The car-buying process has evolved, but while many customers have changed the way they shop for cars, a lot of dealerships have yet to catch up. Many dealers still use outdated, outmoded inventory management techniques, and that can make or break your bottom line.
At MAXDigital, we provide cutting edge inventory management software to car dealers. Our definition of inventory management is making sure you have the right vehicle at the right time with the right price.
Keep reading to learn about three ways MAXDigital can solve your inventory management woes.
Stock the Right Cars to Offer Customers Quality and Value
Today’s consumers are looking for a transparent, consistent, and simple car buying experience. The way you stock your inventory now might not allow for that.
Cars are unique in the retail space for the nearly limitless options available to customers. Countless models come in different colors, different body styles, different trims, and so on. How do you know which cars to have on your lot? You might stock the model a customer is interested in, but if a competing dealership across town has the same model with the color and engine option they want, you’re going to lose that sale.
Your existing inventory management system isn’t helping you fix that, but MAXDigital can. Our FirstLook platform analyzes data from your market to tell you exactly which cars are in demand at any given moment. We can also look at your own historical data to tell you what models you have proven success selling.
Our system will make your dealership more effective. If a customer submits a lead on one of your cars, you’ll be able to respond with absolute certainty about where it is and what condition it’s in.
FirstLook can also eliminate latency. You don’t want to be in a situation where you just got the exact car someone wants on a trade-in but it takes a week to put it in your system. Or worse, when a customer asks about a car that’s been sold but is still listed on your website. We make it easy to get cars into your system as soon as you acquire them, and we get them out of your system as soon as their sold.
Set Transparent Prices with MAXDigital’s Acquisition and Pricing Tools
When a customer is browsing your inventory, they expect to see the price of each car. If they ask about it, it should be obvious where that price comes from.
The value of data can’t be underestimated in the digital age of car-buying. Our FirstLook platform comes with powerful tools that help you appraise and price your inventory. FirstLook is your best friend when you’re trying to close a trade-in while maintaining a high gross profit. It’s also there when you want to decide how much to put into reconditioning the vehicle and when you’re setting a fair market value to offer the next owner.
Our inventory management system makes use of real-time market and wholesale data from a comprehensive and reliable data set so that you know exactly how much to charge for a given vehicle. We not only take into account local prices, but regional prices as well. It’s important to realize that a customer who will drive 25 miles for a good deal would drive 250 miles for a great deal. With FirstLook, you can find that sweet spot that makes the deal great for both of you.
It’s important that this data is real-time because it isn’t just about offering the right car at the right price. Timing is everything, too, and auto dealers have to be sensitive to how long a car is on their lot. You’ll know exactly when it’s better to wholesale a trade-in instead of leaving it in your inventory where it’s just taking up space.
With Great Inventory Management Comes Great Merchandising
Selling cars based on price alone isn’t enough anymore. You also have to demonstrate your inventory’s value to your customers, and you can’t do that if you settle for generic vehicle detail pages (VDPs).
“Is this car right for me?”
“Am I buying a lemon?”
“Why is this car better than the other one?”
“Is this a fair price?”
“Why should I buy from this dealer?”
These are the questions your consumers are asking, and it’s these questions that a VDP should answer. There’s no point telling people a car is blue if you put pictures of it on the page. Instead tell them what features and options packages come in the car. You should give as detailed a vehicle history report as you can manage. Make sure everything worth knowing about a vehicle is listed online because that’s where consumers are making their decisions, not in your showroom.
It’s because of this that upgrading your inventory management system is only the start of adapting to the digital age. You also have to change the way you market to consumers. We know how to help you there too.
Give your customer the information that provides the vehicle’s value at every stage of the sales process, including in the showroom, and highlight the reasons you bought that car. You priced it based on its value, now defend that price.
We encourage you to schedule a demo with us to see how our full suite of software works together for you. If you need to start somewhere, remember: right car, right time, right price.
In recent years, the amount of people participating in mobile commerce has increased as the number of people who use desktops or laptops to shop is in decline. The tipping point came in August 2014 when 51% of retail traffic stemmed from smartphones and tablets. Smartphones are also not going anywhere anytime soon, with a projected 2.08 billion people using smartphones daily in 2016.
