Digital transformation drives change across a broad number of industries. Technologies are starting to fundamentally change our lifestyles. Car buying is not an exception. Modern customers are fully informed about the cars they’re interested in and once they reach the point when it’s time to go to a dealership, they know exactly what they want.
However, buying a car often turns out to be a very intuitive purchase. You have to get in, place your hands on the wheel and go for that test drive, in order to make a decision of purchase. You might get all the information needed from digital channels, but the act of physically driving a car can’t be replaced, yet.
As for the beginning of the decision journey, 59% of buyers do online research to help them choose the best option. Nevertheless, if dealers want to provide the best car-buying experience, they need to make use of these highly informed customers and connect to them on a personal level. Today’s consumers increasingly expect to have such personalized experience across all their brand interactions.
A great way for automotive industry to meet this challenge and the growing expectations is by integrating advanced digital technologies into the buying process.
Automotive manufacturers and dealers choose to make significant investments in consumer-focused digital technologies. These range from tablet-based product guides to virtual reality applications, set to increase customer engagement on the showroom floor.
On the other hand, at retail level manufacturers differ from dealers in the outcomes they need from digital transformation. Dealers focus more on immediate digital solutions to reduce overhead and drive operational efficiency, as well as increase transparency while reducing friction in the salesperson. They need tactical ones to ease information flow across the dealership.
As we mentioned above, more than half of auto buyers do their research online. This leads us to our first point:
Digital Is The Main Information and Customer Influencing Channel
A modern trend in buying behavior is the RoPo phenomenon. This is the “research online, purchase offline” method. It means that customers research relevant product information to qualify their buying decision before they actually decide to buy their favorite product from a local store. This results in offline revenue, influenced by online marketing investments.
This phenomenon is highly applied when it comes to bigger, long-term purchases like vehicles or even homes. As you already know, most of the auto customers start their journey online. Of course, in-person dealer visits still provide the most information, as you can physically see the vehicle.
The key is somewhere in between. Car manufacturer websites actually play a crucial role. After that comes dealers’ online offerings and some review on the selected options. This means that dealers and manufacturers should provide an amazing user experience on their websites, as well as a solid social media strategy.
They need to constantly adapt to new technological developments to meet growing customer expectations, as their web presence might be decisive for their sales.
The Modern Customer
Most customers are highly informed upon their first visit to a showroom. They are completely aware of products’ features, model history, and price ranges. This makes dealers adjust the purchase process so that it responds to this new, specific set of customer requests. On the other hand, digital offerings are getting more complex and require expert knowledge to understand.
To successfully work with these changes, dealers need new types of employees that can be most helpful to the modern customer. They are dedicated sales staff ready to explain every detail of the car, with particular expertise in digital features. These employees have access to an information management system, which allows an in-depth explanation of features supported by visuals.
Furthermore, on a showroom level, there are various digital innovations that can enhance the customer experience. Modern consumers are open to new types of digital features. This allows dealers to implement test-drive simulators, and life-size configurators, which save showroom space and boost upsell potential. These allow customers to visualize all options produced by the current mass customization trend and the ability to receive much better information about their preferred models.
Digital Is Changing Auto Retail Models For Good
Showroom visits are continuing to decline. However, dealerships need to view these changes as an opportunity. Their role is becoming more specialized, as they no longer serve as a prime information source in the consideration stage of the customer.
Customers reach out to dealerships at the end of their decision making process. This means they already have a model in mind and they need something more than what they could find online. Dealers need to innovate their skills and become more tech-savvy if they want to be actually helpful. Digital pre-purchase channels could be useful to provide early access to motivated potential buyers.
Retail models in the automotive industry’s retail models are changing for good. The future of dealers is highly digitalized. New retail formats are also going to be a part of the transformation. Test drive centers, for instance, will be in easy to reach locations and offer a broad range of cars for test drives, so that consumers can try what they’ve seen online.
From Small City Centre Stores to Car Superstores
These are some of the new auto retail models, that will come to reality in the near future with the help of digital transformation. Car shopping will look quite like a way more informed grocery shopping.
Smaller stores will appear in city center locations and will have a dedicated sales proposition. Products there could be exhibited through visualization technologies such as VR or 3D wall screens. These stores will focus on conveying a brand image, offering a product experience, and answering specific questions. They enable customers to see their personal car configuration on interactive screens.
On the other hand, car superstores will be located on the outskirts of a city and will offer a cash-and-carry customer experience. They will be built for customers that have already made their decision through digital research and want to buy a car directly on the spot.
Toyota, for instance, has already built one called “Longo Toyota” on the outskirts of Los Angeles. It sits on 50 acres and employs 500 people. The superstore consists of showrooms, sales office, and spare parts isle. These are the bigger brother of the small city stores, that offers the same digital experience, but also the ability to get the car right away.
The Future of Car Buying Is Digital
To wrap it up, the evolution of automotive retail will come in many different formats. The effects of digital transformation are shifting the focus on a more technological and personalized car-buying experience.
From setting up digital online channels to fundamentally restructuring retail networks, manufacturers and dealers will have to choose their way to deal with the informed modern customers and today’s digitalized world.