LEAPING INTO DIGITAL RETAIL
Trust and transparency
A new way of building customer relationships
Building opportunities for 2020 and beyond
As highlighted so far in this section, the digital shift that was slowly taking place in the industry prior to 2020 received an adrenalin shot this year. As a result of COVID-19, and other global trends, OEMs and dealer groups have been galvanised into action, promoting a much more rapid adoption of the digital customer journey.
Retailers found innovative ways to keep their businesses operating throughout various social distancing and lockdown restrictions, working with their customers and community to deliver real value. Digital retail is firmly on the agenda.
Consumers have become empowered through the wealth of online transactions completed over recent months and are beginning to gain confidence to test out the automotive digital experience. As an industry, it is important to put in place the tools and processes to support customers and consumers in the right way.
There will always be those who value the comfort and social interaction of engaging with humans, particularly when dealing with a transaction that is complex or emotionally sensitive. But, equally, there are significant benefits to be had when it comes to providing consumers with options. It is important to present a seamless experience that takes consumers between channels without asking for information on repeat.
Two key principles to think about in the era of digital retail are trust and transparency. Consumers want to know that if they make the wrong decision, they can put it right with minimal hassle and little to no cost. They need to trust that the information they are getting is correct and see a transparent process to manage any issues which may arise.
“Part-exchanges have the potential to cause friction. Our mission is to improve online and in-store vehicle transactions for everyone. By removing the barriers, implementing a transparent process, and enabling a frictionless experience, we create an environment in which trust is at the heart of the relationship."
Paul Humphreys, Managing Director of Car Buying and Mobility at Cox Automotive
The part-exchange process
More than 50% of vehicle transactions have a part-exchange attached to them. As the industry drives towards e-commerce, and digital retailing becomes core, being able to handle part-exchange vehicles remotely is critical to the success of the journey. Cynicism and a lack of trust may historically have led dealers to require physical appraisals while consumers often sought out a second opinion.
This created unnecessary friction in what should be the exciting experience of buying a new car. However, when transparency is added to the process, that friction evaporates. Cox Automotive, with its large-scale auction and vehicle services businesses is well placed to support the change.
The Cox Automotive eVA suite of products is an API-based tool that ingests market data, provides tools for retailers to assess the condition of the vehicle, and delivers trade and underwritten values. Cox Automotive can then use its operational capability to uplift the trade-in and dispose of it with no risk to the retailer. Alternatively, the retailer can retain the trade in vehicle as retail stock. As eVA is surfaced via APIs, it can be easily utilised by retailers’ systems and seamlessly integrated into the consumer journey.
Empower the consumer to appraise their own vehicle, using smart technology and data-driven insights, and everyone starts to trust the valuations. What used to be a painful experience is now quick and objective. The dealer is free to focus on the consumer’s new car journey, while the consumer avoids a stress point. With greater than 99% average accuracy rating, everyone can be confident in the process.
Clearly, there is a balance to be struck. Enough questions need to be asked during the appraisal that the information is gained to make a robust valuation but not so many that the consumer switches off and goes elsewhere. Interestingly, consumers tend to under rather than over-represent their vehicle. As such, more important questions tend to focus on the quirks which can impact prices achieved at auction, such as a panoramic sunroof.
To be both transparent and accurate in valuations, you need to see the entire value chain – what the wholesaler pays for the vehicle, what the dealer pays, what they advertise it for and how much they actually make at the end of the process. On top of the data, you also need to have market knowledge and understand the quirks and seasonal inputs which can make a big difference to the price achieved.