forward into the new normal of an increased desire by consumers for digital retailing options, according to the Wall Street Journal. Some dealers have in fact been ahead of the curve in terms of adopting digital retailing solutions but what matters now is how to thrive in the digital landscape and that will only happen with a more pointed focus on customer experience. CX is the practice of supporting efforts to make customers satisfied and to keep people enjoying the experience of interacting with a brand along the entire customer journey to make each interaction with the brand as positive as possible. In fact, “companies that lead in customer experience outperform laggards by nearly 80 percent,” according to Forbes.

Good customer experience costs almost nothing and over time good customer experience will speak for itself allowing business to spread organically. This can keep sales and marketing costs low. No matter how much you splash the internet with pricey pointed marketing, consumers just won’t hear it. They listen to each other. Customers are the new marketers, and the only thing that matters is what they think and say about you. Reviews play a role in nearly every purchasing decision. Rideshares, food delivery, ecommerce, service, and vehicle purchases are all dominated by reviews. Even a small shift in consumer sentiment can make a big difference when it comes down to failure and success. An outspoken and engaged customer community can do the marketing for you allowing you to be lean in marketing investments. Buying that kind of advocacy would not only be expensive, it would be impossible to do sincerely.

Good customer experience will give you a competitive advantage that will be impossible for competitors to overcome. In this ever-competitive world, CX can set your company apart in a way that is very hard to duplicate. Vehicles are highly commoditized, with rapidly emerging competition. Manufacturers aren't releasing new models every year, so if it’s not possible to find new buyers by having a new product, how do you keep them interested? By focusing on the experience.

A thoughtful and engaging customer experience across each touchpoint of the customer journey is much more difficult for competitors to copy because an experience is personal. It encompasses pre-sale, sale, post-sale and delivery engagement.

Everyone learns in CX 101 that calls-to-action are an important part of generating leads. Two dealers can both have a button saying: “Get your E-Price Now” but a customer can have two very different experiences once they click that button. If one dealer calls up that customer and says “When can you come in?” and the other calls the customer with a detailed vehicle price, that customer is going to choose the dealer who followed through with the request. While it may be possible to replicate one or two of those aspects, when you do it right, competitors can’t replicate what makes your dealership unique without looking ridiculous and fully inauthentic.

A great customer experience can be the largest and most efficient growth opportunity a dealership can have and, over the years, the time invested in focusing on customer experience will be returned ten times over. A digital customer experience can make or break business in the long term in the same way that a poor physical customer experience can. Customer experience can shave marketing costs, solidify loyalty and increase referrals. If you’re not currently investing in CX in your online processes in order to make, hopefully this blog will convince you that it’s more than worth it.

The economic downturn the auto industry has faced beginning in early March was more devastating for those dealers who were not able to quickly and easily shift sales processes online if they didn’t have digital retailing channels already. Now as restrictions lift slowly across the country, we are waking up to a new digital era that could turn out to be more positive for the auto industry than previously anticipated.

Many industries have turned to digital retailing to keep revenue flowing as technophobia fades among businesses and consumers alike. Automotive remarketing needs to embrace digital solutions. Used car demand hasn’t evaporated into thin air for the past 3 months. that business has still existed in the digital landscape, the same place dealers find new and used car shoppers.

Supply chains in the auto industry are slowly returning to normal but restrictions on public gatherings have kept automotive auction business stuck in a standstill. Classic car events which usually draw large lucrative crowds have been canceled and have been reinvented into live video events. COVID-19 has almost rendered physical car auctions nonexistent for a portion of dealers in the short- to medium-term according to Cox Automotive’ s latest dealer sentiment survey. That is, unless we are able to find ways to shift more of the auto industry into the digital realm ASAP.

In questions focused on stock acquisition, some dealers said that they planned to either decrease or stop attending altogether. Two-fifths of the dealers surveyed told Cox that they have increased their use of digital solutions due to the lockdown, with 49% of those indicating this will be a long-term change with 7% insisting on avoiding buying digitally.

