4 Predictions That Will Affect Car Dealer Performance in 2015

2015 Automotive DealerRefresh Prediction

It’s time to get the band back together for another round of predicting the future of automotive marketing, technology and consumer behavior for 2015. This is one of my favorite annual posts as it provides the opportunity to share my vision for all of the things I love about our business.

As I gathered my thoughts for this post, I kept coming back to two themes for dealership performance this year: Growth and Simplicity – as in a maturation of our activities and efforts. We have all experienced a flurry of new products and services over the past couple of years. I get a sense that we have reached a point of information obesity and are ready to finally to trim the excess. This year will be more about understanding the customer and how dealers can make better connections based on the unique experiences they provide, versus simply plugging another new tool into a fragmented array of dealership services.

Let’s get started…

Mobile Consumer Behavior & Traffic Activity Will Shift: Geo-Targeted content, Hyper-local offers, NFC & Beacons.

Mobile traffic finally eclipsed desktop traffic toward the end of 2014 and won’t slow down. The most significant change will come from phablet traffic – devices with screens larger than 5 inches. Traffic to dealership websites from phablets could exceed 25% in 2015.

This means dealers should review their existing mobile site user experience. Google has already indicated mobile health as part of their ranking criteria. If your site isn’t responsive, this should be a wake up call for the items that you’re displaying on your mobile site. This is an opportunity to provide more rich content such as vehicle reviews, specials, comparison content and especially more videos.

Mobile phones will also provide greater contextual awareness. While mobile search will continue to explode, a newer segment of targeted mobile ads and content delivery will emerge. Geo-targeted and hyper-local mobile targeting (within 1 mile) will provide more consumers than ever before with relevant offers based on their location and prior behaviors. Watch the major retailers as they set the bar for this, it’ll quickly flow into other market segments and I believe dealership showrooms are ripe for this experience. Low-frequency bluetooth beacons within the dealership and/or the lot can provide even more relevant information within 60 feet. (A solid showrooming defense play) I see geo-targeting solution providers like AutomotionTV helping push this activity to a new level as well.

Watch out for in increased amount of consumers using their Google Wallet and Apple Pay. NFC is finally a real thing and people are actually using it. There are currently 220,000 merchants with NFC enabled. However, there are 9 million total merchants in the US currently. The adoption rate for retailer NFC usage will finally change significantly in 2015 as merchants are required to accept EMV credit cards, thus creating a spike in NFC enabled equipment, creating greater usage. EMV’s are smart credit cards which prevent fraud by authenticating the sale using integrated circuits. Retailers who can’t support these cards by October 2015 will be liable for any usage of lost and/or stolen credit cards.

Another huge opportunity for all retailers, including car dealers, is the ability to leverage digital loyalty programs. Users store their loyalty membership info within their digital wallets, allowing retailers to push relevant offers to them. These alternative delivery methods open the door for improved customer communication, greater customer loyalty and more business.

Wearables Will Create A New Layer of Mobile Activity and Data

The US wearable market is poised to grow approximately 40% over the next five years. This includes several types of wearables: smart glasses, cameras, smart watches, healthcare, sports and activity trackers, and 3D motion trackers. The primary device categories to lead the push will be healthcare wearables, smart glasses, and smart watches. This is the one segment where we’ll see the greatest acceptance and understanding as we begin to get more comfortable with their appearance and most important, the personal benefits they provide us. Glasses won’t become a consumer product, rather a behind the scenes, enterprise experience.

Dozens of brands of smart watches already adorn close to 20 million US user’s wrists. The US makes up about 35%+ of the global smart watch market. The real change in usage and mass acceptance will happen early this year with the introduction of the Apple Watch. I’m predicting more than 15 million units will be sold in 2015. (George Nenni bet me less than 10 million. Looking forward to that steak dinner George.) Keep in mind, Android versions such as the Moto 360 will also contribute to this increase – as well as fueling the OS wars even more.

More smart watch users will create different local search discovery opportunities as well. One of the key functions of the smart watch is messaging – glanceable marketing. New permission-based marketing efforts and opt-in notifications (think CRM) will allow retailers to provide additional targeted messages. Remember, this entire segment is about time – or the ability to create the perception of time for the user. Getting more of the info we want and staying connected to the things most important to us are a priority. Customers getting smart watch alerts about pricing, service info and coupons is a real possibility in 2015.

Users will also be able to wave their smart watch over a sensor to receive coupons and discounts. More proximity based notifications will be available to these users. Also, local voice search will continue to grow as a viable alternative. Apple’s default search engine for Siri is Bing, so optimizing your business listing within Bing local search is definitely a smart idea.

I also believe there will eventually be a tremendous data surge from this wearable usage behavior. Just as we we rely on Google Analytics for website tracking, data from these wearables will help us understand more about consumer behavior, their location activity and the type of content that is truly helping create more time for users. Look for the Apple Watch announcement to come in March at the Mobile World Congress – they’re rumored to be present this year after being absent for the last couple of shows.

