The Auto Dealer’sGuide toDigitalRetailing

TABLE OF CONTENTSThe Digital Retailing Evolutionpg. 4Consumer Expectationspg. 6Dealer Expectationspg. 8Consumers Still Want to Visit Dealershipspg. 10Challenges with Purchasing Vehicles OnlinePg. 12Online Car Buying: The Integrated ApproachPg. 14How to Prepare Your DealershipPg. 16Digital Retailing Solution ChecklistPg. 19 Copyright 2018 Data Software Services, LLC. All Rights Reserved.2

MESSAGE OF THANKSELEAD1ONE thanks the following automotive experts for contributing commentary:Jim ZieglerPresident of ZieglerSuperSystems, is atrainer, commentatorand public speaker ondealership issuesMark TewartSales training expert,consultant, professionalspeaker and author of thebook “How to be a SalesSuperstar”ELEAD1ONEGuide to Digital Retailing3

THE DIGITAL RETAIL EVOLUTION“Digital retailing is defined as moving some or all of the carbuying experience online. As an industry, we’ve beentalking about it for years, but there’s still no consensus onhow this new business model will work.Ford Motor Credit has partnered with AutoFi to develop aproduct that allows customers to buy a vehicle from adealership’s website. Toyota is aggressively working on anonline transaction solution.Digital retailing is not a revolution; it’s an evolution.Every new process has to be nurtured and requireseducation of the public, the dealers and themanufacturers. Cars are not commodities, yet.”- Jim ZieglerAll indicators point to 2018 as a milestone year in thedigital retailing evolution.4

Large dealer groups like AutoNation Inc., SonicAutomotive Inc., Asbury Automotive Group and PenskeAutomotive Group have developed, or are developing,online car shopping tools and software for their dealers’websites.Consumer demand exists and online car buying is alreadyhere. Early adopters have the opportunity to win marketshare, and not just locally. Digital retailing solutions makeit easy to sell vehicles to customers hundreds of milesaway.“30% of AutoNation’s new-vehicle sales in January2018 were transacted online.- AutoNation CEO Mike JacksonSeveral vendors, including ELEAD1ONE, have introduceddigital retailing solutions that integrate seamlessly with adealer’s CRM and/or DMS.Dealers are pushing this off. The people who willwin are those who can make the processtransformational, not transactional. It has to behigh tech and high touch.”- Mark TewartWhat does the immediate future of digital retailing looklike? Read on to discover how your dealership can join theevolution.ELEAD1ONEGuide to Digital Retailing5

CONSUMER EXPECTATIONSCar shoppers already use the Internet to research brandsand models, buy insurance and look for dealers. Howmany consumers would start the purchase processonline, if the option were available?85% of consumers said they would be morelikely to buy from a dealership that offers at least onecomponent of digital retailing.83% of consumers want to do one or moresteps of the purchase process online.71% of consumers say they would considerbuying a car more often if they could start or completenearly all of the purchase online.Reasons why demand for online car-buying is growing:TimeCar buyers spend an average three hours at thedealership. More than half that time is spent negotiatingor doing paperwork.1“We all feel like we’re time poor. Dealers need tospeed up the process, especially the financeportion of it.”- Mark TewartCox Automotive “Future of Digital Retail Study” —January 2018ELEAD1ONEGuide to Digital Retailing6

ConvenienceCustomer satisfaction with the dealership increased onaverage by more than 100 percent when customerscompleted their financing online. The majority of thosesurveyed reported that the finance experience online waseasier, more pleasant and hassle-free than what they hadexperienced previously at a dealership.2Less PressureCar shoppers like the convenience of conducting most ofthe car-buying process on their own time and away fromwhat is perceived as a high-pressure environment in thedealership.37

DEALER EXPECTATIONSNot surprisingly, the majority of dealers are reluctant toimplement a digital retailing solution.Only 35% of dealership management said theywere likely to offer a digital retailing solution onDealers’ primary concerns include: Losing control of the sales processDecline in gross profits, especially from F&I productsSignificant investment requiredProcess changes and training requiredIntegration issuestheir website, defined as selecting a car, negotiatingprice, submitting credit information, reviewing finalpaperworkandtransacting.Whentoldthatconsumers were very interested in buying a ed and interest increased to 53%.- Root & Associates/CDK Global study — January 20178

Many of these concerns are unwarranted. Most digitalretailing products in development are designed to keepdealerships involved in the purchase process. Not allsolutions require a significant investment, and integrationissues can be a non-issue, depending on the solution.Dealer Interest in Digital Retailing ToolsWant a digitalretail toolconnected with instore processesNot interested indigital retailThe only concern dealers may need to address is processchange and training.“Dealerships have actually been doing this for years.I’ve purchased cars from dealers hundreds of milesaway. It’s easy to do over the phone and email. Thenext step simplifies the process and makes itmore digital, with less email involved.”- Mark Tewart30%70%- eLend Solutions auto dealership survey —October 20179