The majority of dealers are catching on to the inherent efficiency and convenience of digital channels and don’t see why they should go back to spending thousands of dollars and countless hours dragging inventory to and from auctions.

Customer and dealer to dealer trade-ins are an important part of the auto business and, luckily, there has been no need to stop as it is very easy to gather vehicle information from a customer and post vehicles online almost as soon as they are evaluated thanks to digital technology. Dealers can make confident bids on purchases with online tools and services because vehicle information can be laser accurate with the right photos and vehicle data.

Automotive dealerships will begin to adopt digital retailing channels quickly in order to be better prepared in the future. Socially distanced shopping will be a new normal for consumers. Dealerships have the option of turning to digital solutions surrounding vehicle sales and expect to see the more positive results. There are open opportunities for growth in digital trade-in appraisals, F & I, wholesale and dealer-to-dealer trades as the entire auto industry can see the long-term benefits of fully utilizing digital solutions in all operations as we all move forward into the ‘new normal’.

Digital retail has just had an unexpected growth spurt. While stay at home mandates disrupted worldwide economies, it has also forced many business and consumers to abandon technophobia and welcome digital retail solutions with open arms. Companies like Home Depot and Lowe’s utilized digital shopping early and actually saw business increase as a result of stay at home orders.

The auto industry has had to act fast as shutdowns and restrictions forced so many to make operational and process adjustments in order to remain profitable while at the same time forcing consumers to quickly become reliant on being able to complete transactions online for even the most basic necessities like groceries.

Consumers embraced digital retailing long before COVID-19. Digital retail was born the day a 74 year old woman ordered groceries from a television in 1984. Digital retail’s next big wave came with the adoption of mobile devices and payment methods, and now we find ourselves at the precipice of another significant time for digital retail in that social distancing and shutdowns have forced many new shoppers online. Now that more consumers are on board with digital retail, they are here to stay. Dealerships that have responded by embracing digital retailing products and services have been able to continue operations, while dealers that have been etching out their digital processes for years barely missed a beat during the sudden transition.

The newest factor in digital retail success is within demographics. Millennials and Generations Z and Y grew up using the internet for everything from school work to shopping to entertainment while Generation X and beyond have been more hesitant. Older demographics shopping and purchasing habits have changed permanently. Or Lenchner, CEO of Luminati Networks reports:

“Our online data collected in collaboration with our partners shows that older consumers are now embracing online retail and are currently using e-commerce at a rate 15 percent higher than the same time last year. With Britain’s average age now 40, this change is key. On average the over 40 demographic reports the highest levels of disposable income in the UK with their consumer spending clocking in at around £803.91 per week in 2019, far outstripping the spending of Millennial and Generation Z consumers.”

While digital retailing may have only accounted for around 2 percent of sales in the past, digital retail is expected to outperform retail earlier than expected and dealers need to be prepared as consumers are now going to be more likely to desire these types of services moving forward. Digital retail processes need to factor in that older people shopping online means new levels of user and customer expectations. User experience needs to consider more than simply appealing to younger more internet savvy users. Take advantage of digital retail solutions that have proven they can provide top tier user and customer experience to a range of generational shoppers. Offer services like a complete online trade vehicle inspection, online sales transactions, pick-up and delivery in service and even mobile service at a consumer’s house or job site. That way you can expect to retain members of many generations even while more and more businesses are reopening every day.

The worldwide COVID-19 pandemic forced many retail businesses to either shutdown or embrace automation, AI and digital retail solutions in order to continue to generate revenue. Almost immediately, artificial intelligence has gone from a niche concept to a one that many automotive dealers and businesses need to strongly consider even as many of us begin the re-opening process. While some people believe it could unlock a new golden age for humanity, some, including the late Stephen Hawking – think that it could plot out humanities doom…but are the robots really here to take jobs, or does AI need human intelligence to exist and be nuanced enough to really benefit retail?

