On today’s show, we welcome back Jessica Stafford, senior vice president, and general manager at Autotrader and Denise Chudy, General manager at LivePerson Automotive. Jessica and Denise are here to discuss the latest trends in digital retailing, and how your dealership can prepare.
VIDEO TRANSCRIPTION:
Jim Fitzpatrick: Thank you, ladies, for joining us today.
Jessica Stafford: Thank you for having us.
Jim Fitzpatrick: Sure. Let’s kind of dive into this digital retailing topic that’s so hot out there today. How are changes in customer expectations affecting the automotive space with regard to this?
Jessica Stafford: We see that consumer expectations that exist outside of the automotive space are now transitioning into the automotive space. We spent all this time thinking automotive and even retail were in this bubble where consumers expected an easy, simple, fast experience when they buy other things.
Jim Fitzpatrick: Right, on Amazon and such, right, sure.
Jessica Stafford: Amazon and yeah and all of these new ways to buy digitally, buy fast, save time. Now that they’re so used to that, their expectations are transferring into these other big purchases as well. They expect to be able to do the research online. They expect to be able to do some of that car shopping car buying process online. At [inaudible 00:01:28] we see over 80% of people want to do at least one of those steps online. Those expectations are dramatically and quickly coming into our automotive space. Those behaviors are the expectations, so we need to be able to meet them.
Jim Fitzpatrick: Absolutely. I don’t think there’s a consumer out there that hasn’t caught one of the Carvana commercials where the person is sitting on their couch literally watching TV, and they do the whole deal online, and up comes a truck and its got their vehicle flat bedded right to their home. I think it gets a lot of people asking, “Why can’t I do that with my new car with my local dealership that I’ve known for 20 years?”
Jessica Stafford: That’s right. Having that flexibility and kind of that seamless experience online to in store, we know that consumers want to do a lot of that work online. We also see that a lot of them want to then walk in the store and kind of do that final step in the store, talk to a person, sign the deal. Although that part of the process is still digital, they expect that to be digital as well. This digital retailing experience actually goes kind of online to in store.
Jim Fitzpatrick: Sure. While people are online Denise, the one thing they are definitely doing is chatting right? Talk to us about that, where that lies today.
Denise Chudy: Yep. What we’re seeing in the digital retailing space is that people want to start a conversation as well right? You and I have talked before about two out of three people say that they would fill out more forms if they just simply had more help, just somebody there to help them along the way. With our technology, that’s exactly what we want to do, provide that help button, also allow people again to start the conversation. No car was ever sold without a conversation right?
Jim Fitzpatrick: That’s a good point, that’s right.
Denise Chudy: Let’s get the paperwork started, let’s get the conversation going so that there’s that conversation level, and that relationship is starting before the person enters the dealership.
Jim Fitzpatrick: Nowadays, conversations people want to keep them at a text level. I found that with all of the vendors that I did business with, even my family and friends we’re always sitting here texting, and the phone will ring, and I’m like, “I really don’t want to talk to you right now. Can’t you just answer this simple question for me?” Do you find that to be the case that texting has really been the driver in many of these instances where that just starts it? In many cases, they want to stay on the text right?
Denise Chudy: It’s fluid, right? You start, again, it’s that relationship. It’s a very fluid conversation, doesn’t have a very defined start and stop point, right, and you continue the journey into the dealership. Our CTO recently bought a new car, and his entire process was text based. Once he found the car he liked, he started the conversation, “Here’s how much I want to spend. Here’s my trade in.” By the time he got to the dealership, and he was in Seattle, so they’re very technically savvy right… all he wanted to do was fill out the paperwork that he wasn’t able to fill out online and be done.
Jessica Stafford: That’s exactly, it builds on what you were just saying as far as that’s how you’re used to interacting. We as consumers or as people are used to interacting with our friends and our family. That transitions now into that expectation that we can interact with everyone in that way, and we can buy a car this way. It can be those short spurts of conversations that start online and kind of go back and forth.
