The auto industry has been laser-focused on digitizing the retail shopping experience for several years, especially since the pandemic. However, the right digital retail strategy for today’s used-vehicle dealer goes beyond up leveling a dealer’s web presence. This thinking has evolved, and many in the industry now realize that the sweet spot consumers want when shopping for a car will take a true omni-channel approach – where customers want to research and build deals online but still appear in the showrooms at some point in the process when it’s convenient.
The convergence of tools for an omni-channel environment
Driving this omni-channel movement will be continued economic uncertainty and shifting consumer behavior. These trends include a consumer desire for convenience, to do as much remotely before coming into the store, save money, and have the flexibility to buy when, where, and how they want.
In order to truly enable this experience for consumers, used vehicle-focused retailers, lenders and OEM partners must team together and leverage the right tools and resources that are advanced enough to power a digital shopping experience in an omni-channel environment.
The lack of this combination of digital-enabling shopping continues to be a pain point for consumers. In fact, roughly 84% of dealers have adopted a digital retailing tool of some kind, but only 30% are maximizing its use in the store, according to dealership technology giant CDK Global Inc.'s 2023 Friction Points Study. What the digital technology adoption statistics show is that dealerships are using digital retailing products as online tools, but relatively few also use them in the physical store.
Prequalification technologies as just one example
As an example of a key element of one of these resources, used-vehicle dealers must leverage sophisticated prequalification tools in a way they never have before. Transitioning the consumer from the digital retailing experience into the dealer's customer relationship-management experience and not starting the car-buying process over for the consumer is still a significant challenge for the dealership.
Prequalification tools today must enable customers to know their terms on vehicles across a dealer’s inventory within minutes, including monthly payments and annual percentage rate.
This is especially critical since inflation and rising interest rates are forcing customers to have a better understanding of what they can afford from the beginning of their shopping processes, allowing them to find vehicles that fit their needs and budget. This is extremely critical, especially today as dealership inventories are once again rising. With more vehicles to choose from, it’s understandable that customers’ appetites will grow larger. The right prequalification tools will help dealers match the right customer with the right vehicle early on in the sales process.
Once prequalified on a dealer’s website or mobile app, customers can adjust filters, such as down payment, to see how those affect their terms, or filter to show only vehicles that meet their monthly payment budgets.
This approach will also strengthen a used-vehicle dealer’s ability to embrace more of a credit-first strategy. Dealers recognize the importance of integrating a smarter credit-first conversion strategy, and leading options today are centered around solutions built on helping customers shop based on payment possibilities.
Credit-first strategies provide a one-to-one personalized shopping experience, allowing consumers to shop simultaneously for their vehicle and financing across a retailer’s entire inventory and finance programs, for all available terms, with rebates, incentives, specials, e-price, trade-in equity, etc. calculated and applied.
This approach also enables a friction-less shopping experience, and it helps dealers increase the quality of their leads so that they can pinpoint the customers who are qualified, ready, able and willing to buy now.
The combination of data and technology helping retailers build the right lead-generation and conversion strategy will separate those retailers who thrive from those retailers who simply try to survive in the months and years ahead in this new digital ecosystem.
With the emergence of today’s digital and online shopping, the desire to build a more comprehensive and complete omni-channel ecosystem will only grow in importance. As more used-vehicle dealers and partners continue with their digital retailing transformation, they will embrace this strategy with their car-shopping consumers. Having the right tools in place will help them elevate their customer satisfaction scores, prevent fraudulent threats, and ultimately sell more vehicles.
ABOUT THE AUTHOR
Ken Hill is managing director of 700Credit, a provider of credit reports, compliance, identity verification, and soft-pull products.
