Today on CBT News, we welcome Amy Anderson, Director of Research and Market Intelligence in Cox Automotive and Chase Abbott, Vice President of Sales for dealer.com and VinSolutions. Amy and Chase are here to talk about a brand new 2019 study called the Technology and Transformation of Auto Retail Study, and what it means for dealers looking to capitalize on advances like artificial intelligence and automation.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: Hi everyone, I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News.
Amy Anderson: Thank you. Thank you for having us.
Chase Abbott: Thanks.
Jim Fitzpatrick: Great. Amy, let’s start with you. Talk to us first about why Cox decided to perform a study focusing on these two elements.
Amy Anderson: Absolutely. So what we’ve been witnessing is that the pace of adoption has been increasing at a rate much faster than ever before. Just knowing that today only 2% of consumers actually identify themselves as being laggards, defined as either being skeptical of technology or slow to adopt. That number was in double digits just three years ago.
Amy Anderson: So knowing that the pace of innovation is going so quickly and that technology is becoming so commonplace, we really wanted to take a time to deep dive, really try to get into the insights around these two major things, automation and artificial intelligence. Because it really is changing the way that we interact to changing the way that we engage as consumers. We’re here, we’re hoping to bring those insights to the dealer community, as well as to dispel some of the myths that are out there around artificial intelligence.
Amy Anderson: There’s three things we commonly hear around AI. The first of which is that artificial intelligence is a far off future thing that’s happening, that consumers aren’t interacting with it. We just know that that’s not true. I mean, each one of us in our daily lives, whether it’s through recommendations on Amazon or through Netflix or using ways to navigate through the traffic on your way home, we’re all using these things.
Amy Anderson: The other thing we hear about artificial intelligence is that consumers don’t want to use it. There’s concerns over privacy, and so that’s going to keep them from using it. We can validate that that’s true. They do have concerns around privacy. But we also know that if the tool offers a benefit or a true value, they’re willing to make that trade off.
Amy Anderson: So we’re seeing that, and that they even know that consumers themselves realize that despite that they’re acknowledging the privacy issue. 68% say that they’ll go ahead and use it so long as it improves their shopping experience.
Amy Anderson: Then the last thing we hear very often is that AI is going to replace all jobs. It’s going to take our jobs away. We don’t see evidence of that one really being true either. We’ve looked both from the feedback we got from our dealers and our own study, but also looking at other industries where AI has been sort of out there a little bit longer and in play. what we really see is it’s driving a faster, better experience for both the consumer and the worker alike.
Jim Fitzpatrick: Right, yeah, I could see that. That totally makes sense. Who took part in the study and how long did it go on for?
Amy Anderson: We kicked off at the end of April and it fielded through the middle of May. We knew it was important to not only talk to dealer clients about really what their attitudes and perceptions were, but we really wanted to hear from that consumer as well. So we did speak with 536 franchise dealers. Then we also spoke with over 2000, 2027 consumers or recent automotive purchasers.
Jim Fitzpatrick: Very impressive. Yeah, you get a good sampling with that.
Amy Anderson: Yeah, for sure.
Jim Fitzpatrick: What were some of the highlights and key takeaways that the dealership focused on?
Amy Anderson: There’s quite a few interesting things that came out of it. Number one, I’d say that consumers are ready for this. They’re engaging with personalized experiences in other retail outlets. So it makes sense that they want that similar or same experience when they walk into a dealership.
Amy Anderson: They gave us data points on three different things in there, the importance of how they thought that would improve their experience and also their expectations. Looking at importance first, 74% of people felt a personalized experience in the dealership is important. That’s a big number.
Jim Fitzpatrick: Yeah, that is. It’s huge actually.
Amy Anderson: That actually when you break it down even further and look at age groups, so those 25 to 34, that number raises to 81%.
Jim Fitzpatrick: Oh my gosh.
Amy Anderson: Then if you go even a step lower to those 18 to 24 year olds, there are 87%. It’s almost nine in 10 want to have this personalized experience. That’s just really huge. Then when we ask them about what they think that will do for them, 67% believe it would offer a better buying experience, and just shy that 64% believe it would offer a better ownership experience. So again, really strong.
Amy Anderson: Then expectations, then this kind of goes back to that first misconception of the fact that it doesn’t exist today or people don’t want it today. Consumers currently today have the expectation that when they walk into the dealership, that the dealership, the dealer, knows something about them.
Amy Anderson: Three quarters of consumers expect that they know something on the sales and service. That looks different obviously on both of those sides. So from a sales perspective, they’re looking that they understand what’s the evaluation of my current vehicle? What’s my budget? But that sort of price point hadn’t been shopping. On the service side, they know your vehicle, your make, your model, your year, your past history.
Jim Fitzpatrick: Yeah, when you had it in last, and what do you think it needs, and what was suggested last time you were in, and yeah, it really helps.
Amy Anderson: That’s exactly right. They don’t want to have to say that again to you. They expect you to know that.
Jim Fitzpatrick: Yeah, that’s for sure. In terms of AI, what are you seeing I should say any pushback from dealers to move into this direction? And then why or why not?
Amy Anderson: You know, we are. There’s a few barriers to adoption there. What we see mainly is the majority of them range around the change management processes. So whether that’s training or understanding the process changes that have to happen in the dealership. The biggest one we see, and it’s true for things even outside of artificial intelligence and automation. It really, any new technology is the resistance of staff to change.
