2020 marked a turning point for dealerships adopting a digital-first retail environment because technology improvements became essential to keep business moving forward. As we enter the second quarter of 2021, digital is proving its staying power. As consumer demand remains high, dealerships are finding improved efficiency and higher customer satisfaction in their digital workflows. Dealerships saw 73% more car shoppers starting their deal digitally in February 2021 compared to February 2020, according to data from Internal Consumer Use Data within Cox Automotive’s Product Analytics.
As digital workflow solutions evolve, they will continue to help dealerships and lenders meet consumer and marketplace demands.
Dealerships taking this change on with vigour are experiencing success. In fact, an overwhelming 85% of dealerships are conducting business outside of their physical location, according to the 2020 Cox Automotive COVID-19 Consumer and Dealer Impact Study. By giving consumers the option to execute processes digitally from any location, all parties involved benefit, including dealers and lenders.
Consumers appreciate the faster process. They’re saving more than 40 minutes of time in the dealership, which we believe contributed greatly to 74% of consumers being highly satisfied with the car-buying process — an all-time high rating, according to the 2021 Car Buyer Journey Study. When customers are highly satisfied with their experiences, that builds trust and confidence in the deal, giving dealers a greater chance for repeat business and referrals.
Retailers that have embraced digital are seeing other upsides as well – 64% of franchise dealers report a positive impact on their vehicle sales; 70% of retailers agree that digital retailing allows their staff to be more efficient with their time; and 67% of retailers are seeing customer relationships positively affected as well, according to the 2021 Digitization of End-to-End Retailing Study.
For lenders, allowing customers to contract digitally significantly reduces operating costs and allows for faster funding times compared to manual deals. One lender, John Garner, vice president of TCU Indirect Lending in Indianapolis, stated that by receiving loan documents digitally with no wait time, they can process deals within 15 minutes, which has a tremendous impact on their lending program.
Realizing these benefits has its challenges. Adopting to a digital-first retail environment comes with a learning curve in terms of technology and processes to allow for proper data flow and data integrity. This investment can be a hurdle for some organizations. State regulations can also create a barrier to digital adoption, however that is rapidly changing. As of now, 35 states allow retailers to use e-signatures for some or all titling documents.
Finally, retailers may experience a gap in staff skill sets as they move away from traditional manual methods. But, by placing an emphasis on the importance and value of digital adoption with existing employees, hiring the right people, and implementing ongoing, innovative training, dealerships can be better equipped to compete in an accelerated digital workflow environment. Ultimately, a multipronged focus on people and process can have a profound impact on profitability.
There is no looking back at this point. Consumers want digital options in their car-buying process, and dealerships and lenders that provide it will be the big winners. Digital is a vital piece to the puzzle that helps every part of auto retail ecosystem function better. As digital workflow solutions evolve, they will continue to help dealerships and lenders meet consumer and marketplace demands.
Cheryl Miller is vice president of Dealertrack F&I Solutions.
Originally posted on F&I and Showroom