According to in-depth research conducted by the leading automotive research agency, ICDP, in partnership with NFDA and Auto Trader, retailers that are enabling consumers to complete some or all of their buying journey online believe they are selling more cars, more efficiently and to more satisfied customers. In fact, the study found that those retailers with more online services available not only believe that their sales teams are able to operate more efficiently but also claim to be selling more vehicles per salesperson than those with only the basics in place.
Conducted over the second half of 2021, the survey of circa 160 retailer directors and owners, highlighted the recent growth in the adoption of the tools and services necessary to provide an online retail experience. This has been accelerated even further over the course of the pandemic with physical forecourt closures, as well as the emergence of new online only retailers, and changing consumer preferences. In separate consumer research conducted by Auto Trader, 72% of 5,000 people surveyed find digital car buying appealing, which is up from 61% in 2020.
ICDP’s study found that eight out of 10 retailers are now offering a range of digital services, such as enabling consumers to complete a finance application online (83%), place a reservation online (71%), or apply for a guaranteed part-exchange valuation (41%). Click & collect (86% 2021 vs 15% 2019), home delivery (85% 2021 vs 30% 2019), and video chat (83% 2021 vs 28% 2019) saw the biggest growth in adoption, with more than 80% of retailers introducing these services since 2019. These are the same services that Auto Trader pushed through its platform to help retailers remain operational during the periods of COVID restrictions.
Critically, the survey found that car buyers are engaging with these services in significant numbers. 72% of retailers offering online trade valuations are seeing at least one in four of their customers using it, while 67% are seeing the same proportion of their customers generating an online finance quote. Some tools are seeing significantly higher levels of engagement; for example, nearly one in five (19%) retailers offering click & collect are reporting over half of their customers using the service. Although the engagement level is promising and likely to provide incremental business for retailers offering these services, it’s also evident a small segment of car buyers isn’t quite ready for online retail yet. Whilst there will no doubt be more to gain from these features as consumer adoption grows, it’s important to cater for all buying preferences, whether online, offline, or most likely a strong blend of the two.
This consumer engagement is already resulting in perceived benefits for retailers. When asked how their operating model had changed since they’d embraced these tools, there was a strong correlation between improved efficiency and also the sales per salesperson in the data, relative to those who had adopted more of the digital retailing services. Retailers who'd embraced more of these digital services seem to be clearly feeling the positive effects on their business, with those respondents more likely to report increased sales and efficiency than those who hadn’t.
What’s more, further supporting these business improvements, those that have implemented more online services believe their customer experience has improved too. Almost two thirds of those further along in the digital journey are also reporting a higher percentage of buyers accepting the price offered. In addition, at least 6 in 10 believe they are already experiencing strong value from all of the services implemented and expect it to increase even further over time.
Neil McCue, Chief Operating Officer of Snows Motor Group, which took part in the survey, highlighted the benefit he believed the business had experienced through the adoption of digital services: “We made the transition to online sales as soon as the first lockdown was announced and enjoyed some incredible results. As soon as customers could come back into our centres, we maintained a strong sales rate through our online channels. We firmly believe that online sales will continue to grow and will play huge part of our business moving forwards, and so we continue to look at ways in which we can improve our online journey. Our sales executives have total confidence in dealing with online sales enquiries and by using our video technology to interact with customers we are seeing sales increase.”
Ian Plummer, Auto Trader’s Commercial Director, commented: “It’s fascinating to hear first-hand from retailers the benefits they’re seeing by improving the customer experience for their buyers through the application of digital services and tools. Clearly, responding to changing consumer needs and expectations is having a positive impact on both efficiency and sales performance. While behaviours are changing, it doesn’t mean everyone is going to buy every car in an end -to-end online journey. This research tells us that retailers should think ‘digital first’ to make these services and tools available where they meet the needs of their customers. Don’t think about them separately, but rather as part of how you operate overall and make sure they’re really connected into your forecourt experience as most consumers will be completing at least some of the jobs on the forecourt for some time to come. So, it’s crucial to enable that in a joined-up way.”
Are retailers missing out on the full potential of digital?
While adoption of online tools is high, many retailers may still be missing out on the full potential of digital retailing, as a significantly lower percentage of businesses have implemented the core operational changes required to support a truly omni-channel experience. For example, over half of retailers (54%) are yet to introduce longer operating hours, 55% haven’t changed staff pay policies (bonus system), 42% are yet to offer a no quibbles return policy, and nearly two thirds (64%) are yet to offer new customer service roles.
Although these operational changes are more challenging to introduce, they have significant benefits, enabling retailers to access buyers who may go elsewhere without the convenience and stock choice these create. Those who have made these operational changes are already seeing significant value and this will only increase; 79% are experiencing med-high value for extending their operating hours, as are 83% of those that have changed their pay and bonus policy.
Steve Young, Managing Director, ICDP, commented: “With evolving consumer car buying behaviour and the emergence of new well-funded competitors, digital retailing as part of a broader omni-channel strategy is critical for the continued success and future growth of car retailers. Over the past two years the industry has experienced significant pressure to accelerate the implementation of digital retailing elements, and from our research it is clear that those who are focusing their efforts on this area are the ones who will reap the rewards. They will also be in the best place to face off to the new competitors.”
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), added: "Embracing digital retailing is vital in today's marketplace. The most successful businesses are those that offer a variety or routes to their customers to start and complete their vehicle buying journey. The pandemic pushed retailers to accelerate their digital strategy and adopt practices they are now benefitting from. Franchised retailers continue to demonstrate their resilience and ability to adapt.
“NFDA is pleased to support the research conducted in partnership with Auto Trader and ICDP. We will continue to work with industry partners as well as our specialist working groups to provide retailers with key insights and support them in their digital journey."
 Representing both franchise and independent businesses
 August 2021