The automotive landscape has continued to develop, grow, and shift throughout 2022. The virtual retailing process is a mainstay in automotive’s digital transformation, and this is much more than just having a digital retailing tool on your site. Inventory issues are starting to resolve, cars are slowly showing up on lots, and customers are sending in leads consistently. We will review the state of the automotive industry heading into the new year, and then break down a playbook for engagement success.
State of the Automotive Industry Year-End 2022 with Projections into 2023
Below is an “at-a-glance” view of the current state of automotive, with projections into 2023. As we continue forward and modify our sales techniques to meet consumer demand, there are key areas that we cannot ignore. Inventory, the constantly evolving customer path-to-purchase, and merchandising and advertising vehicles should be top of mind for every dealer.
- The SAAR (Seasonally Adjusted Annual Rate) increased from 13.2 M in October 2021 to 14.3 M in October 2022.
- New Car and Truck inventories have reached their highest levels since June 2021Prices for both new and preowned are starting to normalize
- September 2022 hit a high of a 42-day supply
- 76% of customers are open to a fully online car buying experience
- 84% expect more of the buying process to be online/virtual
- Loyalty toward brands and dealerships is continuing to decline as consumers pay at or above the manufacturer's suggested retail price.
While inventory and supply chain issues are starting to look up, the days of consumers paying above MSRP is dwindling. Prices are deflating on both new and preowned vehicles, and consumers are feeling better about their purchases. As the numbers suggest, inventory is not going back to pre-pandemic numbers of a 120-day supply, but has risen from single digits in 2021 to a 42-day supply in September 2022. Customer expectations are driven by the current and transformative model of easy online transactions, and we need to bridge the gap between expectations and what we truly deliver. There are some key elements to enact to ensure your dealership is transforming with its customers and providing the relationship needed to help increase dealership loyalty and return service/sales customers.
Automotive Playbook for 2023
The landscape for selling cars is constantly shifting, and to maintain consumer expectations, there are elements that should be in place. This is not the “modern” way of selling, but rather a transformative approach to selling.
Marketing: Time to Turn it Back On
With less inventory and consumer appetite to purchase cars at sticker price in 2022, many dealerships greatly reduced their marketing budget. And while in the short term that may have been a cost-saving solution, in the long term, you lose more than you gain by shutting down entire marketing channels. Social media is one channel you need to continue to broadcast on. And with the low cost of ads and the ability to grow an organic audience, this should be a focus for 2023.
Social Media is still relevant
Many dealerships were reluctant to jump on the TikTok bandwagon when it first came out for many reasons: It was yet another platform that you needed to manage. Content had to be created. And most of us have barely managed YouTube or Instagram Reels.
TikTok has become an important part of Automotive Sales in 2022. Just in the automotive sector, there were 60 Billion views of car-related material in the first half of 2021. There is a growing demand for automotive content, and the first to create quality content and curate an audience will win. Many dealerships have already started their professional TikTok channel for their dealership, and here is a guide that will help you get started.
Facebook and Instagram remain the powerhouses, and remember--you can create 1 piece of content and share it on multiple platforms. Instagram highly favors Reels in their algorithm, TikTok videos can be uploaded to both Facebook and IG.
Customer Experience is Key
So, you have curated your audiences and have content published. Now customers are going to engage with you. This is the magic of social media--the building of relationships on multiple platforms that could ultimately turn a fan into a follower (and car buyer).
This means you need to have a solid process in place to handle customer engagement on social platforms. Nothing is worse than asking a question or stating a concern and not receiving a response. Customers have been trained that instant communication is normal--especially on social platforms. Ensure you have at least 2 people monitoring and “listening” to your social channels and responding to comments, suggestions, complaints, and inquiries. This engagement will not only benefit your social media standing but will increase customer satisfaction and build relationships with current and potential customers.
Digital Retail is More Than a Widget on Your Website
Digital Retailing Tools have been around for quite some time– they are not a new concept we need to master. (I remember being part of an OEM launch for one in 2017) They have continued to evolve for dealership ease of use and process.
But what if I told you that having a widget on your website is useless if you do not have a full virtual retailing process in place for your consumers?
Digital Retailing will continue to be a consistent part of the buyer's journey in 2023, and with other “made to order” manufacturers coming on the scene, customers will not only look for but expect a virtual retailing experience.
Virtual Retailing is different from a Digital Retail tool in this sense: dealers need to utilize a digital retail tool on their site to help facilitate customers down the path to purchase. Dealers need to create a virtual retailing process to set expectations for customers, guide them down the path, remove any roadblocks to purchase and create an easy and seamless process. Virtual Retailing includes the DR tool, but goes beyond and truly focuses on engagement and relationship building.
When a customer lands on your website, interacts with the tool, possibly starts to fill out a credit app and then stops, your team should reach out to the customer and pick up where she left off. Your team should be able to answer questions, direct the consumer to the links on the website needed, and ask questions to help diagnose where the customer is in the process and why she/he abandoned the tool in the first place.
Follow this process and you should have a solid Virtual Retailing process in place for 2023:
- Map out the customer journey from first click on the VDP to finalized paperwork
- Decide what the defection points look like and how to re-engage the customer
- Calls, texts, emails
- Train your staff on the DRT as well as your process for an online purchase. Make sure everyone is well-versed and comfortable with the plan.
Digital Retailing will continue to be one of the bigger areas of opportunity for dealerships, but there is truly one thing that will make this more successful than it is for others. Make sure to create a process that truly puts the customer first. Stop focusing on what will work with your current processes, and look for ways to surprise and delight your customers. Look for ways to remove any roadblocks or friction points in the virtual sales process. This is where you will find the magic in your digital retailing tool.
First to Engage Well Wins
Bridging the gap between customer expectations and your engagement process should be your focus in 2023. With customer loyalty down 1.6%, inventory hard to come by, and customers expecting instant responses from live people, this is the year to not only manage customer engagement but perfect it. Your BDC (whether on-site or off-site) are the chief relationship creators. They are the face and the first voice of your dealership for the 95% of customers who shop online before they ever decide to come into a dealership.
There are some areas that you need to evaluate to ensure you have the right team/people in place. First, do you have a BDC or a team to answer consumer questions and/or comments? Are they answering these 24/7/365? Are they answering them quickly and knowledgeably?
If the answer is no, or I don’t know, it is time to evaluate your BDC needs and either hire and train up a staff or find a reputable partner who utilizes Collaborative Intelligence and not only AI to connect with customers.
While AI definitely has its place, there needs to be a human element that can, at a minimum, address questions that a bot may misinterpret or ignore. Ensure your technology has a solid mix of technology and people to best serve your current and future customers.
This Playbook has focused on three areas of priority for 2023: Marketing/Developing new social channels, Virtual Retailing, and most importantly engaging with customers.
If you would like assistance with customer engagement or are looking for solutions that utilize collaborative intelligence as opposed to AI only, Better Car People is here to help! We would love to help your dealerships perfect omnichannel communication with your new or existing customers.