With over a third of the world’s population slated to own a smartphone by 2017, what is your dealership doing to capture the attention of literally ⅓ of the world?
Understanding mobile commerce trends and shopping behavior can give your dealership an advantage over the competition down the street who is afraid of mobile users and does nothing to relate to customers already shopping online. Learn how to leverage mobile commercial trends to win consumers during the entire shopping process.
Definition of Mobile Commerce and How Your Dealership Can Leverage Trends
You may have an understanding of mobile commerce, but what is it exactly? When people use a mobile device, such as smartphones or tablets, to purchase goods or services through an online transaction over a wireless Internet connection, you have the definition of mobile commerce.
One trend that seems here to stay is that customers want to engage with your brand across social platforms. In fact, 82% of customers consult their smartphones inside your store when making purchase decisions (also called “showrooming”). And before they even step foot in your location, 90% of customers will read reviews online to influence their decision to make a visit, let alone a purchase.
If you are not monitoring your online reputation, responding to reviews on social media sites like Facebook, or even neglect to have any presence at all on social media, you are shutting out potential customers and sending a signal that you don’t care about them. Even if it is not true, it is crucial you interact with potential customers online.
Another trend is that customers are rarely separated from their mobile devices. A whopping 9 out of 10 customers interviewed in a study stated they kept their phones within reach of them 24/7. This means when a customer is thinking of buying a car, he or she will turn to a mobile device first for research rather than walking into a dealership to ask questions.
Customers shopping on mobile devices expect instant results. 60% of mobile users expect a site to load in 3 seconds or fewer, and 74% are willing to wait only 5 seconds for a site to load before leaving to search for another site. If your dealership is delivering a poor user experience, you will definitely lose customers.
How Dealerships Can Embrace Mobile Commerce Trends
- Know and manage your online reputation. The conversation is occurring with your business among customers online whether you realize it or not, so you should embrace it and interact with your customers.
- Provide a fantastic user experience. Make sure your website scales well, loads quickly on a mobile device, and is easy to navigate from a smartphone or a tablet. And above all, your site must have the right tools on it to make their experience at your dealership exceptional.
- Be proactive in keeping customers in the dealership by providing a mobile transparent vehicle pricing tool they’ll be searching for anyway.
- Find ways to establish trust with modern car shoppers. If you keep viewing mobile commerce trends in a negative light, you will always experience some degree of an “Us v. Them” mentality. But if you embrace mobile commerce trends, you can meet shoppers where they are and easily exceed their expectations.
- Turn your showroom into a digital experience by utilizing tools that help your dealership with appraisal, stocking, and pricing.
By staying ahead of mobile commerce trends, you can provide a seamless vehicle purchasing experience while embracing mobile users, not fighting trends that are here to stay. What are some mobile commerce trends you have noticed and leveraged successfully in your dealership? We’d love to continue that conversation.
Expertise remains a keystone of the MAXDigital philosophy. And to maintain a level of commitment for giving our clients and partners the best insight and materials, we must work with leading minds in key areas of our business. That’s why we are proud to announce a new addition to our impressive roster …
Benjamin D. Freedman, an experienced automotive digital marketing professional, has joined our team in Chicago. He’ll take on the role of Senior Sales Solutions Engineer, working under the direction of our Senior Vice President of Marketing and Sales, Mr. Brad Kruse. We selected Benjamin for this role based on the results he created within organizations such as the Minneapolis-based Morrie’s Automotive Group, Seattle-based Car Pros Automotive Group, and PCG Consulting.
With nearly a decade of digital marketing and Internet sales / BDC management experience, Mr. Freedman understands today’s competitive automotive retail environment. He also recognizes the critical role data plays inside and outside of a dealership, so his methodology includes assimilating data and making it actionable to leverage it as a key resource for generating a favorable ROI.
When asked why he chose to join the MAXDigital team, Benjamin said, “MAXDigital is growing rapidly, and my ambitions align with their brand message and product set. With data and technology going hand-in-hand, the products offered by MAXDigital not only surpass those of the competition, but do so more efficiently and at much better value.”
