Why Dealerships Need to Go Digital

In December, Cox Automotive released its Forward Thinking Dealership Study that revealed how dealerships that embrace technology and digital transformations for the car buying process are faring in the industry. The results showed that these forward-thinking dealerships were surpassing dealerships that remain stuck in their old habits.

Digital transformations in the auto industry have revolutionized the shopping process, and, during Covid, many dealerships moved to online offerings. However, dealerships that stepped up their game to include digital resources as a standard experience could have a modern edge. Here’s why dealerships need to go digital and what resources can help them to make this pivot.

Digital Resources Simplify the Process

In a press release detailing the results of the Forward Thinking Dealership Study, Cox Automotive noted that dealerships that “…embrace data science and automation…” reported an 18.5 percent profit margin. What defines a ‘forward-thinking dealership?’ Cox Automotive explained that “…they are well into their digital transformation and employ integrated technology, automation, and data throughout their operations.”

Forward-thinking dealerships offered customers digital resources that simplified the buying process for both the customer and the dealership. For example, Cox Automotive noted in a press release that these dealerships have access to online libraries for contracts. This is important as these digital contracts can aid communication with lenders.

Forward-thinking digitized dealerships also provide easy search capabilities for buyers. According to the press release about the study, two-thirds of these dealerships provide search tools that let buyers simplify their search by price (monthly payment), MPG, fuel type, etc. For buyers, these dealerships make it easy to find a hybrid in a specific price range or the most fuel efficient standard vehicle.

Why Dealerships Need to Go Digital

Forward-Thinking Dealerships Offer Personalized Messages

Forward-thinking dealerships nudge out their competition because they also offer better communication to their customers. More than 80 percent of these dealerships use their CRM to reach out to customers via personalized communications.

In contrast, Cox Automotive noted that 36 percent of ‘static dealerships’ send out these personal messages using their CRM. Personalized messages, however, can help customers feel that the dealership is vested in their experience and cares enough to take the time to contact them in a more meaningful manner (e.g. instead of a standard spam or bulk email).

When customers feel valued, they are likely to remember the dealership and return to the dealership if they need their car serviced or if they are shopping for another vehicle. Dealerships that don’t tailor communication outreach or dealerships that send bulk messages might have their communications sent to a spam folder.

Looking Ahead Means Increasing Options for Customers

The press release for the study also noted that forward-thinking dealerships were interested in including additional resources online for their customers. These resources included pricing for services and even offering more automated services that could connect customers with the DMV for registration/licensing.

For dealerships that were not afraid of digitizing their business, these resources could further simplify the customer’s buying experience and help customers better understand additional services offered by the dealership (if the customer needs to schedule a service appointment).

Digital resources offered by forward-thinking dealerships make it easy for customers to research their vehicle options online and even move ahead with the buying process. Digital-forward dealerships enable customers to utilize easy search query tools to view only the vehicles that fit the buyer’s exact specifications.

Why Dealerships Need to Go Digital

Forward-Thinking Dealerships Offer Immersive Tools

Dealerships that are open to embracing digital experiences also offer more immersive resources that could help them boost their profits by simplifying the online research process for potential car buyers. These tools enable customers to better explore their vehicle options; when customers can visit a dealership’s website to explore vehicles that interest them using unique tech experiences, these customers might stay longer on the dealership’s site.

Digital tools on a dealership’s website also might provide customers with enough information about a car model that they feel comfortable moving to the next step in the sales funnel. Exploring the vehicle through these digital tools might make them curious enough about the car to reach out to the dealership to schedule a test drive or visit the dealership in-person to pursue the purchase.

What digital resources do forward-thinking dealerships offer to customers online? The press release for the study explained that these dealerships include immersive resources like spin photos. In fact, the study noted that 57 percent of forward-thinking dealerships offer these immersive tools while only one out of three standard dealerships provides these resources.

Offering interactive spin photos or even an augmented reality showroom could be beneficial for dealerships that want to reach Gen Z buyers. According to a study by CDK Global, 81 percent of Gen Z buyers surveyed wanted to take their time to research vehicles. Interestingly, the study also found that 22 percent of Gen Z respondents felt that buying a car completely online was difficult.