CONSUMERS STILL WANT TO VISIT DEALERSHIPSCar shoppers still rely heavily on dealers for services such as inventory selection, accepting trade-ins and arrangingfinancing. Most consumers still want the touch, feel and smell experience of buying a car.“- Capgemini Cars Online -- 2017There’s a certain percentage of consumers thatwill transact online, but a greater percentagewon’t right now.”- Jim ZieglerELEAD1ONEGuide to Digital Retailing10

Consumer Adoption Rates Will Be SlowAlthough more than 80 percent of consumers say theywant to do one or more steps of the purchase processonline, ELEAD1ONE projects that consumer adoptionrates will be slow.Many variables affect a person’s ability to transact avehicle purchase online and some consumers will alwaysfind it easier to let dealership staff manage the process.Within two years, five to ten percent of consumers willcomplete some of the purchase process online. In threeto five years, that will grow to 20 or 30 percent.“89% of consumers said they want to sign finaldocuments at the dealership. However, one in four ofthose customers want to review paperworkelectronically before coming into the dealership to sign.80% of consumers would never purchase withouta test drive.Six in ten consumers still want help fromdealership staff even if they could purchase online.- Cox Automotive “Future of Digital Retail Study” —January 2018Even if only 10 to 20 percent of the people want todo it, why not have it available?”- Mark TewartELEAD1ONEGuide to Digital Retailing11

CHALLENGES WITH PURCHASING VEHICLES ONLINEThe car buying process is not as simple as placing avehicle in an online shopping basket and paying with acredit card. Challenges to be addressed include:Entrepreneurial solutions may soon include biddingnetworks or remote appraisers going from house tohouse with mobile tablets.Accurate Price QuotesMost digital retailing products are unable to quoteaccurate price payments to the consumer. A final pricequote includes all variables such as the customer’s creditscore and local taxes and fees. Without this ability, theretail installment agreement cannot be completed online.Trade-InsThe value of a trade-in can be difficult to determine. Somedigital retailing solutions provide tools for the consumerto upload photos and information so that a dealerrepresentative can come up with a quote.ELEAD1ONEGuide to Digital Retailing12

“FinancingComplianceMany consumers believe they can afford more car thanthey actually can.Some digital retailing solutions connect a F&I providerexchange network (PEN) with a dealership’s DMS and/orCRM for electronic ratings, forms preparation andelectronic contract origination. All presentations have theproper disclaimers in place.Customers have unrealistic expectations abouttheir credit. If a customer comes in with a 600credit score, they need a down payment, and theyhave to accept a higher rate. Someone needs toexplain that to them, and that’s a challenge.”- Jim ZieglerState LawsCertain states still require documents to have a wetsignature. This will likely change in the next few years asdigital retailing becomes more mainstream.Percentage of U.S. consumer credit scores:- Fair Issac Corporation (FICO) -- 2018ELEAD1ONEGuide to Digital Retailing13

ONLINE CAR BUYING: THE INTEGRATED APPROACHq View different payment options and changetermsIt may take years for consumers to feel comfortablecompleting 100 percent of the transaction online. Thatdoesn’t mean that dealers should adopt a wait-and-seementality. The faster dealerships embrace digitalretailing, the less impact solutions that cut dealersout of the process will have.q If credit application is rejected, contact thedealership for optionsAn integrated approach allows the consumer to completesome or all of the following steps online:q If application is approved, complete the financingprocess onlineq While viewing inventory, have the option to “BuyNow” or “Build Your Deal”q Save vehicles into a shopping cart and continuebrowsingq Learn about, and add, aftermarket productsq Apply for creditq Start and stop the process at any time, and pickup from where they left off either in-store oronlineq Choose whether to have the vehicle delivered orpick it up in-storeq All transactions are integrated with current salesprocessq Negotiate price with dealer representativeq Get a trade-in quoteELEAD1ONEGuide to Digital Retailing14

Although this scenario allows for the consumer totransact all of the purchase process online, the majorityof consumers will come into the dealership for a part ofthe process. Additionally, dealership personnel must beavailable to answer questions and help the consumeralong the entire journey.What part of the car-buying process doconsumers want to complete online?Dealers that want to stay competitive should act soonerrather than later to implement a solution.“The higher the ticket item, the more questionsconsumers have. Customers will need access to asalesperson or concierge throughout the process.”- Mark Tewart- Autotrader 2016 Car Buyer JourneyELEAD1ONEGuide to Digital Retailing15

HOW TO PREPARE YOUR DEALERSHIPIn addition to a technology solution, dealers may want toconsider tweaking some internal processes, as well awebsites and advertising to help educate the online carbuyer. Additionally, staff roles and responsibilities willinevitably change.Digital MarketingDealers will need multi-channel digital marketingstrategies designed to drive online car buyers to theirwebsites.“Research Tools on WebsiteMost dealer websites don’t provide in-market carshoppers with answers to their most commonly askedquestions. Explore ways to provide information to FAQs.Videos are highly recommended.Tools that customers would like to see inaddition to ‘traditional’ tools used for research:A newspaper is only valuable for training a puppy.Today’s car buyers go straight from the manufacturerwebsite to the dealer website. They’re Googling andcoming off social media. That’s where you need tobe.”- Jim Ziegler- Capgemini Cars Online -- 2017ELEAD1ONEGuide to Digital Retailing16