Jim Fitzpatrick: That’s right, that’s right. I call my teenagers for dinner by text instead of screaming upstairs, probably have their headphones on, whatever. It’s certainly the new way that people communicate. It’s unfortunate when you get a dealer that will on the first text come back and say, “What’s your number? I’ll give you a shout? Is it okay to call you with more information?” It’s like, “No, it’s not. First answer these questions and then you can come back to me.” I think it’s a telling sign that consumers want to stay in that mode isn’t it?
Jessica Stafford: That’s one of the biggest best practices that we see on the digital retailing side. In order for digital retailing to work for you as a dealer, you’ve got to be all in. You’ve got to be ready to operate a little differently. If somebody starts chatting or texting or even submits a full on digital retailing deal, and that dealership then kind of calls back and says, “When can you come in” and that’s the first question, because that’s what they use to want to get you in the door, then the consumer’s thinking, “No, no, no I want to start this online. I want to go back and forth.” You’ve got to meet the consumer where there are. Then even more importantly, when they actually do walk in the door, you’ve got to acknowledge the fact that they’ve done all this work. You’ve already had this digital conversation, you’ve started your relationship. Now you finish it off in store.
Jim Fitzpatrick: Look at how much time you saved with the consumer ’cause we’re not going to keep you here now four and a half five hours because you’ve done all of this online. “Look there’s your car, it’s ready to go, it’s clean, we’ve been waiting for you, let’s go.” I think that is a big point that you just made there. Digital retailing continues to be obviously a massive trend coming out of NADA. We’re still doing interviews from NADA about this topic. What can you tell us about this? I know that it’s growing and dealers need to pay attention to it. What are some of the things that you’re finding?
Jessica Stafford: Well you know it is, it’s continuing to grow adoption by both consumers and our dealers are growing. We’re continuing to kind of more cars, more vehicles are online and digitally retailing enabled, which is what consumers are looking for, so they’ve got more content to search and shop and buy, and then more dealers are seeing the need because the consumer demand is there. We’re kind of building that marketplace. With Accelerate My Deal on Autotrader, we continue to see more consumers come in the door looking for this functionality, looking to be able to engage online. Of course, we’ve got big consumer advertising campaigns out there educating consumers on what it means to buy online, the fact that you can structure your deal. You can look at monthly payments, you can-
Jim Fitzpatrick: Get a trade allowance.
Jessica Stafford:… you can get a trade allowance. [inaudible 00:07:12] Automotive is continuing to produce more and more products within that suite in order to enable digital retailing. At NADA, we rolled out SnapLot 360 from HomeNet, which is a way to look at full 360 views of vehicles you’re shopping for online, bringing more of that shopping process online mirroring what you would do in store. Then of course, we have a new integration and partnership with LivePerson Automotive in offering consumers a chance to contact and chat online with the dealer in that digital retailing experience.
Jim Fitzpatrick: That’s a game changer. Talk to use about that.
Denise Chudy: Yeah I’d love to share if you wouldn’t mind. I brought some examples of what consumers ask. When they’re in that moment, they’re very specific about what they’re looking for and what they’re asking for, so can just give me a second to load this up? What we find mostly is that often times people will click on the form asking for things that you think are on the page, right? As you build this page and you think you provide all the information on the [VDP 00:08:14]. Here’s one example of a person who chatted in actually through a digital retailing an example through Autotrader and actually the customer says, “Hi, my name is Eric.” We’re seeing a good transition of people feeling more comfortable about actually giving their name to begin with. Then this customer gave the STK number, S-T-K number wondering what financing options are available.
The dealer replies back, “Are you looking to purchase or lease?” Then the consumer says, “Purchase.” The agent says, “All right.” The customer asks, “I can get a [GM 00:08:49] discount, a family discount, but it seems to me you already applied this to this truck. It’s so far under MSRP now”, right? Here we’re having this rich conversation with consumers telling the dealer where am I in my buying process and my buying decision? This has been a really important shift we’ve seen from days of past when it was always about “Is this car still available?”
Jim Fitzpatrick: Right, yeah they’re diving right into the deal.
Denise Chudy: That’s exactly right.
