A Digital Transformation Guide For Car Dealerships


Digital Transformation

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There’s no denying that we are currently living in the midst of one of the most competitive periods in business history. Thanks to rapid technological innovation, companies in every industry are driven to evolve and adapt their business operations to keep up with competitors and meet shifting customer expectations. If they don’t, they’ll have little option but to watch as newer, more innovative enterprises disrupt their industry and acquire their customer base.

One of the hottest trends surrounding this issue in recent times is digital transformation (DX), which is the process of fundamentally changing an organization with technology and culture to improve or replace what existed before.

Incredibly, the digital transformation market was valued at $469.8 billion in 2020. The car-buying process is the car-buying process. Despite this massive influx of spending, the one consumer purchasing experience is still lagging behind the new digital revolution.

For one reason or another, the automotive industry has been slow to switch to new digital technologies. Currently, walk-ins remain the most common form of initial contact consumers have with dealerships (by more than half of car shoppers), and only 6% of car buyers made their purchase online. If you own a car dealership, this presents a huge opportunity for you to take advantage of this lackluster pace and seize a competitive advantage over your rivals.

Why digital transformation matters

The first thing we should point out is that DX is no small feat. It requires a well-thought-out strategy that accounts for numerous variables and intangibles, such as fostering a company culture that embraces change and a willingness to adapt to new technologies.

Perhaps this is why an estimated 70% of digital transformation initiatives fail, wasting over $900 billion each year on failed projects. With these figures in mind, it’s no wonder that the automobile sector has been hesitant to launch new DX projects. However, Covid-19 has forced many business owners’ hands.

DX has become a necessity for dealerships to stay in business and discover new methods to connect with their consumers. If they are to navigate out of the clutches of the pandemic effectively, they must be prepared to make dramatic changes to internal systems and modify their tactics accordingly.

However, if you look at it on the bright side, these unique circumstances provide the perfect opportunity for dealerships to digitize their products and services to position themselves for short, medium, and long-term success.

Enhance the customer buying experience

At its core, DX is all about meeting shifting customer demands. Thanks to digital technologies, ever more complex goal supply chains, and increased competition, consumers demand more and more from their products and services.

That said, you don’t have to move mountains to gain a more prominent digital presence. Here are a few basic steps that can help you start moving in the right direction:

Better website experience

Car buyers spend 59% of their time online researching. If you do not offer any online services, you cannot control or influence a large chunk of the buying process. At the very least, you need to bring your website up to date and open up new digital touchpoints with potential customers. This means ensuring a seamless experience on the website with excellent customer service through things such as chatbots, FAQs, and blog posts.

Furthermore, it’s essential to make yourself available on at least a couple of the major social media platforms such as Facebook, Instagram, or Twitter if you haven’t already. The more lines you have in the water, the better.

Improvements in digital retailing

DX must be embraced across all facets of the company, including retailing. Granted, the automotive industry is one of the most challenging sectors to achieve digital sales due to the nature of the process (high ticket items and the need for test drives). However, you can take steps to bridge the gap if consumers cannot make it to the store in person.

Innovative dealerships across the country have started to embrace video platforms to showcase vehicles and communicate with prospective buyers. In fact, a survey of prospective car buyers revealed that:

  • 37% would like the option to have video meetings with salespeople
  • 35% would like the opportunity to visit the showrooms virtually
  • 32% would like the dealership to provide online purchase options

Virtual/augmented reality

To impress your customer base, the automobile sector has several use cases for augmented and virtual reality. For example, customers can sit in a chair that imitates a vehicle seat to have a real-time experience in that particular vehicle. While this doesn’t replace a test drive, it’s at least one more tool in your belt to overcome sales objections.

Stay informed with the latest industry trends/news.

As digital transformation is all about staying up to date with the latest trends, you need to keep yourself informed with industry news, particularly throughout the pandemic. Take the time to check out an automotive podcast or read a few blogs to find out how other business owners are overcoming the challenges so you can implement them into your own business operations.

Digitize internal business operations

Firstly, storing and retrieving physical documents is time-consuming, which leads to frustrations for both customers and employees. Secondly, large cabinets take up valuable office space and can incur an extra fee due to offsite storage. You can save a lot of time and energy by switching from the on-site storage of physical documents to a cloud-based data storage solution.

Finally, car dealerships must uphold various regulations and standards regarding the protection and security of customer data and other confidential information. Storing such data securely on the cloud helps companies keep up to spec with regulators while boosting productivity and efficiency throughout the business.

In addition, storing customer data on the cloud makes it easier to analyze data subsets to gain valuable insights into customer behavior. Switching from legacy systems to digital solutions can help you recognize business opportunities and boost revenue more easily.

Final word

In the auto industry, digital transformation is the next step towards bridging the gap between the outdated retail model and online strategies that help to create an improved customer buying experience. While dealerships will always play a key role in car shopping, it’s clear to see that more consumers are looking for an increasingly digital experience, from research to purchase to delivery.