Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

M-revolution

During the last few months we’ve been noticing a wave of interest in mobile communications and mobile marketing as part of an online strategy for stimulating car sales so we thought we would take a closer look at the m-commerce revolution and what it means for UK car dealerships.

Firstly it’s important to look the key areas that you may need to consider as these are the building blocks of a great mobile comms strategy:

1.      Mobile website

2.      Mobile Wallet

3.      QR Codes

4.      Mobile Apps

5.      Texting

6.      Responsive Email Design (RED)

Mobile Website

The key is to have a website which views well on mobile devices including tablets, smart phones and laptops. You should also tailor content so it’s easy to read on the move. Adding a well-flagged Click To Call (CTC) button on the mobile site for example is likely to be a big winner for mobile users who are busy and don’t want to search through a site for contact details. CTC; according to new statistics from the Google Think Insights published in Auto Retail Bulletin this month; is one of the most-used features on the mobile search engine results. 70% of mobile users have used CTC to reach the businesses they’ve found via their mobile. More importantly for sales departments, 61% of mobile searchers say that this option is most important at the purchasing phase – at the end of the sales cycle.

So the calls that are coming through off Click To Call buttons are likely to be red hot leads – quite possibly in your area right now looking to book a test drive or even buy a car. CTC is also valuable for mobile search ads – producing an average click through rate increase of 8%.

Location-based promotions & information provision

There has been a great deal of innovation going on in areas like location-based offers which could now be considered for application in dealerships. So for example Apple has begun installing iBeacons in many of its US stores. These sensors are placed on tables that hold Apple products. They allow customers to sign up for a notification on their iPhone to receive more pricing and features information on the product that customer might be looking at. The technology could be used to:

·         provide customers with details on upcoming workshop sessions on new products

·         locate customers waiting for Genius Bar appointments

·         presenting relevant adverts and promotions related to products that are close by.

For those looking at their phone regularly (and that’s most of us now) this could definitely assist the in-dealership experience and create an engagement which browsing customers might not otherwise get. Location-based offering, supported by information provision to the mobile, would seem to be something which dealerships ought to be looking at as part of their mobile strategies.

QR Codes

QR codes have, for some time, seemed like a solution looking for an application. However, if they can be used to provide mobile users with access to data and downloads which they value, then we think they can deliver real value to dealerships.  Directing mobile browsers from the QR code to your website’s front page is not good enough. But if you could use the QR code to push customers towards your new Mobile App for car configuration or car financing, then this would seem to be a great way of engaging them. For example, have you thought about putting QR codes on the specification/pricing sheet in the window of each of your used cars on the forecourt for customers to scan and read more about the vehicle and financing options in depth when they get home?

Mobile Apps

We predict an explosion of the development of mobile apps geared to helping provide customers with timely and easy-to-grasp information to assist their buying decision-making on the move. Much more on this in future eTag blog posts.

Texting

Texting deserves special attention in the mobile strategy as it has clear application for car dealerships. Clearly you will need to set guidelines for style and content of text messages to customers, even scripting key messages that might be used regularly. You can monitor and control what texts are going backwards and forwards by running all messaging through a central console. Several service providers offer these. Look out for a solution which automates opt-out permissions; tracks text transcripts; and provides user documentation designed to reduce compliance risk.

You will also need some familiarity with upcoming EU Data Protection legislation which is about to affect direct marketing and communications with customers. If the current proposals go through, then businesses will have to ask all customers for explicit permission to use their personal data for day-to-day activities currently taken for granted. Companies who can demonstrate that customers will get real value in return for their data will be the ones who thrive under the new rules.

But once the management systems have been put in place, texting has clear advantages for delivering timely information to customers. Messages like: ‘Your Vehicle is Ready’, ‘Your part is now in stock’, ‘there is a new special offer on the car you were looking at last time you were in’, ‘your MOT is due for renewal next week’ or ‘we’ve valeted your car free of charge’; if sent in a timely manner, are likely to be very helpful and will inspire genuine customer loyalty.