Jim Fitzpatrick: This person is an absolute buyer, in market right now.
Denise Chudy: Absolutely. We also see, here’s another example of somebody who is on actually the VDP. Consumers will surprise you right? The customer says, “I’m looking at the Impreza Hatchback. Can you tell me if it has been in any accidents. I would like to trade in my Jeep”, right?
Jessica Stafford: All the information.
Denise Chudy: You get again a really good indication where somebody’s mind is at. It opens up beyond what information is on the page. It opens up the capability for you to actually start that process of getting them into that car.
Jessica Stafford: Imagine getting that much information in what we would have used to call a traditional lead that maybe you knew the car that the person was looking at, maybe you got some contact information, but you’re getting so much rich information through digital retailing, and through this type of life chat experience.
Jim Fitzpatrick: That’s right, it’s phenomenal, it really is. At what point in time should that sales person if ever suggest that we jump on a call? Is there a certain time or is there a certain phrase that the consumer says that you say, “Hey, [inaudible 00:10:25] maybe we should jump on a call at this time?” Are you turning the customer off be suggesting that?
Denise Chudy: A lot of times, the conversation will naturally move into a appointment setting, right? Lot of times it doesn’t even transition to a call. There’s so much transfer of information in a conversation that’s hard right? Your example about [inaudible 00:10:47] conversations. They’re just replacing what is a traditional phone call. We have a little bit more information about the consumer because we know what page they’re on, we know what car they’re looking at right? They’re on a form that we can identify where they are in the process. That’s what happens most of the time. There’s not even a need for that extra step on the phone.
Jim Fitzpatrick: What advice would you have or would you offer to dealers to connect with consumers online better, better than what you’ve already been doing I guess?
Jessica Stafford: Well I think to build on what Denise is saying, I mean transparency and starting that conversation early on is the key to all of this. We’re in a relationship business, that’s what automotive is, and that hasn’t changed. It’s just that we have the opportunity now to start the relationship with the consumer even earlier in the process and online in a very again frictionless experience that a consumer is happy to give this kind of information and also has high expectations for that transparency back. I think that’s a really big part of the process.
Jim Fitzpatrick: It really is for sure. As you said, it’s a relationship business, and it has been for years. That’s really what I think has been the glue in every sale that happens on a showroom floor, is that relationship between the sales person and the customer, or maybe the manager and the sales person and the customer. If that relationship isn’t working, there’s no transaction that’s going to take place. I don’t care what the price of the car is, or what you’re selling. If I’m not a LivePerson automotive customer, can I still use live chat with COx Automotive Digital retailing?
Denise Chudy: Yes, yes you can. You can use our tool. Our tool is exclusive on the Cox properties, but absolutely. We have a number of dealers who might not have any sort of chat or text on their own site, but absolutely enjoy the benefits of this partnership, absolutely. The real crux of this is we want to make sure that that pipeline, that ability for a consumer to click the button and ask the dealer a question is there so 100%.
Jim Fitzpatrick: What happens when the dealership is closed? They say a lot of car shopping takes place from eight o’clock after dinner at night all the way to maybe 11 or 12 o’clock midnight. Is there any kind of suggestion for that time when somebody is online and says, “Hey, I’d love to get some information right now?”
Denise Chudy: Sure. Our agents can always back up the dealership, so we can be there for them. We call that the tango right? If you’re not there or we’re there, somebody’s going to catch the consumer. We can absolutely do that.
Jim Fitzpatrick: That’s huge for a dealer right?
Denise Chudy: It is.
Jim Fitzpatrick: I mean ’cause if they don’t get that kind of tango as you call it with the dealer that they’re choosing, they may move to another dealership that does have that.
Denise Chudy: You’re right.
Jim Fitzpatrick: That’s a huge thing.
Denise Chudy: You’re right. That’s our number one recommendation is be there when they click the button, be there. That’s the easiest thing you can show up right? They say that’s most of life is just showing up, right?
Jim Fitzpatrick: Woody Allen says 90% of all actors are showing up.