Aside from the data scientists and programmers who work in the automation field, think about all the ordinary people who perform the tasks that AI’s aren’t equipped to handle, thereby helping to improve them, and vice versa.

To compare the combination of man and machine to the two parts of a brain, like Microsoft’s Dr. Hsiao-Wuen Hon, consider machines as the left side of the brain - the side responsible for logic and rationality, with humans being the right side - the side responsible for creativity and judgment and decisiveness. Together, they can form an ideal form of intelligence, which Dr. Hsiao-Wuen Hon expresses in the following equation: Artificial Intelligence (AI) + human intelligence (HI) = intelligence, or augmented intelligence.

Amazon’s Mechanical Turk is often described as “artificial intelligence” even though it uses a small army of workers to carry out micro-tasks like matching information in photographs – something machines aren't usually very good at. But this is changing as machines learn more over time. Mechanical Turk workers end up spending more time checking the work of algorithms, as opposed to filling in ability gaps for them.

Another example of how AI solutions need Human intelligence first can be found in the automotive vehicle inspection process. Over the course of 15 years, in North America there are over 22,000 body styles of vehicle produced. Each style can have up to 10 unique colors, creating hundreds of thousands of possible vehicle combinations. There are also over 1,000 combinations of types of damages and severity that AI would need to learn, detect and process. It would be almost impossible for AI to consistently detect the same damage and severity on each different body style and color, as every different variation affects how this damage can appear for AI vision. The AI would need to learn over 2,000,000 unique variations and combinations AND be able to learn and detect new variations as they come into existence.

In order to avoid this problem ideal AI solutions need to include Human Intelligence and cannot simply rely on AI to learn an impossible amount of data and execute nuanced functions that can take their human counterparts a short period of time to process in tandem and deliver more accurate results. While concerns about jobs being “lost to machines” may have some validity, new types of roles are popping up for people within the Artificial Intelligence Arena because AI needs a human touch in order to benefit retail and provide the kind of User Experience that retains customers and keeps growing business.

The retail car business in North America can be incredibly taxing on its employees. From 12-hour days to uncertain paychecks – salespeople can go from hero to zero quickly. As we all deal with this COVID-19 virus, many dealerships have experienced incredibly severe consequences. Some have had to close completely while under lockdown which, in some instances, has led to a complete layoff of staff or, at the very least, furloughs. Unemployment has skyrocketed in many areas with skilled and talented automotive professionals at home waiting to be able to go back to work.

I truly believe that one of the most effective use of time for any automotive professional stuck at home is to take this time for some professional development. It can be challenging to focus on training before or after a 12-hour day. Brains get fried and everyone needs downtime. This unprecedented world pandemic offers time that can be taken advantage of, however, to immerse in training.

There are many types of training available for automotive professionals. It doesn’t matter what position in the dealership they are in, there is something for everyone. The lucky employees may be provided with training by their dealerships that they can take advantage of. There are also many automotive industry trainers who hold online training through social media. Oftentimes, however, those may be sporadic and typically focus on a single topic. There are also plenty of virtual training schools out there. Many times, however, they require a monthly subscription which many people cannot afford in these tough times. There are, however, online training platforms that are free (or at little cost) that automotive people can access.

In addition, there are plenty of professionals offering tips and advice on automotive forums which afford automotive professionals the ability to read best practices, interact with their peers and ask questions that offer them professional growth. Of course, live training in which there is teacher-student interaction is the most effective. That is exactly why schools in the around the globe have gravitated towards online learning during these times.

Regardless of what someone wishes to learn, there is training material available. Automotive professionals don’t have to limit their education to automotive topics. This is also a great time to learn a new skill or get better at one. Topics like writing emails more effectively or outside industry best practices can introduce whole new levels of engagement and customer experience skills. Think of GMs relationship with the Disney Institute. There’s a reason that Disney has earned probably the highest level of brand loyalty in the world. Auto dealerships can improve as a whole but salespeople, service advisors and managers can also learn some tactics and skills that they may not otherwise be exposed to.