As a Sr. Sales Engineer, Benjamin will develop strategies, as well as product and process implementation, to facilitate growth for both new and existing MAXDigital customers. His knowledge and passion for the retail automotive industry coupled with his in-dealership experience will quickly become an asset to our clients’ operations.
With all of that being said, we ask that you give a warm welcome to Benjamin Freedman.
The National Automobile Dealers Association (NADA) will host another incredible convention in Las Vegas, Nevada, from March 31st until April 3rd. Throughout the course of the event, you can find us at Booth 1923C to discover how our expert solutions can help you increase gross margin profits.
In addition to hosting many great dealer representative from across the nation at our booth, Patrick McMullen, Senior Vice President of Customer Success, will lead one of the many great educational sessions you’ll have the opportunity to watch:
The Art and Science of Selling on Value vs. Price
- Friday, April 1st, 2016
- 10:30 am – 11:45 am
Patrick will delve into the artistry, formulas, and data about selling on your inventory’s value versus its listed prices. So, in anticipation of his speech, we wanted to provide you some insight about this powerful methodology as well as preview some of the details he will discuss—a demonstration of Patrick’s expertise acquired from more than a decade’s worth of managerial experience in the automotive industry. Here are some answers he provided based off of questions many dealers ask when looking toward the future.
How can dealerships manage the informed consumer?
Previous to the Internet revolution, consumers would visit approximately 5-6 dealerships and come to a decision based on the information, including prices, they learned. This is not the case anymore.
The modern consumer conducts all research and shopping online, then visits only 1 or 2 dealerships. This means they’re yours to lose.
Equipped with a ton of information acquired from months of research and viewing hundreds of cars, these shoppers come to your showroom more informed than ever before. So, that begs the initial question: how do you manage them?
It’s vital that your brand specialists have access to immediate resources and information that make them instant experts for every single car. One of the most effective ways to accomplish this is by maintaining a comprehensive digital showroom that displays all high-value equipment, packages, and all other information that makes the specific car unique.
“Why is this car better than the others?” This is one of the primary questions consumers now ask. A digital showroom will help you build quality and value in the vehicle, as well as demonstrate transparency in its listed price.
Did you know that 92% of consumers don’t trust car salespeople?
It’s true. The vast majority of shoppers walk onto your lot without trusting you or your brand specialists. These consumers show up with their smartphones in hand and shop. If you do not provide sufficient information online, they’ll go elsewhere because they discovered more transparency with a different dealer … while standing on your lot.
What other mobile trends are on the horizon?
There will come a time, at some point in the future, when consumers order and shop for cars purely online with options like Carvana. One of the main catalysts for this shift in behavior is that many dealership lack a proper product that enables them to share information the customer needs and wants.
Consumers will have trusted sites they turn to, so it’s important that brick-and-mortar dealerships become the authority—so shoppers don’t fall into the confined funnel of where Google sends them. Instead, they come directly to you.
What is the coming “tsunami” of used cars?
The evidence is everywhere. CarMax has warned of lower prices across the board because of a rise in supply. Other resources are coming to data-driven conclusions that the industry will hit a bubble, so it’s paramount that dealers know what used cars to acquire and how to price them for their specific market.
Take a moment to digest this: prior to 2008, there were 83-84 million units between the ages of 0-5 years old that were potentially available to dealers for sale. With the economic downturn, the fictional “Used Car Factory” was shut down because of limited new car sales and leases. But with some general economic recovery, dealerships started selling new cars again— all credible research indicates that a huge influx of used cars coming off leases will be entering the market in 2016, which will create further pressure on used car sales and margins.
We have already seen early signs of this happening from 2013-2015, when margins were stagnant. As used cars inundate the market this year, indicators (and frankly, common sense) suggest used car margins will suffer and trend down to 2008 levels.
Here’s further information to substantiate this, according to NADA:
- In 2008, used car front end gross profits were just $1,619.
- In 2015, used car front end gross profits hit $2,372.
That’s a $753 per used car difference in gross profits. Imagine what the difference could become when there is a record number of saleable used vehicles—profits level out.