Real Time Scoring and Training Will Reach New Heights

Why wait until the month end or even the end of the quarter to figure out that your training services aren’t working – or worse, your staff’s performance isn’t constantly improving?

Again, this is another simple function of consumer behaviors changing so rapidly. More email is being opened on mobile devices than via the desktop. It’s getting increasingly harder to reach consumers on landlines as they continue to rely on their mobile phones. Messaging apps and texting have become a simple replacement and even used to gain the permission to contact someone. (How many times have you sent “Got a sec for a quick call?” prior to calling someone? – I counted four times today so far.)

Two of the best known real time training and predictive scoring platforms within the retail automotive industry are Phone Ninjas (phone training) and Task Teacher (email scoring).

Combine the speed at which consumers digest information and attempt to make decisions with heightened expectations of quality, the need to provide a world class experience is more important than ever before.

I see this as a major movement for 2015 as dealers begin to realize this change in training and lead scoring behavior is much more efficient and effective in creating a culture of constant improvement.

Content Marketing, Local Optimization and Semantics Will Replace Conventional SEO Thinking

I predict 2015 will finally be the year the majority of car dealers begin to realize that search engine optimization is now an integral element of their marketing efforts rather than being an optional activity that can’t be quantified.

We’re well into the age of contextual relevancy and consumers expect to find the best answers when searching for questions, from any device. Dealers will begin to understand how important it is to provide specific content, within their websites, that applies to the intent of the users. Just because your VDP’s appear for a search query asking for a year/make/model comparison is not good enough. The user’s intent was to compare A to B. If the search results don’t provide this level of relevance, nobody will ever click your link, regardless of where you rank.

The opportunity for expert, authoritative and trustworthy content is never ending. New vehicle review pages, vehicle comparison pages, blog posts featuring content from satisfied customers and vehicles videos are vital when helping connect with consumers at various points of the shopping process. Plus, the introduction of connected cars from likes of Mercedes, Audi and Tesla will create such a demand for new content exploration.

Local search awareness will continue to creep into the marketing mix as more dealers grasp the importance of accurate and consistent business listings within local directories as significant ranking factor now. 77% of smart phone users contact a business after looking for local information. Search engines will continue to shift their preference for quality, relevant local search results based on quality signals which reflect the consumer experience and social signals rather than a marketer’s ability to game the rankings based on tactics alone. Local search creates an action by the consumer within 30 minutes.

I also expect to hear website providers become more vocal about their use of structured data and Semantic markup within their platforms. These activities will help provide the necessary signals for search engines with regards to topic modeling, hyper-specific queries and deep social/local content. I’ve been a huge proponent of the Semantic movement and this race is about to get extremely intense as the opportunity to create more linked data grows. Expect to hear more about these elements from the likes of Dealer Inspire, DealerFire and Drive Digital. If any other vendors would like to share what they’re doing in this space, you know where to find me. The dealer community needs to be aware of this movement.

The simple theme to succeed in today’s marketing environment is to adopt a media company mentality for your dealership: Optimize, publish & distribute will become the blueprint for success for those dealers changing the way they market their brand, their people and their inventory in 2015.

Ideas and Predictions from the Community

I asked the dealer community to share some of their thoughts for changes to expect in 2015 and you didn’t disappoint with your contributions.

