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How Car Dealers Benefit from Increasing Digitalization

For more than 85 years, the international operating DAT Group (Deutsche Automobil Treuhand) collects and prepares comprehensive automotive data, providing the automotive industry with valuable, current insights on market behaviour around used and new car purchases, and the repair shop business.

Screen Shot 2018-07-26 at 10.03.31EASI’R has spoken with DAT press speaker Dr. Martin Endlein about the findings from the latest DAT report on the future of car dealerships and possible strategies to deal with customers who become more and more digital.

“In the digital ages, dealers have to position themselves as competent contact persons, also beyond the actual car purchase”

EASI’R: The latest DAT report finds that 80% of new car buyers and 78% of used car buyers are researching for a new car online today. Which implications for the future of physical car dealerships does that have?

Dr. Martin Endlein: Already ten years ago, people in the industry said that the end of car dealerships would be near, due to the increasing digitalization of the customer journey. But that has not happened yet and it also won’t happen that soon. Current data even suggest that approval for local dealerships has increased significantly in recent years, especially in the new car segment. Cars have always been complex products and they have become even more complex during the last few year, so they are actually more in need of explanation today than ever before. Besides from that, many customers find it very time-consuming to do a complete online research for a new car at home on their own, and therefore, they continue to appreciate the expertise and advice provided by the local car dealer.

A businessman selecting a Loyalty Concept button

EASI’R: The DAT Report 2018 also states that 20-25% of all car buyers have changed the car brand because of the internet at least once. 15% have even purchased a new car via a new car portal. How can dealerships re-establish customer loyalty? And is the digitization undermining brand loyalty?

Dr. Endlein: The internet now offers the customer the opportunity to easily compare offers from different brands and different retailers, for example, to find extras or to set additional quality promises such as financing offers. Volatility in buying behavior has always existed, but of course the competition between the car dealerships has clearly increased due to digitalization. For the customer, the overall package is important because it decides whether customers actually accept longer travel times for the better offer, or not. In general, the more attractive price-performance ratio is crucial.

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EASI’R: What can car dealers actively do then for an increased customer loyalty in the digital ages?

Car dealers need to evaluate their customer base. Knowing why a customer actually chose a particular dealership, knowing the purchase history and if a customer’s family situation has changed provides valuable insights for a strong positioning.

Dr. Endlein: Most important for the car dealers is the data quality of its own customer base. Car dealers must be able to give existing customers regular signals and they need to be able to activate them. We can see that successful dealerships are implementing this very well already. In addition, especially in the internet age, retailers need to become a strong brand themselves and need to position them accordingly. This is at least as important as the positioning of the brands they sell. However, I see most need for improvement in the evaluation of the customer base of dealers: many do not really know why a customer has chosen just their dealership, they do not know how the invoice history in their own database looks like, they don’t know if a customer’s family situation has changed, and so on. Exactly these information, however, can provide valuable insights for an even stronger market positioning.

EASI’R: The DAT Report 2018 finds a high degree of loyalty for the whole workshop/repair area; and it shows that the cost-benefit-ratio only plays a subordinate role. Can car dealerships learn something from car workshops?

Dr. Endlein: They can surely learn that dealers should not only see themselves as sellers, but as competent consultants around the vehicle, even after the purchase. The satisfaction with the workshops is so high, because the workshop actively solves problems and takes care of the emotional good car. It is also an advantage if the sales team in a dealership works closely together with the workshop department. Many sellers have reservations about showing customers the repair area because they think the customer does not care. In my opinion, exactly the opposite is the case: for the sharpening of the dealer brand, sellers should rather take their customers by the hand and show them the workshop.

The more touch points with customers, the better: Dealers should stay as close to the customer as possible and carefully evaluate if they really should outsource certain areas or rather provide additional services themselves.

EASI’R: There are some providers, e. g., Amazon, where customers can book a test drive online and then the car is conveniently delivered to the customer’s door for testing it. Is this the future?

Dr. Endlein: For the dealerships certainly not. The test drive is one of the strongest and most emotional tools car dealers possess, and they should not give that away. In the last few years, many dealers have already outsourced valuable opportunities for customer touchpoints, e. g., the whole subject wheel storage, processing or repairs of glass. Therefore, car dealers are well advised to look carefully which areas they can offer themselves, in order to stay closer to the customer. Especially the test drive is a pivotal point for the customer’s decision, and to give that away would be a mistake.

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Online booking offers are something that car dealers can learn from online players like Amazon

However, what third-party vendors can learn from those online players is the way of offering an online booking process, and so giving customers the ability to conveniently book an appointment that suits them best on their own from home for the test drive. And if the customer then shows up for the test drive in the showroom, the dealer should pay much attention to create a positive experience down to the smallest detail, from providing the vehicle in the rain under a roofing, to discussing the customer experience after a test drive.

Interested in learning more about EASI’R and how we help car dealers to bring every customer on the best winning sales path, while taking advantage of valuable insights from the customer data base? Then just request your free demo at www.easir.com/request-demo or contact us for further information at sales@easir.com. We look forward to hearing from you!