43% of car shoppers view the dealership as aneducational institution.- “Car Buyer of the Future” study“Most dealers take the kitchen sink approach with theirwebsites; let’s try this widget, let’s try that form, let’stry everything. You have to take a more linearapproach. Think about the consumer and whatthey want to accomplish. How do they get from pointA to B to C?”(AI) chatbots can be helpful, but can’t answer morecomplex questions. Dealers need to explore extendingtheir store hours or utilizing a 24-hour BDC.Staff Roles and ResponsibilitiesDigital retailing will inevitably change the roles andresponsibilities associated with dealership salespeople,F&I managers and BDC agents. Online car buyers neednurturing, not closing.Dealers have to make a choice. They either have tomove towards a professional, higher-gradesalesperson that handles every part of the process“- Mark Tewartincluding F&I, or they have to move towards asalesperson that’s more limited in their role, like aproduct specialist.”Be Open 24/7- Mark TewartDigital retailing means your dealership is open 24hours a day, seven days a week. Artificial IntelligenceELEAD1ONEGuide to Digital Retailing17

Car buyers prefer staff who are “productspecialists.” Consumers want dealership staff tobe highly knowledgeable about vehicle specs,features, technology, models and trim levels, andthey also want them to act as consultants wholisten to their needs in a low-pressureenvironment.- Cox Automotive “Future of Digital Retail Study” —January2018Dealers will need to experiment with a variety of roles andresponsibilities designed to help the online car buyer: Digital sales specialist or concierge to facilitate theonline car-buying process BDC agents trained to facilitate the online car-buyingprocess Product and/or brand specialists to answer questionsand help with selection“High touch, combination sales/F&I managers thatoversee the entire process from A to ZI see salespeople becoming selection specialists, havingno part in negotiating prices or payments. They strictlyhelp the consumer select the model and then amanager—not a F&I manager, or a sales manager, buta manager—sits and transacts the entire deal in onesitting, never getting up from the desk.”- Jim ZieglerHome or Work DeliveryA small percentage of customers will want vehiclesdelivered to their home or work. A product specialistdelivers the car, explains features and takes the customerfor a test drive. Also, dealers will have to offer a moneyback guarantee.ELEAD1ONEGuide to Digital Retailing18

DIGITAL RETAILING SOLUTION CHECKLISTLook for a digital retailing solution designed to meet customer expectations and keep your dealership central to the carbuying process. Here’s a checklist of features and tools that your dealership’s digital retailing solution should have.q Shopping Cart: Allow consumers to select cars andsave them for consideration and comparison againstother models as they continue to browse.q Ease of Use: Online forms should be simple tonavigate and visually appealing. “Click to Buy” or“Build Your Deal” buttons should be highly visible onVDPs.q Integration with DMS and/or CRM: Don’t use atool that uses “bait and switch” tactics to take yourcustomer to another website or third-party solution.q Save Deals: Customers want to progress at theirown speed. Look for a tool that allows them to savetheir deals and come back to them later.q Communication: Online car buyers must knowthe best and fastest way to communicate withdealership staff. Look for a tool with integratedcommunication options such as a built-in chatwidget.q Allow Price Negotiation: 56% of consumers stillwant to negotiate price1. Give customers the optionto negotiate price, either via phone, email or throughthe application itself.q Remote Trade-Ins: Look for a solution that allowsthe customer to enter in information about theircurrent vehicle, including videos/photos so that youcan give an accurate appraisal.ELEAD1ONEGuide to Digital Retailing19

q Accurate Pricing: Your digital solution needs to beable to calculate accurate pricing down to the penny,incorporating data from consumer credit reports andlocal taxes and fees.q F&I Product Presentations: Look for a solutionthat can present F&I products and other aftermarketproducts to the customer, along with all necessaryforms and disclaimers.q Allows Consumers to Remain Anonymous: Acustomer should not have to enter an email address orother information unless they want to save the deal orapply for credit.eBook Sources:1) Autotrader 2016 Car Buyer Journey2) SpringboardAuto survey, November/December 20173) Root & Associates/CDK Global study January 20174) Cox Automotive “Future of Digital Retail Study” —January 20185) J.D. Power 2016 New Autoshopper Study6) ELEAD1ONE Dataq Mobile Optimized: 53% of online auto shoppersuse a mobile device.5Accelerate CX: Connect with CustomersThrough Genuine 888.330.1004 Copyright 2018 Data Software Services, LLC. All Rights Reserved.20

Automotive Inc., Asbury Automotive Group and Penske Automotive Group have developed, or are developing, online car shopping tools and software for their dealers’ websites. Several vendors, including ELEAD1ONE, have introduced digital retailing solutions that integrate se