The one-two punch of digital adoption

The number of dealerships the average consumer visits during the car buying process is the lowest it has ever been thanks to the pandemic. And yet, 72% of car buyers are highly satisfied with the overall shopping experience—which is the highest it has ever been. 

That is according to a study from Sitecore, Microsoft and Publicis Sapient, and presented by Aswin Mannepalli, Global Director of Industry Strategy and Marketing at Sitecore (automotive and manufacturing) during the CXAUTO2021 Summit Series in June. The data points to the importance of a digital model for dealerships.

“Some of the people who are more digitally inclined have been able to pull away (during COVID), while the rest have been kind of lagging in the background,” said Mannepalli. “I think it’s always an excellent time to disrupt yourself and have the say in what your future will look like, as opposed to waiting for the market to disrupt you.”

The report, which considers a number of countries (including the United States, Canada, India, and China) suggests that the online experience has become one of the most important factors next to the actual product when buying a vehicle. It shows that China and the U.S. are the most likely to purchase a vehicle from a website, followed by countries like India, New Zealand, the United Kingdom, Canada, France, Italy and Spain. 

But that does not mean brick and mortar retailers are dying out. According to the report, 63% of automotive customers still prefer buying from dealerships—even though digital is gaining momentum in certain markets.

It depends on the age group, since 78% of consumers aged 65-plus are more likely to go straight to the dealerships, along with 68% of consumers aged 55-64, and 66% of those aged 45-54. Among the 35-44 age group that percentage is at 61%, and for 25-34 it is 56%—the same as the 18-24 year age group.

Those last three age groups are also more keen on using online platforms and OEM websites, while the demand for digital options has increased with the pandemic. For Mannepalli, this shift is related to a number of factors. 

Automotive dealerships are facing the perfect storm(s) thanks to:

  1. evolving customer expectations (demands for online tools to research and buy vehicles online); 
  2. disruptive market pressures (OEMs selling direct-to-consumers and online dealerships);
  3. uncertain digital tracking rules (policy changes from Google, for example, can impact attribution and personalization); and
  4. the global impact of COVID-19, which has helped transform consumer needs and expectations. 

Mannepalli said these factors are among the many things driving “an immense amount of the demand-driven need” to reorient the customer experience. 

On disruptive market pressures, Mannepalli said the challenge comes from OEMs (indirect and also online first dealers) who are eyeing the space left open by traditional dealerships in not being able to meet evolving customer expectations.

“There’s been an immense amount of change here, growth here, and it proposes a very honestly incredible challenge for traditional dealerships,” said Mannepalli. “Even when we start to embrace digital, there’s a lot of things here where we don’t control our own destiny.”

This is because dealers must rely on things like cookies, retargeting, and other factors, while a policy change at Google can have downstream impacts on the way dealerships manage their attribution models. 

One thing dealerships may need to consider is what Mannepalli calls the “other vertical effect,” which is the idea that the same brain is being trained on incredible experiences, using products such as Apple, Google, Netflix, and Amazon. That brain, he said, is the same one walking into an automotive dealership and is seeking those experiences. 

“If you’re not able to meet that kind of quality bar, that table stakes, that poses an incredible challenge, because the challenge here is not so much that they’ll go to the dealership across the street—they will opt out from your dealership altogether,” said Mannepalli.

It is no secret that younger generations are more likely to buy digital, as the data in the Sitecore report shows. And if we look at the global picture between the youngest and oldest age groups, dealerships have lost 20% of the market share. OEMs during that time have gained 10% of the market share with their online commerce options, and digital platforms increased 5% during the same period.

“So you’re seeing squeeze from both sides in terms of what traditional dealerships are being able to do. And that digital experience is really driving all of this change,” said Mannepalli, adding that “it’s manifesting itself in very interesting ways throughout the business model.”

For example, brand loyalty erodes as expectations increase among consumers, and especially by age group. It is highest with slightly older age groups (55-64 and 65-plus), and lower with younger age groups (18-24 and 25-34). Younger customers do not have as much loyalty as older customers do, and digital is considered a must-win for that younger generation.

But the report indicates that there is a lack of digital competency among some dealership staff, and found that 47% of dealers rate their ability to be an online sales retailer as poor or inferior. Furthermore, 57% of dealers think they are lacking the basic skills needed to manage online sales. And if we consider the percentage of online cart abandonment rates out of all measured categories in retail, the automotive category has the highest rate, with 98.88%. 

“It’s a one-two punch in that it’s very hard to work through, because you’re going to have to invest in some ways in order to make sure you’re able to serve this (younger) customer base,” said Mannepalli. 

The key to growth is customer happiness, and companies that do this—that deliver superior customer experiences bring in 5.7 times more revenue than their competitors. That also means being able to customize the experience for the customer, because although the physical dealership is not going away, consumer behaviour has likely changed in a lasting way.

The data was pulled from Sitecore’s shorter presentation report, and the more in-depth global research study on The Automotive Customer Report 2021 from Sitecore, Microsoft and Publicis Sapient.

Source link

Related Articles

Back to top button