For years, there’s been talk of the industry heading towards online car buying. At ActivEngage, we agree and endorse this presumption.
In fact, in 2012, ActivEngage pioneered technology to support General Motor’s Digital Retailing Program with 100 dealers in 8 states. The unique program allowed our company to develop best practices with a major OEM and test the validity of online retailing. While our technology has been out for years, the financial performance of these pilot programs shows that a full online car buying process isn’t what today’s car buyers want. In general, the automotive industry tends to overestimate what is going to happen within a year and underestimates what will happen in five years.
While ActivEngage can currently provide a full digital retail experience for online car buyers, consumer trends and the data we’ve collected over the last five years piloting programs with OEMS and large dealer groups confirm low consumer adoption and an unsubstantial ROI for dealers. In fact, our numbers show there was a significant drop in ActivEngage chats that attempted the full retail experience. We found that forcing consumers down the online buying journey can actually hurt the sales process. A one size fits all approach to digital retailing cannot be applied as the industry needs to be flexible to consumer demands while also protecting the current working business model.
However, on our journey developing cutting-edge digital retailing programs alongside OEMs, we uncovered effective ways to converse with customers and get more evolved lead data for dealers. And, more importantly, we were able to pioneer additional technological breakthroughs that help dealers achieve immediate financial upside within fixed operations in today’s market.
Shifting Gears: A Focus on Service
An even more pressing reason to turn the attention from online car buying to fixed operations is the numbers. US auto sales in March came in below market expectations and gave early evidence that America’s boom in car sales is losing steam. As car sales flatten out over the next 24 months, customer retention and promoting the service drive will play a critical part in the financial success of dealerships.
On average, OEM’s state that if a customer performs service at your dealership, they are five times more likely to purchase a car from you. Additionally, in 2016, nearly 300,000 ActivEngage chat conversations were related to fixed operations; that’s over 800 service-related chats per day.
Without a doubt, the service department is the backbone of your dealership. That’s why ActivEngage has pioneered technology and integrated with some of the industry’s top service-scheduling platforms to offer real-time service scheduling in our managed chat solution. Our technology sends appointments straight into the DMS to create a more efficient and effective way for dealers to increase repair order revenue. Through our ability to drive online shoppers into dealerships, we’ve found that the service lane is the best way to quickly boost dealership profits and also generate new car sale opportunities.
Bottom line? Most shoppers just aren’t ready to buy cars online in today’s market. And with little consumer demand, dealers and digital retailing companies such as Carvana are struggling to match the performance of a traditional dealership. In the next 5 to 10 years, we expect consumer interest to change and adoption rates to increase to the point where the technology is warranted and valuable for every dealer. We look forward to promoting our technology when market conditions are ripe enough for dealers to receive its intended ROI.
We believe your dealership should prepare for the digitization of car buying, but not at the expense of what can make your dealership profitable today. While consumers want to use technology to get answers and set appointments online, they’re still comfortable coming to the dealership to complete the buying process. Start Increasing revenue today by engaging online shoppers early in the sales process and moving them into the showroom and into the service lane.
Make your dealership thrive today, as we continue to monitor how consumers will transact in other ways tomorrow.