In an earlier article, I wrote about the changing dynamics of profitability within an automotive dealership. The tightening of available credit through responsible lending, the reduction in available insurance products and the change in original equipment manufacturer (OEM) behaviours have changed the makeup of the overall profit a dealership makes.

Key performance indicator (KPI) income has never been so important to the viability of the dealership. In fact, those prospering are those that not only hit factory volume targets but also achieve these targets in line with the strategic objectives of their OEM (high customer service index, win repeat business, etc), thus maximising the bonuses and incentives on offer.

The digital economy

In conjunction with the above, perhaps the biggest changing dynamic a dealership needs to cope with is the digital economy, which is defined as an economy based on digital computing technologies. It is this digitisation that is having a major influence on customer buying behaviours. But have automotive dealerships adapted to this change in dynamic for all departments within the business?

Changing dynamics

As an example, let’s picture a Dealer Principal. Typically, Dealer Principals have a strong sales background, exceptional product knowledge, are good deal closers and learn the traits of how to run a successful business through industry experience. This is ordinarily gained via working up through the ranks of the dealership, starting out ‘on the yard’.

In the digital economy, where the use of the internet and social media platforms mean customers are significantly more informed when they arrive at a dealership, these are not necessarily the best traits for success. Statistics suggest that consumers visit only 1.2 dealerships before acquiring a vehicle, therefore closing a deal when a customer comes to your dealership is no longer the challenge; rather, it is getting the customer to the dealership in the first place.

Getting customers to your dealership in this new digital landscape

So how then do you get customers to your dealership in this new economy? This is achieved via the implementation of a strategic marketing plan that considers all channels, including digital marketing, website (customer journey and experience), social media, search engine marketing and optimisation, as well as email marketing campaigns on both desktop and mobile environments.

Dealerships can no longer rely on the OEM’s digital campaigns or other online mediums to drive leads in used cars. In fact, specialist independent service and parts companies tend to have an edge over the dealership in this regard.

Changing skillsets – do you have the right mix?

Historically, individuals with these skill sets have not been found within the organisational structure of all dealerships/groups; however, in the forward-looking groups it is these people who are driving the changing agenda and becoming key players within senior management for successful Dealer groups.

So what are the typical traits of this role? Typically it’s someone who can:

• develop and champion best-in-class online consumer shopping experiences
• implement and measure interactive marketing projects to reach online customers with the mission of converting shoppers into loyal and long-term buyers
• make it easy to navigate, learn, compare, experience and buy with confidence online
• drive online retailer marketing initiatives, driven by shopper insights, for our top retail partners and teams, and
• drive development projects to deliver user-friendly, accurate, innovative, on-brand digital experiences.

Clearly people in these roles didn’t necessarily start out in car sales, but their presence is more important than ever in running a successful dealership. In my experience, the most profitable Dealer groups are those that have redirected their investments in people into these channels to help facilitate an exceptional customer experience and lead generation without the need for other mediums (both online and not) to drive leads to the dealership.

So next time you are in your leadership/executive meeting at the dealership, ask the question, “Do we have the right skills within our team to function effectively in the digital economy?”

Matthew Cutt
Partner,
BDO Automotive