Denise Chudy: There you go. Let’s first show up. Whether you’re there, or we’re there, and we understand you also get busy in the dealership, Saturday morning, maybe your staff doesn’t have the ability to get on the mobile app and answer those conversations, so make sure somebody’s there because we all know what will happen if not, particularly on a robust site like Autotrader that has the most dealers in the nation on it, a consumer goes to another one and start doing their shopping with the other dealers on the other sites. As soon as they click and want to start that conversation, be there, be present.
Jim Fitzpatrick: So important. How long do you think it’ll be before we see the majority of vehicles being sold through digital retailing in the country?
Jessica Stafford: Well I think that there is a wide spectrum we talk about of I mentioned earlier the idea of just retailing is really digitizing this experience. Some of that means happening from the comfort of your couch on your phone chatting and working your deal and adding F and I products in the process and seeing how your monthly process changes and all of that. Even when you do walk into the dealership, consumers expect a digital experience when you’re printing out a bunch of papers for them to sign versus signing something virtually. Making that process digital, we feel that that piece of it is going to be happening very fast. Consumers demand it. We’re in this space where the consumer demand really matters. We’ve got to meet their demands I think like Denise said. In a lot of these cases, if you’re not there for what they’re asking for, they’ll go to the next place. Being able to offer that is very important.
Digital retailing still is so new. We’ve got everything from state to state laws that are kind of different, and need to catch up to the world of digital retailing, do you need a signature or not? Can we really deliver a car or not? I think our goal is to enable as much of the process as possible for both consumers and for sellers and for lenders, to be as digital as they’d like it to be, and allow consumers to kind of move down this process at their own speed.
Jim Fitzpatrick: What do you say to the dealers that are watching us right now you know who you are that say, “We’re crushing it. We don’t do this digital retailing. We don’t even really do that much chat. We want the customer to be in our showroom ’cause you can’t sell a car to a customer that’s not sitting in front of you, maybe that’s the old school part of me.” There’s still those dealers with that mindset, that at the same time, they’re having a record year. What do you say to those dealers?
Jessica Stafford: Well I would say part of digital retailing is getting the right people in the door. At that same time, we know that there is a reality of margin compression, and that there’s stress on our industry right now and likely more to come. This world of making sure you’re bringing super qualified, ready to buy buyers into your lot to sell is key. It creates operational efficiency and allows you to sell more cars. A digital retailing deal, we call them deals instead of leads because they actually are very different than a traditional lead closes three times higher of a rate than a traditional lead.
Jim Fitzpatrick: It’s a no brainer.
Jessica Stafford: It’s a no brainer, it’s so much easier. We’re also seeing 51% more profitability in those sales.
Jim Fitzpatrick: Now you’ve got dealer’s attention.
Jessica Stafford: That’s right.
Jim Fitzpatrick: 51% more profitability.
Jessica Stafford: 51%.
Jim Fitzpatrick: Don’t ever call in here again and talk about your front end margin compression unless you have these things in place.
Jessica Stafford: It’s true.
Jim Fitzpatrick: Guess what? You can do a little something about it.
Jessica Stafford: It’s not a matter of like that it’s not great to see a shopper face to face and close that deal. How much better is it if that person is ready to buy, and that deal happens faster? That’s a win-win for the consumer and the dealer.
Jim Fitzpatrick: Yep, absolutely. Well ladies, thank you very much for joining us on CBT News. We very much appreciate it, and hopefully can have you back and talk more about this. CBT would love to play a big role in helping dealers make that transition to digital retailing. We get a lot of questions from our dealer viewers and subscribers and managers to say, “Hey, how quick is this thing coming? What do we need to do internally? Are we ready for it from a training standpoint? What do we do?” There’s a lot of apprehension, some nervousness out there from dealers as to digital retailing. I think they all agree, it’s coming. It’s just a question of when and how fast, right?
Jessica Stafford: Got to get ready for it, yep that’s right.
Jim Fitzpatrick: Well thank you for joining us, really appreciate it.
Jessica Stafford: Thank you.
Jim Fitzpatrick: Thanks.
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