Responsive Email Design

Responsible Email Design (RED) is worth considering that if you are doing eNewsletters and other outbound email-based communications regularly. You must design these for reading on small format smart phones as over 50% of them will be viewed and read in this way now. Mobile-specific design expertise can enable you to get your communications right. Have a look at: http://www.campaignmonitor.com/guides/mobile/design/. There are lots of RED software offerings out there now and your email marketing provider should also offer their own mobile-specific RED templates.

There are lots of things to consider so I thought I would leave you with a few technical tips for RED for mobile:

·         Single-column layouts that are no wider than 500 to 600 pixels work best on mobile devices. They’re easier to read, and if they fall apart, they’ll do so more gracefully.

·         Links and buttons should have a minimum target area of 44 × 44 pixels, as per Apple guidelines. Nothing is more unusable than clouds of tiny links on touchscreen devices.

·         The minimum font size displayed on iPhones is 13 pixels. Keep this in mind when styling text, because anything smaller will be up scaled and could break your layout. Alternately, you can override this behaviour in your style sheet (do so with care).

·         More than ever, keep your message concise, and place all important design elements in the upper portion of the email, if possible. Scrolling for miles is much harder on a touchscreen than with a mouse.

·         When possible, use display: none; to hide extraneous details in your mobile layout. Elements like social sharing buttons may be great in the desktop inbox, but aren’t always easy to use by the recipient on mobile devices.

When mocking up an HTML email or template, our advice is to create two sketches or wireframes - one of the desktop/webmail layout and one of the mobile layout. Keep in mind where your Call To Action button, such as ‘View deal’, appears on both layouts. Is it immediately visible when the email is opened on a smart phone? Or does the recipient have to scroll down in order to see it?

Do you see strong potential for mobile in your dealership or do you still think it’s too early to invest more senior management time and marketing budget?

Welcome back to the Improve My Dealership blog brought to you by eTag, the dealer key management systems provider. We’ve decided to focus Improve My Dealership posts on exploring avenues to efficiencies and higher profitability for dealerships.

A skim read of AM and other dealer-focused trade magazines in recent months might fool you into thinking that UK car dealers are operating in a buoyant market in which they can do no wrong. New car sales are set to exceed original 2013’s sales forecast by more than 200,000 units, hitting 2.25 million registrations by year end, up from 2.04m in 2012. It gets better, the National Franchised Dealers Association (NFDA) recently reported: “the market will remain strong in the New Year as consumer confidence continues to grow as the UK economy continues to recover.”

With positive numbers emanating from most major groups and city analysts indicating that many publicly listed groups like Vertu Motors are under-valued; it seems likely that these groups will have more shareholder funds to invest in further acquisitions in 2014. Yes – the large chains are going to continue to expand, the consolidation trend may even accelerate as we slip slowly out of the deepest recession since the 1930s.

So why worry I hear you say? But underneath the positive growth charts there remain deeper concerns which have been brought about by changing customer behaviour. Dealers are not immune from the paroxysms that have already hit high street retailers up and down the land. You guessed it: we are all going online to do our research and plan our big ticket purchases – new and used cars included.

But what should a dealer be spending their hard-earned money on to ensure they are seen online and remain visible in their core catchment area - capturing the interested buyer early and making sure they buy from them rather than the one down the road or out of area? One area where investment is badly needed is digital marketing and thankfully there are lots of suppliers with expertise in our market that can help you including Razsor and Greenlight.

But if you are investing more heavily in online marketing, something has to give now most of us are operating close to industry average return on sale margins of 1.3%. One of the areas that they might choose to hold off on is that dealership refit which your manufacturer may be asking you to fork out for.

A recent paper from automotive analyst ICDP encourages UK dealers to push back on expensive refit requests in favour of getting some more fundamental issues right – namely customer service: http://www.am-online.com/news/2013/12/18/car-dealers-the-property-timebomb-/34117/

Deeper reading of ICDP’s research findings uncovers another potential point of friction between manufacturers and franchisees: namely their attempts to micro-manage franchises in the area of customer service through enforcing top-down standards, bonus structures and CSI scores. ICDP observed that these systems are actually part of the problem rather than the solution. Their research from talking to customers that have recently bought new cars this year reveals a very different picture from published CSI scores. One part of the problem is the heavily bonus-orientated dealership sales force which sets up a dynamic which encourages individual success over team work and joined up thinking. Handovers between different people in UK dealerships can be poor or non-existent. Staff turnover runs high because the best salesmen go where the best bonus is on offer and dealerships tend to spend less on staff training as a ‘survival of the fittest culture’ starts to pervade. When compared with the US dealerships, too many UK dealers still serve up a pretty shoddy and disjointed customer experience as a result.