Immersive tools like spin photos let customers interact with a 3D image of a vehicle. They can see the car from different angles to fully understand its design. EVOX Images offers interior panorama photos, and exterior spin photos; panorama images are spin photos that let users explore the interior of the car. With exterior spin photos and panorama images, customers can use a mouse or their fingertip (for mobile devices) to explore the cars they like.

Gen Z also has been noted as the augmented reality generation. Gen Z prefers to take their time when shopping for a vehicle and an online augmented reality showroom could help forward-thinking dealerships better meet the needs of these buyers. Augmented reality is accessible to many customers as it doesn’t require a headset; instead individuals simply need to have a mobile device like a smartphone or a tablet that offers a camera.

The augmented reality experience lets the individual choose the environment where they wish to enjoy the experience. The individual chooses their environment with the camera, and they can drop in a 3D graphic depiction of a specific vehicle. Augmented reality experiences can be designed to let customers use their camera to walk around the vehicle, look inside it or even change the paint color.

Some augmented reality experiences can be so immersive that the customer can use this digital experience to simulate the walkaround experience at the physical dealership. Dealerships that are interested in creating augmented reality experiences for their customers can use EVOX Images to find 3D images that are compatible with both augmented reality and virtual reality technologies. EVOX Images offers a library of digital assets compatible with these technologies for many new vehicle models.

Dealerships that Want to Move Forward Need to Staff Up

The press release explaining the results of the Forward-Thinking Dealers Study pointed out that dealerships that are moving forward are doing so with a staff that is dedicated to marketing. According to the press release, about two-thirds of these proactive dealerships have a staff focused only on marketing, but only 13 percent of standard (or static) dealerships have a dedicated marketing team.

Cox Automotive didn’t elaborate on the benefits of a dedicated marketing staff because the benefits might be obvious. A dedicated staff can focus on the marketing objectives of the dealership, and they can brainstorm strategies to reach key demographics like younger buyers. A dedicated marketing team allows the dealership to focus on understanding the needs and demands of buyers; they can initiate outreach strategies on social media, analyze SEO objectives and create impactful campaigns to elevate the dealership’s brand online.

Dealerships without a dedicated marketing staff might require other staff members to perform these duties in addition to their other job responsibilities. Sales team members might need to find time to update social media pages or support staff might be tasked with these duties. Creating a dedicated marketing team enables the dealership to zero in on strategies to meet the needs of customers and to increase the dealership’s visibility in the digital realm.

A team that is focused solely on marketing also could be more aggressive in their strategies or, at least, more ambitious. The study from Cox Automotive revealed that forward-thinking dealerships are more likely to reach out to a broader customer base to advertise their service department.

The study noted that more than half (56 percent) “…of forward-thinking dealers market their service department to local car owners who didn’t purchase a vehicle from them.” In contrast, the study noted that only 17 percent of static dealers reach out to these potential customers.

Boosting awareness of the service department for the dealership could increase profits for this side of the dealership. More importantly, though, if individuals who haven’t purchased a car at the dealership are utilizing the dealership for the service department, these individuals could convert to buyers for the dealership when they need to replace their current car.

Why Dealerships Need to Go Digital

Is Digital the Doorway to Higher Profit Margins?

Cox Automotive’s study revealed that forward-thinking dealerships have a higher profit margin compared to their static competitors. Today’s customers research their vehicles online. Offering more digital resources and simplifying the buying process via online tools could help dealerships amplify their bottom line.

Dealerships with a dedicated marketing staff also could have the edge over their static competitors. A marketing team can focus on SEO, social media outreach, creating an inviting online environment for customers and increasing the dealership’s online visibility, too. When staff members need to juggle marketing tasks with their primary sales or support roles, the dealership might lack a marketing edge.

As dealerships move to market vehicles to younger buyers (like Gen Z), offering more online tools and resources could be crucial to remaining competitive. EVOX Images offers dealerships high-end digital assets, videos and immersive resources that can help dealerships increase their online offerings and embrace a forward-thinking marketing mindset.