Take this time to step back and do some soul-searching. Many of us are waiting for the world to reopen and, in some instances, states are starting that process. This is the perfect time to take your skills to the next level and invest in yourself. There may not be opportunities like this in the future to truly dive into self-improvement – especially once everything is back to normal and people resume their 12-hour workdays. Now is the time to retake control and use time wisely. Don’t waste it.

There have only been a few times in automotive history that a disruption has caused so much harm to the world’s economy that has dramatically affected it. We are in one of those times right now.

Let us explore a few of the variables:

1. Dealer Inventory – Most dealers buy vehicles on credit (i.e. floor plans.) If dealerships pay off those individual cars within 30 days, they don’t necessarily accrue any interest. Inventory turn is very important. Because of COVID-19, however, not only are dealers holding used car inventory that could be 6+ months old but they are also holding NEW inventory that could end up being that old. Manufacturers will resume producing the next model year vehicles and expect dealers to take their allocations which presents a quandary. Dealers will be scrambling to get rid of their aged inventory while being encumbered by new inventory. It won’t be unheard of for some dealers to have three model year vehicles in stock.

2. The Race to the Bottom Accelerates – Once dealership sales departments reopen, Dealer Principals will be pressuring their sales staff to sell… sell… sell. If you thought automotive sales was hyper-competitive before, wait until every dealership is trying to offload inventory. As it stands, there is a glut of inventory sitting on dealership’s lots. What about all of those expired leases that consumers have not been able to return? Manufacturer finance companies are telling consumers that they need to coordinate those returns with the dealership while the dealerships are telling consumers they need to talk to the respective finance companies. An infinite loop that only irritates consumers.

3. Vehicle Values – Just like in any industry, supply and demand will definitely impact vehicle values. Dealers will find themselves in the precarious position of either taking a vehicle in on trade at a higher price than they could acquire at auction just to sell a unit. Valuations are going to become extremely trickier since there will have to be a balance between consumer expectations and transactions that are beneficial to the dealership. Dealerships will be forced to further decrease the small front-end grosses that existed pre-virus in order to move another unit thus resetting the floor plan clock. It’s almost like robbing Peter to pay Paul.

4. F&I Profit Will Decrease – Because of the race-to-the-bottom that existed even before COVID-19, dealers began relying on finance income in order to be profitable in sales through finance products like warranties, etc. but, most importantly, through finance reserve. No consumer with excellent credit is going to accept a marked-up interest rate when they can go with a manufacturer offer of 0% interest over 84 months unless they need the rebates to overcome negative equity. Dealers will not only have to acquire a trade-in (probably at a higher price than they could get the same vehicle at auction) but will have to have some great salespeople in finance in order to get any income whatsoever on the backend.

5. Digital Retailing Just Had a Growth Spurt – Consumers embraced digital retailing even prior to COVID-19. How do you think Amazon became the largest retailer in the world? Now, however, consumers have been stuck inside for months and have become even MORE reliant on being able to complete transactions online. Dealerships (or at least the ambitious ones) have responded by embracing digital retailing products and services in order to continue operations. While digital retailing may have only accounted for around 2 percent of sales in the past, consumers are now going to be more likely to desire these types of services moving forward. Services like a complete online sales transaction, pick-up and delivery in service and even mobile service at a consumer’s house or job site that are being offered right now will entice consumers into wanting those services moving forward.

This pandemic has not only created substantial lifestyle changes presently, it will also be a catalyst for the future of retail. In the automotive industry, it will no longer be acceptable to reply “just get them in” nor will a disparity in pricing or trade-in value be acceptable any longer. Consumers are going to not only expect but demand dealerships to adapt to their desires. Dealerships who do - and have the technology to do so – will flourish while those that believe that they can continue operating as they have for decades will find themselves either playing catch up or out of business. Is this harsh? Yes. But it’s meant to be a wake-up call. If you need some coffee. Drink it and read this again.

Until next time.