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Some Things Car Dealers Can't Fix

by Roger Lanctot | 3月 28, 2016

Thanks go to Tom Taylor this week for highlighting the impact of politics on advertising on radio and television and the role of car dealers.  Taylor describes how one “top-three radio group” seeks out car dealers for radio spots, knowing that dealer TV spots have frequently been bumped by political spots.

Taylor notes that auto dealers are “the largest advertiser category for both radio and TV,” as high as 12%-15% of the former and 25% of the latter.  He further notes a Wall Street Journal report, quoting Kantar Media research showing that it’s car dealers who “lose the most commercial time on local TV, when political advertising ramps up.”

http://tinyurl.com/h8cf7c6 - “Why Radio Loves Car Dealers” – Tom Taylor

http://tinyurl.com/hqcdlqq - “When Political Ads Come to Town” – Wall Street Journal

A much more important advertising medium for car dealers, though, is online advertising.  There is a multi-layered and multibillion dollar industry built around what some call the “sales funnel” – the process by which car dealers identify, track and lure in car buying customers.

The world of online advertising is built around search engine optimization and cookies and the ingestion and mastication of customer information including everything from location to demographics.  It’s a sometimes icky process of privacy invasion intended to help the customer and the car dealer better find the perfect match.

The importance of digital versus broadcast advertising has grown to such a degree that it is transforming the car selling experience and the process of customer engagement.  The extent of this transformation is important to understand in the context of a car shopping experience increasingly influenced by interactive digital tools that allow customers to compile comprehensive information on vehicle pricing, availability and configuration prior to the dealer visit.

The digital shopping process has become so evolved that it has car makers contemplating or instituting direct sales options – with car dealer fulfillment – and pondering the future role of dealers in a world increasingly dominated by virtual tire kicking.  This situation was highlighted by Steve Young, managing director of International Car Dealer Programme (ICDP), speaking at the WorldDAB Forum in Geneva a few weeks ago.

SOURCE: ICDP

Young noted the declining number of dealers in Europe and the enhanced role that car makers play in customer engagement.  European customers normally pay their first visit to the car maker Website before turning to their local dealers.

Much is made of car companies such as BMW instituting “expert” and “genius” programs, replicating Apple’s retail model.  The thought is that retail experts or agents can help customers understand new vehicle technologies – primarily infotainment systems.  The only problem with this model is that Young of ICDP considers it almost a complete waste of time.

For Young, speaking to an audience of WorldDAB developers and broadcasters,  the selling and educating of consumers regarding in-vehicle technologies must take place online or elsewhere prior to the dealer visit.  Dealers should be expected to understand the technologies in the car, but too many decisions have been made and conclusions drawn by car shoppers prior to the dealer visit.

Young enunciated five principles for the WorldDAB audience including:

  • Customers make most of their choices online, not in the dealership
  • Customers know more about “their car” when they arrive at the dealer than the salesperson
  • Dealers are keen to sell what they have, not what is in the options list
  • Dealers are more interested in closing the sale than peripheral things like service plans … and DAB radio
  • You need to communicate with the customer during their pre-dealer search phase, or with the OEM and dealer to increase fitment rates.

A similar view was express the following week in Hannover, Germany at the AutomotiveIT conference at CeBIT, where an executive from retail merchandising technology provider Innoactive demonstrated digital and virtual shopping tools for configuring and buying cars online and in stores - including VR renderings that allow customers to virtually sit in the car of their dreams.  The message from Innoactive was clear that 80% of car shopping begins online so dealers must “digitalize” their customer communications.

All of this might give dealers pause to ponder the future of automobile retailing.  Are dealers becoming a vestigial industry structure like some kind of retailing appendix ultimately in need of excision?

Reassurance came last week from an unexpected source.  John Krafcik, CEO of Google’s Self-Driving Car program chimed in in comments made at the New York Auto Show that the increased utilization of cars in relation to ride hailing and car sharing services and ultimately including self-driving cars – will put increased demands on vehicle service networks.

Shared cars and cars used by Lyft and Uber drivers can easily rack up more than 100,000 miles/year – a utilization level normally only seen over the lifetime of a car.  More than ever, car makers will be relying on their dealers to keep these cars repaired to say nothing of keeping their software up to date and performing recall work.

We’re going to need dealers for the long haul.  But don’t expect dealers to sell or even successfully explain new technologies – even if they are doing it today on a daily basis.  Those tools and resources must reside online with messages conveyed clearly and concisely prior to the dealer visit - and maybe including some cool VR-style interactivity.

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