There’s something special about visiting Florida. There’s a positive energy that’s contagious, more so now that the air travel mask mandate has been lifted and smiles can be seen. Most travelers are tourists, sporting beach attire or Mickey Mouse ears as they flock to the white sand beaches and Magic Kingdom. But instead of visiting Disney World, I was headed to my very own personal Epcot Center, Digital Dealer in Tampa.
Digital Dealer tends to be a smaller automotive circuit event, but it’s known for bringing together progressive dealers and emerging technology providers. The event attracts some of retail automotive’s best marketers, operators, and innovators of tech. Additionally, the show includes breakout sessions and discussions highlighting new ideas, processes, and future tends.
I’m a sucker for predictions and new tech toys, so I collected my top 5 takeaways from the event below.
1. Dealers Are Using New MarTech Tools to Improve Marketing Optimization
Dealer marketing effectiveness was a big talking point at Digital Dealer. The automotive industry is notorious for reactive marketing, often launching campaigns mid-month to achieve an end-of-month sales goal or purchasing leads from third parties in an attempt to procure sales opportunities. Dealers have long been challenged with optimizing their marketing due to the offline nature of the auto industry’s transactions and usage of legacy technology.
Additionally, many OEMs (manufactures) provide dealers with advertising co-op dollars if dealers use an OEM-selected provider. While the OEM program providers are efficient at blocking and tackling components of advertising, they’re often locked into high funnel branding strategies given the funding of the OEM. Many dealers subscribe to these solutions and choose “set it and forget it” strategies that lack personalized messaging and custom audience applications.
Digital Dealer facilitated many discussions on how to best optimize your advertising using your existing OEM certified provider. The sessions also covered how to improve audience management with the latest Martech technologies. For example, leading automotive brands integrate AI-powered conversation intelligence solutions like Invoca with their CRM to capture insights from phone conversations and modify their ad targeting strategies accordingly. This solution allows dealers to personalize car buying journeys at a deeper level, increasing conversions and building customer loyalty.
2. Today’s Consumers Favor Digital Communications and Phone Calls Over In-person Handshakes
“We get a lot more phone calls now” was a sentence that was on repeat at the show. In 2020, when COVID began, “Shop from home” became every OEM and dealer’s rallying cry. Dealers raced to install digital retailing software that enabled customers to obtain things more easily like consumer payments, trade-in valuations, and back-end finance and service products. Digital retailing solutions were already gaining adoption and usage prior to the pandemic but COVID sent adoption into warp speed.
Fast forward to 2021-present, with the supply chain being disrupted and a microchip shortage halting production and distribution of new vehicles, digital retailing has become a question mark. Many dealers at the show discussed abandoning digital retailing tools due to the lack of inventory citing, “If the consumer wants the car they should come in and buy it before someone else does.”
A question that resonated at Digital Dealer regarding Digital Retailing was, “Will we, as dealers, realize a decrease in gross profit if we allow the customer to configure their own payments online?” Many dealers and vendors are struggling to answer that question given the current supply and demand conditions. But one thing is for certain: there is a clear desire from consumers to optimize their car buying experience prior to a showroom visit or vehicle purchase.
With dealerships receiving more calls than ever, it’s a great time and opportunity to rethink your call routing solutions as hold times have increased and 25% of dealership inbound phone calls are currently dropped or going unanswered.
3. The Automotive Dealership Workforce Is Going Hybrid
There were some great sessions around the future of the dealership workforce. As work from home and hybrid roles have become more popular in alternative industries, how can automotive dealers adapt to attract, acquire, and retain top talent? Additionally, what are the generational differences and preferences in the workplace?
Generations aside, I think everyone agrees that it’s no fun to work bell to bell. Many dealers are rethinking and testing work from home or hybrid specialized roles such as business development center staff, business operations roles, and centralized marketing team member roles.
Despite a slow start in 2022, predictions indicate further consolidation in the industry, with larger dealer groups acquiring more small groups. Will this drive more work from home or hybrid roles? I think so.
4. The Private Party Inventory Acquisition Gold Rush
A big topic of discussion at the event was Carvana. Carvana is a used car retailer that has historically marketed a better way to buy a used car via a 100% online transaction with home delivery or an onsite vending machine-like experience.
Carvana has made recent news with their falling stock price, the layoff of 2500+ employees, and the acquisition of the online used car auction provider, Adesa. In fact, the news of Carvana’s mass layoffs went public during Digital Dealer on Tuesday. Reactions at the show included comments about how consumers don’t really want to shop from home and Carvana’s recent challenges are an example of that. My hope is that dealers and OEMs don’t see Carvana’s recent challenges as a false positive that “shop from home” is dead.
Those who dug below the surface discussed a larger challenge that Carvana might be positioned well for: private party inventory acquisition. As the industry continues to face inventory shortages due to the lack of microchips, rubber, and batteries, used cars are still in high demand. Many dealers spoke of how hard it was to come by “good” used cars, let alone cars in general. Historically, dealers have acquired used cars from online auction houses such as Adesa and from the public via trade-ins.
There were also debates about how dealers will navigate acquiring private party inventory with Carvana now owning Adesa, seemingly getting the first crack at used car inventory. Some additional topics of debate included Carvana’s position in the marketplace in general. Will Carvana become an inventory listings, lead provider, or retailing platform? An end-to-end logistics provider for dealers? Or will it remain on its current path? Carvana aside, private party vehicle acquisition is and should be at the top of every dealer’s list of objectives for the foreseeable future.
Lastly, as the industry has sold primarily used cars for the last 2 years, we should see OEMs and dealers invest heavily in marketing their new vehicles. New car customers return to dealerships for their next car or service opportunity at a rate of 40%, whereas used car buyers only return to the dealer they purchased from at a rate of 8%. A strong topic of debate was how new car franchises and OEMs will make up for the massive delta in return rate we have historically seen. Dealers should and will leverage their existing database to procure the same private party vehicles they recently sold or serviced.
5. The ACES Market (Autonomous, Connected, Electric, and Shared)
Electric cars are the present. Autonomous, connected, shared, electric vehicles are the future. I think every manufacturer (OEM) and dealer is trying to figure out who the electric car customer is and what makes them tick. As adoption of electric cars increases, dealers at the show discussed how electric cars will affect their fixed operations business and overall gross profit. Additionally, a concern with electric vehicles is the current infrastructure to support charging.
Beyond electric cars, dealers discussed the future of connectivity with the biggest question mark being, “Who owns the customer now?” With connectivity technology advancements, OEMs will now have access to vehicle location data, driving habits, diagnostics, and, most importantly, customer data. In the past, OEMs have lacked customer data, since transactions happen at the dealer level. Connected vehicles present an equal part threat and opportunity to dealerships.
Digital Dealer attendees are generally the minority of progressive dealerships looking for emerging technologies or advanced learnings. I’m bullish on the automotive industry, more specifically dealerships and the people who fuel our local economies and communities. There are more variables in the future of automotive than ever. I believe dealers and OEMs can work closely together to combat upstart contenders for continued growth and sustainability.
And, although I didn’t get to go to Disneyworld, Digital Dealer East was an equally magical experience!
Want to learn how leading automotive brands are meeting today’s challenges with Invoca conversation intelligence? Check out these resources: