Roundtable Q&A: The basics of digital marketing

In the wake of the pandemic, digitalized sales processes have quickly become the norm, not the exception, at Canadian dealerships. Yet some dealers still may find it difficult to navigate the myriad of issues involved. To bring some clarity to these issues, Automotive News Canada asked three industry experts for their take on digital retailing: Chelsea O’Donoghue from Cox Automotive Canada, Gino Caputo from TD Auto Finance Canada, and Brandi Lindgren from Diskloz Technologies Corp.

Q: How do you define digital retailing – what are the key components?

Chelsea O’Donoghue: Digital retailing is about providing infrastructure for consumers, so they have the option to complete components of their vehicle purchase – or even the entire transaction – online. This may include all or any combination of the following steps: Payment calculation, trade evaluation (estimated or guaranteed value), selection of accessories and F&I products, credit application and approval, digital contracting and e-signature.

While elements of the process may be digital, it still requires a physical component to support the digital journey. Nurturing prospective customers is part of this journey. Dealerships need technology to make it easier to manage those relationships and convert those sales, then establish a service relationship during vehicle ownership.

Gino Caputo: Digital retailing is a tool that helps enhance and simplify the vehicle-buying journey. Our customers want easy access to information, and they want dealers and financial institutions to provide more transparency in the vehicle-buying process. They want to complete transactions digitally. Digital retailing isn’t about replacing the current process; it’s about meeting customers where they want to be and creating a seamless experience for them.

Brandi Lindgren: It all comes down to the user experience. Both buyer and seller have outgrown the generic prior platforms, so change is required to stay current with new consumer expectations. With effective digital retailing, every minute detail works behind the scenes to create the ultimate user experience where clients feel they can safely make transactions digitally, but also are impressed and possibly even prefer it.

Q: From your perspective, how far along the digital-retail road have we traveled – where is the industry at in terms of offering a completely digital sales experience?

Caputo: As an industry, we’re getting there. Before the pandemic, we were thinking digitally and established a digital framework. But the pandemic really accelerated the pace and provided a clear path forward. This meant that industry-wide, we had to adapt to a digital world where traditional – typically in-person – tools were rendered obsolete or unavailable.

Lindgren: While change is crucial, it is rarely immediate. Dealers won’t go completely digital until manufacturer’s dictate it. But for now, it’s not about completely switching, it’s about creating digital tools for better human interaction. There have been exponential strides made in innovative offerings. But our measurements, resources and tools should be inspected nearly as often as the results themselves.

O’Donoghue: The pandemic accelerated the desire for digital retail in Canada. In fact, we have the ability today to facilitate the entire end-to-end vehicle purchase online from a technical perspective. But before it ever becomes totally digital, OEMs, dealers, lenders, and consumers must become comfortable about adopting all parts of the online purchasing process. Even though the technology exists, I believe a hybrid model will become common, where consumers have the convenience and flexibility to complete their preference of steps from home. The dealership still will be integral for the test-drive experience, for those that want to negotiate and for the post-purchase service relationship.

Q: Who is pushing digital retail? Is it consumers, solution providers, dealers, OEM’s, outside entities or some or all the above?

Lindgren: All the above have influenced the demand and will continue to do so. But the primary instigator of change here is what I call “COVID innovation.“ When COVID originated, dealership responses ranged from completely shutting down to absolutely ramping up. It restructured our thoughts and processes faster than any consumer, provider or OEM could have.

O’Donoghue: Consumers are really driving the demand for digital retail in Canada. Shoppers want to complete part of the car buying process online. OEMs, dealers, and marketplaces like Kijiji are adapting to meet those demands. Inventory shortages also are a large contributor as OEMs look to provide consumers with options to order their new vehicles when there may not be new inventory on the lot to sell. I also believe that to futureproof our dealerships, the customer journey and their experience should be the primary focus. Dealerships need a seamless end-to-end retailing solution that enables consumers to purchase vehicles online. Dealers will use it to merge online tools with their traditional in-person customer service to serve all customers better.

Caputo: All the above. Everyone in the industry is preparing and building towards a digital future and all parties must remain flexible and adapt to how the digital experience evolves. Our goal at TD Auto Finance is to support our dealers, OEM partners and our customers by continuing to look for ways to enhance the car-buying experience.

Q: Are incompatible software systems an obstacle to integrating digital-retail systems? If so, what is the solution, given the investments already made in these platforms?

O’Donoghue: I think it is the other way around. The onus should be on the digital-retailing platform to integrate with all software systems a dealership uses to be successful. Part of that is ensuring the new solution is flexible enough to accommodate changing technologies or legacy systems. Automotive retailing is changing with unprecedented speed and magnitude, driven by shifting customer expectations, new mobility offerings and technological disruptions such as digitalization, vehicle connectivity and electrification. Everyone needs to be ready and adaptable.

