Think Outside the Lot
Automotive retailers with brick-and-mortar stores as well as online portals can no longer dismiss digital retailing. Small auto dealers are increasingly having to compete against much larger dealers/groups and innovation can level the playing field. In the past, word-of-mouth and exceptional customer service have helped many small auto dealers as well as large dealers. Today, auto dealers need to showcase their products on multiple mediums to reach customers as opposed to consumers coming directly to the actual dealerships, which was how things used to work.
What is digital retailing?
Digital retailing involves the sale of products or services through the internet. What makes this type of retail important is that it does not rely on a physical location to help create the sale. Instead it relies heavily on digital distribution channels and e-commerce related software to filter the consumer through the buying process. These types of channels include consistent social media, e-newsletters, pay-per-click ads, display ads, etc.
Digital retailing advantages
So, you may be wondering why digital retailing is so important. One of the biggest reasons digital retailing has become so popular is because it allows for easy and clear incentives. Here are some of the more popular types of incentives auto dealers can offer:
Cash Incentives (depending on OEM (Original Equipment Manufacturer) – cash allowance can be used towards a purchase or a lease or both.
- Lease Incentives-
- Lease Cash – used to reduce the lease payment similar to a down payment
- Lease Rate (APR or Money Factor) – rate support from the OEM or bank
- Lease Residual Support – residual is the value of the car at lease end. It is typically a percentage of the MSRP.
- Finance Rate Incentives –
- Manufacturer or Bank supported APR (0.9% APR for 72 months)
- Down Payment Assistance – Cash that accompanies the supported APR % (Example; 0.9% APR for 72 months plus $1,500 DPA).
- Payment deferral or waiver – Offered by the financial institution or OEM.
- Customer Cash Incentives-The different types of customer cash incentives have different compatibility/stackability rules. The cash allowances can be offered on an OEM’s entire model line, a specific Year/Model/Trim/Body Style/Engine/Drive Type/Option Package or even specific paint code.
- Dealer Cash Incentives- This type of cash offer is given to the dealer by the manufacturer to use at their discretion.
Digital Retailing and the Auto Industry
One of the biggest leaders in the digital retail space is the automotive segment. That’s because digital retail provides an easier way for consumers to begin the auto buying process. They won’t encounter a hovering salesperson watching their every move and putting pressure on them to make a decision. Digital retail offers the most effective way to convert people searching your website to bona fide leads and transactions. It’s safe to say that digital retailing for auto sales is exploding.
With these leads come a wealth of information. For the auto sales industry that means gathering information about monthly payments, down payments, trade-in choices, and finance and insurance options. No worry if the consumer backs away from deals. The insight gathered from this data can influence the types of campaigns targeted to those consumers to re-engage them in the buying funnel. The once tried and true “call us” CTA has easily evolved to “buy online.”
Defined and non-defined Models
Until now, the customer moved through a traditionally defined system or model when purchasing a vehicle online. Often, the consumer would start with a third-party auto-buying website such as Autotrader for research on make, models, trims etc. However, the majority of the buying process would be completed with a salesperson during an in-store experience. While this was a type of digital retailing, it didn’t have the success of the current digital retailing model.
In today’s digital world, the consumer takes charge during the non-defined model. They don’t even speak with a salesperson in the early stages of this process. The consumer follows the prompts and is led through a process that offers them ideal pricing down to a VIN with the appropriate rebate or incentive, trade-in options, monthly payment schedules with various down payment scenarios, auto accessory variables and protection programs applying for credit, which ultimately give the consumer the perfect penny payment. This is all accomplished online and without actually speaking to anyone at the dealership.
Innovation in the automotive digital retailing space is at an all time high. Not only are customers able to research car models and options but they are also able to begin, and sometimes complete the buying process online. This innovation is driven in part by newer technology but also by changing consumer behavior. Yet innovation has outpaced adoption. Studies show consumers prefer a digital retailing experience that seamlessly moves them through the buying process especially as it relates to nailing down financing and exact monthly payment. Technology is the ultimate equalizer. OEMs and dealers that can adequately provide a seamless digital retailing experience will be the better for it.