When most dealers are asked if they can afford an approximate $600 drop in front end gross profits, they say “No.” What’s your answer?
What can dealers do to combat this potential loss in gross profits?
How does this dynamic play out in the numbers? It’s not even close.
79% of consumers want value and quality at a fair price. Only 21% of consumers buy primarily on price.
So the ultimate question is, how do you want to build your business?
If you want build your business on the 21% of the market buying on price alone, we wish you luck. If, instead, you are looking to build your business around the 79% of consumers who want value and quality at a fair price, our experience in the industry has shown that there are two specific areas in which your dealership must excel:
- Addressing the key issues on the mind of today’s consumers.
- Building trust throughout the entire marketing and selling process.
It’s also important to hold that gross profit by distinguishing yourself among the competition by closing the gap between your dealership’s online presence and in-store presence.
- Online presence is built from ad descriptions and other tools on the website that help with conversions. There should be a ton of information that gives customers the feeling that you’re an authority as well as comfort that you’re offering it at a fair price.
- In-store presence is built from what consumers see on the lot, the price the brand specialist refers to for the vehicle, and how the general interaction develops while the consumer is on your lot.
In other words, the old A-B-C (“Always Be Closing”) mentality from five to six years ago doesn’t work. So dealers are building their online presence, realizing the value in it, and starting to work on bridging the gap between the two experiences.
And you primarily do this by leveling the playing with by transforming your brand specialists into product experts. This way, there is consistent pricing, information, knowledge, and offers from the first VDP view on the website to signing the agreement at the end of the process.
What are some methods and tools that can help prevent double discounting?
So, let’s first establish what a double discount is …
With the massive amount of information that is available online, today’s consumers are better armed than ever before, and they come to the dealership differently than in the past.
Clearly (to use a few terms from the past) because of “market pricing,” consumers have already gotten the “first pencil” before they even stepped foot on a dealer’s lot.
Yet, once they get to the lot, today’s consumers still expect to “do battle” and “fight” for a second “pencil.” It’s that second pencil, that second bite at the apple, that is especially dangerous for dealers.
MAXDigital has put a name on this nasty, margin destroying dynamic: the “double discount.” Think about it. Just 10 year ago, dealers would price cars artificially high because of the lack of transparency in pricing. To be blunt, consumers didn’t know any better. Since the price was artificially high, dealers would offer a discount on the lot—and consumers thought they were getting a good deal.
Times have changed. Market-pricing is ubiquitous. Dealers have adapted the way they price. But there’s a problem …
Dealers have not adapted the way they sell.
So they don’t give themselves a fighting chance to communicate value and keep gross margins high.
The good news is that there is a better way.
MAXDigital has studied all of this in detail and has unique insights to help dealers understand how to make sense of this.
The key to solving the “double discount” is really understanding consumers and the way they gather and process information during their searching and buying processes.
The fact is that today’s car buyers are very different than they were 10 years ago.
What are the primary behaviors of a successful dealership?
For 2016 and beyond, successful dealers do two things up front: (1) close deals without discounting; (2) minimize the discount if one has to be be given to close it.
How? With three primary behaviors:
- Proactively build value in every single car.
- Proactively build trust in the process.
- Proactively build value in the price.
Do those three things and you’ll build a relationship with every customer. By being proactive with these qualities—every time and through the whole process—you’ll set yourself up to discount less, or not at all, compared to those dealers that do not do this.
Learn Modern Selling Techniques at NADA 2016 in Las Vegas, Nevada
The sudden pervasiveness of information as a result of the digital age has placed today’s car shopper in the driver’s seat. They are armed with information that appears at the tips of their fingers, allowing them to become more meticulous and surgical during the buying process.
This tectonic shift coerces brand specialists at many dealerships to discount the price of a vehicle on the lot that had been discounted online in the first place. When this is done, you get LOWER GROSS PROFITS. Couple that with the coming tsunami of used cars onto the market to forge a disastrous formula.
Patrick McMullen, at NADA 2016, will teach you how to keep your sales teams equipped and trained to stay on top of their game and win consumers. During his educational session, you’ll:
- Study the insights from proprietary consumer behavior research
- Explore the consumer buying psyche
- Discuss/workshop the strategies and tactics to win the sale and retain gross profit.