Caputo: Integrating digital-retail systems is a journey as well as an investment. It takes time and money to develop a full end-to-end digital solution and the technology can become obsolete very quickly, so compatibility is critical. One key to success when entering the digital automotive space is the ability to port into different systems. Incremental innovations that deliver value in small, easy-to-deploy enhancements has proven to be a winning approach.

Lindgren: Incompatible/siloed software is only an obstacle if you make it one. It is not “cheaper to keep ‘er” and staying loyal to a system that wasn’t created with today’s buyer or seller in mind can be far more costly than any prior investment. Diskloz wasn’t created to be a dealer’s everything – though it can be. We’re inexpensive enough to complement your processes, not necessarily change or replace them. Uncover your store’s needs and educate yourself on the tools available to fulfill them.

Q: Is converting to digital-retail systems an expensive proposition? What can an average dealership expect to spend?

Caputo: Converting to a digital-retail system can be expensive and time-consuming. But the investment can be worth it if it’s done well. A minimum viable product type approach with small incremental investments ensures you can test, adapt and extract the most value.

Lindgren: It’s expensive to keep a system that no longer supports your infrastructure. When exploring options, look for software that provides connectivity and process with an emphasis on presentation and the user experience. Smart digital retailing solutions provide features like language translation, activity management and central communications, while making the experience and processes more efficient. Besides inevitably increasing profit, the benefits from streamlining the moving parts of sales, finance and service will far outweigh the expense. Diskloz subscriptions range from $199-$1299 pending need & store size.

O’Donoghue: It shouldn’t be expensive. A digital-retailing solution should help you sell more cars and deliver a return on investment that more than pays for itself. It helps feed the dealership with leads that convert to sales and cultivates customer relationships. For a full solution, the average dealership should expect to spend anywhere from $1,000 to $1,600 a month.

Q: Will there always be a place for brick-and-mortar dealerships or will digital retailing eventually render them obsolete?

Lindgren: Digital retailing isn’t here to replace brick-and-mortar dealerships, it’s here to elevate them. Failure to be honest, fair, and ready for delivery has initiated the demand for change.

O’Donoghue: I think there will always be a need for a physical dealership, but the role of the dealership will change. Things like test drives, vehicle delivery and service will always need a physical dealership. With the inventory challenges the industry has been experiencing and the shift towards customers ordering vehicles from the OEMs, dealerships may eventually no longer need the traditional lot size for storage. For example, many dealerships in the greater Toronto area are re-engineering their physical footprints. You see multiple floors where customers can experience different aspects of purchasing, accessorizing, taking delivery or servicing a vehicle.

Caputo: Digital retailing is a tool that will help with the overall customer experience. It will enhance a dealership’s sales process, not disrupt it, or make it obsolete. At TD Auto Finance, we know the importance in investing in technology and designs that will improve the automotive-finance experience for the end user, without disrupting the status quo of our dealer and OEM partners. As an industry, our aim should always be to strike a good balance between our customers and our partners.

Q: What are some key common factors/traits you see at dealerships that have successfully transitioned to digital sales processes?

O’Donoghue: For dealerships to succeed, all departments need to embrace digital retailing and be ready to connect in-person with customers at any point during the purchasing journey, whether that be calculating the payment or signing a contract. When all staff – from reception to upper management – are committed to the changes in process, dealerships tend to be more successful. Embracing the digital process allows dealerships to focus on the important customer experience while the technology handles the transactions to streamline the process. Those that are truly adaptable will win.

Caputo: Dealerships that have successfully transitioned to digital sales process have a few things in common. They use the technology to enhance their sales processes, not replace them. They make use of tools and systems that allow customers to source and buy vehicles on their own timeline, without completely removing the need for face-to-face interactions. They’re willing to look at friction points in the customer journey and see where technology can provide a better overall experience. And finally, successful dealers are open to change.

Lindgren: You can only accomplish pioneering change by recognizing downfalls and researching solutions to solve them, combined with a willingness to change and the discipline to follow through. Solutions like Diskloz keep staff and process accountable with features that streamline their jobs while making it easier to recognize and act on opportunities. My final advice for ultimate success and online validation is to have a process for collecting and exploiting client testimonials, it is invaluable!

ABOUT THE PANELISTS

CHELSEA O’DONOGHUE
Director of OEM Partnerships and Dealer Solutions,
Cox Automotive Canada
Chelsea O’Donoghue is the director of OEM partnerships and dealer solutions for Cox Automotive Canada, where she has supported manufacturers, vendor partners and dealerships as they transition into digital retailing.

GINO CAPUTO
Senior Vice President and Head of TD Auto Finance Canada
Gino Caputo is senior vice president and head of TD Auto Finance Canada, a leading full-spectrum auto lender. He has more than 26 years of experience in retail and commercial banking, product and risk management and strategy and transformation.

BRANDI LINDGREN
Director of Development and Support, Diskloz Technologies Corp.
Brandi Lindgren is Director of Development and Support for Diskloz Technologies Corp. She has more than 25 years of experience in the automotive industry, including F&I and general sales management, lending and consulting.