Amy Anderson: So dealers really need to focus on either finding the right partner or finding the right process that they can get their employees on board because the benefits of these tools combined with the strong desirability from the consumers to have it makes an important investment that they need to embark upon.
Jim Fitzpatrick: Dealers will often go back to what they know and what they’ve been doing. It’s like it’s their security blanket. Even though this AI and technology’s coming at us at such a rapid pace, I think every dealer knows in the back of their mind that I got to change. It’s just they just keep kicking the can down the road. To say, “Okay, maybe my next generation, my kids can address this. They’re more in tune with what’s happening.”
Jim Fitzpatrick: Let’s switch gears a little bit and, Chase, let’s turn to you. How are you working directly with dealers who are leveraging AI and with their CRM to more personalized car buying experience, which is what it’s all about now, right?
Chase Abbott: Yeah, completely 100% accurate. We’ve talked to a lot of dealers that are using AI these days, and it’s really providing a more seamless experience, and it’s allowing dealerships to be relevant in an instant. That’s the way we like to think about it. Just based off the fact that not a lot of salespeople sit around in the morning and say, “I’ve got four appointments today. How can I make these four appointments have a fantastic customer experience?” They’re a little bit more reactionary to it than that.
Chase Abbott: So what we wanted to do at Cox Automotive was make that data of all this visit data we have, all this behavioral data we have, have that data be available on a silver platter. Just have it curated so that they can make that data consumable to them. So five minutes before the customer shows up, we want to know what Jim was looking at online, see where their preferences lie. We can jump right onto the customer record, view that data in an instant and go out there and be relevant right now at any given time.
Chase Abbott: We’ve seen a lot of dealers that have really, you know, forward thinkers, early adopters, embrace this kind of technology. It’s really cool and really exciting to see some of the results that they’re producing with this data in hand.
Jim Fitzpatrick: Yeah, I bet. There’s no question. So for customers who are ready to buy quote unquote, what are their behaviors and signals?
Chase Abbott: Basically we look at ready to buy. We have some of the biggest websites in all of automotive: dealer.com, Kelly Blue Book, Auto Trader. Our cast net takes up a lot of the river. We have data on a ton of different people. With Cox properties touching 75% of all vehicle transactions, there’s a tremendous amount of data. What we’re seeing with ready to buy is we’re looking at stats like 8.2 times more likely than the average consumer to purchase within 30 days. So an eight X probability if they’re in our ready to buy filter.
Chase Abbott: Also, a couple other mind-bending stats. AI from VinSolutions predicted the make or brand of a vehicle a consumer purchased in 69% of sales on the make, and on the model, 34%.
Jim Fitzpatrick: That’s very impressive.
Chase Abbott: Now if we filter that down to ready to buy, the last stop before we go to an actual sale, the bottom of the funnel as most people know it. Ready to buy, VinSolutions predicted make 91% of the time, and predicted model 51% of the time. So the lower that got in the filter, the more accurate the data got. I think in short the data’s there, it’s accurate, and we 100% better be listening.
Jim Fitzpatrick: This definitely seems like something more dealers should be paying attention to, needless to say. What’s the single biggest benefit to using AI and automation in the dealership?
Chase Abbott: I think it’s that the customers are leaving a trail of breadcrumbs for us to figure out how to go about our business in order to gain that share from them and provide them with a great experience. I think it’s really on us to leverage that data and not be resistant to it, embrace it. I think then, only then can dealers really realize… Like we can talk about features and benefits all day, right?
Chase Abbott: But the real results, if I was to tell you that on your website right now, there are hundreds of people shopping that we have their name and info on, would you like to go follow up with those people if you knew that?
Jim Fitzpatrick: That’s huge.
Chase Abbott: I think it’s hard for dealers to grasp a little bit. If we know who they are and they’re actively shopping, but Mary who bought a car three years ago said she wasn’t in the market again for another six or seven years because she drives it until the wheels fall off. But if she’s back on the site in three years, isn’t it something where we would send Mary an email about the specials to upgrade her new Escape to a new one? Because that’s going to hit that relevancy spring, if you will, for her because she’s online looking at that.
Chase Abbott: What we’re seeing with dealers is the process, it’s really getting a lot of exposure, is buying signals without any followup based on them. It’s hard for a salesperson to go through and make sure they touch each one of those because there’s thousands of people. We’ve automated that for dealers and put them in a process where we can nurture that until we get them to an actual lead or a little bit further down the road with their progression on buying a car.
Jim Fitzpatrick: Well, Chase Abbott, vice president of Sales and Digital Retailing for dealer.com and VinSolutions, I want to thank you so much for joining us on CBT. Amy Anderson, Director of Research and Market Intelligence for Retail Solutions at Cox Automotive… That is a real mouthful right there, isn’t it? I want to thank you so much for joining us on CBT news. This has been very informative and obviously I know the dealers are going to get a lot out of it, so don’t be surprised if your phone starts ringing or texting, I should say. We don’t really call people anymore, do we? Now it’s all about the text. Thanks so much for joining us.
Chase Abbott: Thanks guys. Really appreciate you having us.
CBT Automotive Network, the number one most-watched network in retail automotive. This has been a JBF Business Media production.