- Build quality, value, and transparency from the moment consumers see your content.
- Answer pivotal consumer questions.
- Why this make and model?
- Why this dealership?
- Why this specific car?
Transform Your Used Car Inventory into “Purple Cows”!
It’s an old marketing phrase that means you need to distinguish yourself from a sea of sameness. This holds true in our industry today more than ever. You must set YOUR customer experience apart from the competition starting online and ending in your dealership.
So learn how to answer those pivotal consumer queries and build relationships with a fluid process from online to purchase utilizing the same message, quality, value, and trust—a single brand voice—to win in your market.
Coming to NADA in Las Vegas?
Not only can you take the opportunity to learn more about our products prior to the upcoming convention, there is the opportunity to register for and attend a no obligation MAXDigital product demonstration at our booth, #1923C, and receive a $100 Visa gift card.
Then, you can hang out at the MAXDigital sports bar and take advantage of our NADA Special Pricing! If you’ve never come by the MAXDigital booth before, this is the year to learn and win at NADA.
So register today!
When customers arrive at your showroom, don’t be surprised if the first thing they do is pull out their smartphone. Half of all people are using a mobile device to help them through the car buying process, and the same people are using their phones while they’re on your lot.
But what are they looking for?
What are they doing once they find it?
Recent studies of cell phone use at a dealership show that what customers find—or what they don’t find—might cause them to turn around and walk out the door.
Transparent Vehicle Pricing Tools Can Keep Customers on Your Lot
A recent Cars.com Insights study found that mobile research causes consumers to visit additional dealerships. Overall, 72% of shoppers using a mobile device on the lot are more likely to visit additional dealerships. As many as 62% of customers who used a mobile device while in a showroom decided to visit another store the same day.
It’s clear these people are ready to buy a car, but what are they looking for on their phone that is causing them to take their business elsewhere? How can you go above and beyond to be a customer’s first and last point of interaction?
Data shows most people are trying to compare prices and may be drawn to another dealership because they think they can get a better deal. They’re not just “showrooming,” though. Customers will also look at trusted third parties like Kelley Blue Book, Edmunds.com, and TrueCar to estimate car values and calculate what their trade-in is worth.
If you don’t want that to happen, the solution is to give your customers the resources they want on your website and to make sure those tools work well in mobile browsers. You need to give consumers a seamless shopping experience.
That means providing clear explanations for all pricing questions. Your digital showroom should offer as many answers as the physical one. Customers want to know why the listed price differs from the MSRP. They want to know why two used cars of the same make and year have different prices. They want to know how you appraised the value of their trade-in.
With proper vehicle merchandising, you can answer all of these questions and more. With one touch, your customers should be able to pull up all the information they need on a car, including equipment, highlights, vehicle history, and more. This sort of information gives a snapshot of the vehicle that customers will understand.
By being transparent with your customers, you will earn their trust and prevent them from seeking a better deal somewhere else.
The Price is Right with a Solid Inventory Management Platform
The thing about giving your customers the right vehicle pricing tools is that you also have to give them the right price. As Google puts it, each customer will come to that “Am-I-getting-a-deal” moment, and when that time comes, you and your sales team need to be consistent.
Consistency comes from good data and advanced analytics, which you can get from an inventory management platform designed around the current automotive ecosystem. That kind of platform will help you answer questions about stocking, acquisition/appraisal, and pricing.
- What are the best selling cars in your market?
- Which cars does your store move fastest?
- What are your strengths?
You should know which cars the customers in your community are looking for before they’re even in the hunt for a car.
- How much should a used car sell for?
- How much can you offer for that trade-in that will close the deal while still maximizing your profit?
Appraisal tools that are tapped into current industry data and trends will make sure your dealership doesn’t lose out.
Customers are always going to wonder if they’re getting a good deal, and a combination of transparency and consistency can help you convince them that they are. The best deals are the ones that are as good for you as they are for your customer, which means you need tools that benefit both of you.
If you don’t think your dealership has those essential vehicle pricing tools, it’s never too late to seek help.