  • Joey Little Dealerships will start embracing social networking as an additional pipeline for sales and train employees internally on the platforms.
  • Subi Fernando Ghosh Technology, product experts, and individual branding become more common in the average dealership.
  • Aaron Schinke Websites will begin to be recognized as platforms where activities take place and where content is hosted. More as a living breathing organism and less as a static set product or end solution.
  • Bill Playford OEMs will fuel further dealer consolidation in order to streamline customer experience. OEMs will also push flatter dealership hierarchy, with more product experts and fewer actual sales personnel. Luxury OEMs will test remote delivery/maintenance to combat the “Tesla experience.”
    The vendor world will be shaken by outside venture backed companies. The VCs who have been observing from the sidelines can no longer resist the lofty payoffs, and will seek to radically disrupt the retail vendor ecosystem. The fresh talent, better management, and “freemium” Silicon Valley mindset will greatly benefit dealerships. ISMs will rejoice. Providing AutoNation has a strong showing through the first 3 quarters of 2015, the majority of the mega-dealers will roll out a click-to-buy program, closely followed by the regional multi-rooftops. These programs have been in beta for a while, and shareholders will finally force the issue.
  • Jerry Thibeau More and more dealerships will adopt one price strategies.
  • Christine Robertson Negotiation-Free selling is coming.
  • Adam Ross Further consolidation in the vendor industry to the big guys for an end-to-end solution: Cox, Dominion, DealerTrack, CDK Global, Reynolds.
  • Shaun Raines 1. Some OEM’s will finally realize that providing/forcing only one vendor choice does not equal success at the dealer level. This will open up more options for dealers to choose providers that better fit their needs. 2. Distinctive, genuine branding will be the biggest revenue generator for dealers and vendors that figure it out. 3. Like or not, Tesla is doing almost everything right.
  • Will McGinnis Car Sales in general (Used and New) in 2014 roared back to pre-2007 days. In 2015, we will continue to have a lot of supply in both New and Used cars. However, when supply is more than demand, perfection in getting to that customer is key. Used Car merchandising is in place and has been. Finally, in 2015, I believe that our dealer body will embrace the basics of merchandising (photos, price, etc.) to maximize their performance in the New Car realm. It’s absolutely necessary for their success.
  • Kristy Mooney Graves Service departments will be much more crucial to customer loyalty as more OEMs adopt ‘free maintenance’ programs. & more sales departments will establish tech help desks – Apple Genius style
  • Rick Chavoustie New interactive ways will come to market to assist consumers along the research to purchase path. This will result higher conversions as prospects are walked into the showroom as this will lead them with a consistent expertise beyond today’s inconsistent hit or miss online to in store sales experience. The Dealership brand is only as strong as it’s ability to execute a consistent – outstanding – customer experience. This evolution leads to a widening gap in regionally market brand leaders who feed on local / rural dinosaurs who wonder where’s the biz? Unfortunately they will be like deer crossing as the bright lights of 2016 hit them between the eyes.
  • Brian Pasch Shift Digital will become the largest middleman in the automotive industry; a toll booth that EVERYONE pays for. They will become the “Dealers United” model for all OEM vendor solutions, compressing margins, lowering profits, lowering service levels, and forcing small players out of the market.
  • George Nenni 1) Technology innovation and consumer platform adoption continues to outpace dealers’ ability to adopt, thus outsourcing continues to grow in importance. 2) Expert systems applications increase, helping dealers make more and better metric-based decisions in various profit centers. 3) Apple Watch flops, streamline band-watch designs win over traditional watch-face designs, consuming less battery and allowing less-encumbered sleep tracking. (Looking forward to this one George:)
  • Lee Drake By the end of 2015 the number of businesses hosting their email in the cloud will outnumber the number of businesses hosting their own email or using small providers.
  • Anthony Alagona One price strategies are inevitable.
  • James A. Ziegler One Price strategies will come and fail and revert back. There will be a war with vendors making a move on dealer profit centers other than price.. EX: finance, service, parts, service contracts
  • Jaime Poulin Lots here about one price strategies. I too believe that the perception of one price will continue to become more important. But as long as there are more than one person that prices vehicles, one person that appraises, more than one manufacturer producing models, and more than one source providing financing, that there will be competition, and that competition will drive negotiation – negotiation will drive a lot of those so called one price dealers to flatten already thin margins. This will force them to gross on the customers that will let them, and one price as an industry never gets more than marginal play.
  • Tom White Jr. I don’t think very many people are going to like what I think is about to happen… I’ll say this – Tesla is proving that consumers DON’T like Car Dealers and want a better way to buy the second biggest purchase (from total dollar perspective) they will make in their lifetimes. I’m a car dealer…My days are numbered unless and until I can figure out how this business is going to transact 5, 10, 15 years from now… 2015 isn’t going to be THE YEAR that it all happens, but I believe it will be a year to either get your ship in order OR board the life boats.
  • Brad Hensley I’m just a small fish in the pond but I think the noose is tightening on independent dealers quickly. Transparent pricing has to be implemented.
  • Hunter Swift I believe dealers will began to focus more on driving traffic from their existing database in CRM than paying for 3rd party leads. Leads that often cost $20-$50 with no exclusivity and little info that often results in a low gross and low CSI deals. When dealers generate new opportunities from the CRM, you will not only have more info and hold more gross but will help salespeople to use the CRM more since that is where new opportunities will be found.
  • Joe Chura It’s not a matter of if, but when, the buying model will shift. I’m in complete agreement that the customer will choose the path of least resistance. Transparency during the transaction will be more demanded. With technologies like Docusign and Right Signature dealers can get a lot closer with less effort than they think. With little innovation they can offer a richer online buying experience. Choose a vehicle, leave an online deposit, fill out an online form using Right Sig, and 80% of the transaction is completed. (I believe even with Tesla the customer still needs to pick up the car and sign something in person.) 2015 will be the year.

Thank you all for sharing your ideas!

Here’s to everyone having a lot of fun and to a very successful 2015, as we all continue to do what we love.

This post originally appeared on DealerRefresh

Eric Miltsch
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Eric Miltsch

Co-founder at DealerTeamwork LLC
Eric Miltsch is a successful automotive digital marketing consultant specializing in search, social & mobile strategies. His love of all things digital & automotive is the perfect recipe for helping progressive dealers stay on the edge.
Eric Miltsch
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