If the Apple Genius Bar customer service experience is the new retail customer service benchmark then the first thing that needs to happen in dealerships is to increase base salaries as a proportion of overall packages - decreasing the amount salesmen have to sell day in day out to take home a decent wage. I know this sounds potentially expensive but we would argue it’s better to spend more money, time and effort on getting your most important and influential asset right – your people – than on flashy interior design refits.  This is clearly only possibly if you have utter confidence in the strength of the brand you are selling and the sales potential of the locality you represent. If these fundamentals are in place then these sorts of changes can be made. Manufacturers themselves can help by giving their dealers the confidence they need to make these sorts of changes for the good of the business longer term.

Successful dealerships like the Arbury Motor Group (profiled in AM this month) seem to marry a hard-edged focus on the numbers with strong people skills, even fostering a family-business mentality that looks after its people.  We’ve met several dealerships with enlightened recruitment policies. Some like CJ Automotive http://www.cjautomotive.co.uk are hiring based on attitude. Previous automotive experience is not critical in ‘front of house’ roles as long as they are able to look after the customer and have a can-do attitude. 

From people to place - surely one of the key things about a dealership is its locality i.e.  its proximity to a large enough catchment of potential car buyers? So I would argue that dealerships need to work harder to market themselves as a company that is embedded in the local community.

Clever digital marketing techniques, like those espoused by the likes of Razsor and Greenlight, offer the potential for dealers based in, say, Hemel Hempstead to dominate the searches on the brands and models they sell made by online enquirers within 25 miles of Hemel. But once you have their attention, you need to get engagement. We’ve talked before about the need to offer appealing online content in previous ImproveMyDealership blogs so we won’t reiterate this here. Whatever the idea to pull the customers in, the objective must be, to be considered as a ‘destination’ to experience the prospective car earlier in a buying cycle which generally begins online today.

There appear to be other common routes to financial success.  A higher focus on F&I is definitely part of this picture. Financing, insurance and trade-in value options and calculators all must be offered on your website. Products such as PCPs have worked particularly well for many dealers in recent years, partly because prices of used cars (especially those 2-3 years old reaching the end of contract periods) have generally gone up and stayed up. In this way dealers are also able to offer a wider range of options to visitors to their dealerships. Other large chains have diversified into higher margin prestige cars and found growth that way.

Yet most dealers do not appear to have fully arrested the industry-wide decline in service revenues: http://www.motortrader.com/latest-news/dealers-urged-reverse-absorption-decline/,  so that today even the most well run dealerships have overhead absorption rates settling at 60% which is a full 20% below ASE’s benchmark percentage. To top this, new car sales margins remain razor thin. Arresting the after sales decline will surely be on the 2014 To-Do lists of many dealer principals.

So our 2014 Top 6 Priorities for Dealer Principals are:

1.      Push back on manufacturers’ premises refresh demands

2.      Consider re-balancing remuneration levels more in favour of salary if you detect your customer experience is disjointed and an everyman for himself culture is pervading the sales floor, invest in training and process to improve the customer experience

3.      Invest in digital marketing to engage with prospective car buyers before they arrive at your dealership

4.      Look closer at F&I sales and provide more options and flexibility to customers – offering them information and calculators online so they can educate themselves a little before coming to branch

5.      Develop a strategy for building your profile locally – both online and on the ground. More events, test drives, online videos, social media comms activity with lots of customer feedback will all help drive up the positive profile of your dealership

6.      Consider new ways of packaging and marketing your after-sales offers to new customers to improve those absorption levels. Service Plans are an obvious starting point but there are other ways you can personalise your service. Personalisation is a word we’ll be hearing a lot more of in 2014…..

Do you have any other priorities for 2014 to halt shrinking margins and falling overhead absorption levels?  Do let us know.