Despite current economic conditions, the rate of technological change continues to grow at exponential rates. This is extremely important to your dealership because it ultimately affects the way consumers shop and make purchase decisions. If you don’t believe that, just think back to what most dealers knew about search engines long, long ago in 2003. Just over five years later, online search is an essential part of most shoppers’ behavior, and it was less than 10 years ago that people began to take online shopping seriously. Today an estimated 80 percent of automotive shoppers use the Internet in their search for vehicles. Increasingly, what worked 10, five or even three years ago doesn’t work today and certainly won’t work in the future.
According to the Organization for Economic Co-operation and Development, research and development (R&D) is "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.” While you’re probably not trying to change society with your dealership, you are certainly trying to survive and hopefully thrive in the current environment. It is essential to work with service providers who undertake the systematic work of R&D, particularly with marketing and technology providers. R&D is exceptionally important for marketing and technology because constant vigilance is required to stay ahead of competitors and understand consumers’ changing needs. In today’s environment, with some companies laying off employees, R&D can be an afterthought, if even a thought at all, yet the rate of change continues to accelerate, bringing automotive consumers’ expectations along with it.
The focus of successful R&D is not about creating the next widget; it is about understanding and anticipating consumers’ needs, and leveraging technology to best serve those needs. It is market-driven, rather than technology-driven. A service provider that dedicates significant resources to R&D can see where the future will be and is better able to be there when or before it arrives. A company that merely tries to keep up with change is reactive and will have difficulty when it comes to supplying your dealership with the best solutions to meet shoppers’ needs.
New products and services should always be developed with consumers in mind—what do they demand and what will they demand in the future? Programmers and other developers cannot be kept in isolation, creating products that demonstrate technical sophistication rather than market savvy. Just because the latest version of a software program has the biggest or the flashiest new feature doesn’t mean that new feature will enhance the customer experience. Make sure service providers work closely with the market and carefully evaluate consumer trends. The best companies hire R&D staff members with industry experience and market knowledge, not just technical skills.
R&D is also a reflection of a company’s ability to change, adapt and invest profits into the future of the business. Companies that make this investment are forward-looking and focused on long-term strategy, rather than short-term profit. In the U.S., the average high-tech firm might spend 7 percent on R&D, just to stay in the game. The average company is not, however, the biggest winner. To lead the pack, more progressive companies spend 15percent or more on R&D to stay in the lead and keep your dealership ahead of the competition. Merely keeping up with technological change is not enough for sustainable competitive advantage. The best businesses stay ahead of emerging changes, and the very best actually drive those changes.
If you think, for example, that you’re saving the dealership money by going with the cheapest Web site available, over the long-term, you’re probably not. You may save a few dollars on the immediate outgoing checks, but that will probably be the extent of the benefit. The dollars saved will pale in comparison to dollars lost in lead generation from a provider that doesn’t keep ahead of the latest trends. The bottom line is that it’s more important than ever to have competitive advantage, and your dealership is at great risk if you do not partner with marketing and technology providers that stay ahead of the R&D curve.
Vol 6, Issue 3
A record year for dealer participation programs pushed CNA National past the $500 million mark in distributions since the company’s inception.