Car Dealers Need Map of Digital World

Car dealers need a map to get around today’s digital world.

So says Paul Whitworth, vice president-business operations for Cox Automotive Software Group. He is responsible for software strategic planning and operations oversight for six Cox Automotive brands: Dealer.com, Dealertrack, HomeNet Automotive, vAuto, VinSolutions and Xtime.

At the National Automobile Dealers Assn. convention this year, he led a workshop entitled, “Create a Blueprint: Thrive in Today’s Digital World.” He speaks with WardsAuto about it. Here’s an edited version of the Q&A.

WardsAuto: What kind of blueprint do dealers need?

Whitworth: My presentation focused on six steps. Find a niche in their market they can dominate. Source and stock the right vehicles at the right price. Be the most effective digital marketer in their niche. Build a disciplined, adaptable sales process. Focus on retention and repurchase. Embrace technology as a source of competitive advantage.

WardsAuto: The 2016 WardsAuto e-Dealer 100 lists 287,170 sales in 2015 that originated from online leads handled by designated Internet personnel. This is a small fraction of annual car sales. How can dealers be convinced of the need to adopt these digital tools?

Whitworth: A small percentage of buyers currently want an end-to-end digital process. Virtually all consumers are going digital for at least part of the sales process.

Consumers all have a different level of comfort with what they want to do online versus in-store. Our data shows for example that while 95% of Millennials use the Internet for car shopping, 49% say they rely heavily on the sales person for information.

To succeed going forward, dealers need tools that integrate the online with the in-store experience. For instance: Make dealer websites more than just a browsing tool, integrate the CRM (customer-relationship management software system) into the website experience and integrate fixed-operations management software with dealer websites.

WardsAuto: Are there some technology solutions must-haves for dealers on a budget? Or should budget not be an issue as long as the value is there?

Whitworth: Budget is always key, but there is a need to think about budget differently, especially the marketing budget. Dealers need to shift to a digital first approach to marketing. Dealers should view their traditional print and TV marketing as the extras rather than the core of their marketing.

If you shift to digital first, the most important foundational investments are a strong website and a CRM that is digitally integrated. Without these investments solidly in place, digital advertising is less effective because prospects fall through the cracks.

It is not intuitively obvious, but the growth in digital makes heavy investment in customer retention and repurchase absolutely critical. The shift to digital makes attracting new customers more expensive and compresses profitability on the vehicle sale, particularly for new customers.

A key to success is to retain the current customers throughout the lifecycle, capturing the service business and the next vehicle purchase.