When will dealers start providing online vehicle transactions? The answer: when enough consumers start asking for it. The response to a request is called a reaction. Reactions, like dealers, are predictable. What is less typical is to predict demand for the request, that’s called proactive. Proactive is term typically not associated with traditional dealers.
I predict dealers will start selling cars online tomorrow, if enough consumers start asking to buy cars online today. Because consumers are not requesting it, traditional dealers fail to recognize the opportunity. Yet dealers have expressed a desire to streamline the buying process and speed showroom visit. While consumers have expressed a desire for change. An obvious solution is to move the buying process online.
5 steps to initiate online vehicle transactions:
Step 1: Recognize the difference between starting the deal online and completing 100% of the transaction online. Dealers tend to create mental obstacles which prevent them from even making an attempt. I’ve never understood why dealers get angry about how cars will never be sold online. Maybe cars will never be sold 100% online, but if you provide 75% of the deal online, how many more deals will you win over the dealer doing nothing? Don’t be the dealer doing nothing. Maybe your store will never be a case study for a Digital Dealer conference, but if you have a website, you can offer online vehicle transactions. Set a goal for one a month, then one a week and build your capabilities. In 12 months you could be integrated with Apple Pay taking online deposits.
Step 2: Inform the consumer your dealership offers online vehicle transactions. Call it something cool like, Preferred Buyer Program, the goal is to create interest not sell the car 100% online. Online car buying is about developing a program. Consumers may be skeptical of dealers in general, but they’ve been condition and are comfortable sharing personal information online with other companies. The fact dealers don’t capture personal information well says more about dealerships is general than consumers. Consumers are unfamiliar with purchasing cars online, so dealers should be transparent with consumers about the process they use— familiarity will breed confidence. Give prime real-estate on your website about the online car buying experience. This will grow from a program, into a culture that supports a brand.
Step 3: Make the process friction-less. Placing all the burden on the consumer can make the process cumbersome. There’s a reason Amazon talks about the customer experience. Most dealers have trade-in forms and online credit applications which they’d like more completed. Low trust and inconvenience result in poor conversions of these forms. Take responsibility that if you want more engagement you have to offer a more personal experience. Leverage website tools like pricing calculators and trade-in appraisals in a real-time session to build trust and set the customer up to complete an online credit application. I always wonder why dealers promote a one price, no haggle policy, or pay a vendor like True Car, but don’t offer the option to buy online.
Step 4: Be strategic. Just because its called online buying does not mean the process has to start on your website. Remember what I said about mental obstacles. Dealers tend to have “binary thinking”, an all or nothing approach. Certain buyers are more likely to agree to online car buying offline. For example, current customers coming off a lease, do they really need to come back to the dealership and fill out paperwork? Online transaction can be an enticing offer for repeat business and can be started with a phone call or email. Click-to-connect technology makes it easy to connect and buy your next car from home.
Step 5: Segment your buyers and predict their needs. Subprime borrowers require additional documents, like proof of employment, pay stubs, bank statements, or references. This process can cause the customer to leave the dealership, adds to processing time and creates potential to lose the deal. These additional hurdles also create a negative perception, which are not helping. (And remember if something is not helping then its actually hurting.) Capturing the necessary documents prior to the store visit goes a long way in creating trust.
Younger consumers age 18-24 years old present an another online deal opportunity. Although they may never have applied for a loan and have limited credit history, they still need vehicle financing. Younger consumers also report the highest distrust of dealers, but they are the most comfortable with technology. All this signals that first time borrowers are highly susceptible to online vehicle buying. This is a growing segment ready to embrace online car buying.
The market for online car buying is young, but not without momentum. Low trust among consumers, inconvenience and perceived hassle create an opportunity to sell cars online. Dealers that explore options and adopt process can realize considerable benefits. Online vehicle transactions can be a program dealers use to win more sales over competitors not offering a program. But the effectiveness of the program depends on the dealership and the processes they have in place. Online car sales will add new sales currently missed. I’d say without question, dealers are better off starting an online vehicle selling program than not.