Speaking of inventory, it is well-known that the supply and demand dynamics of 2020 contributed to a windfall for dealerships. Squeezed on new car gross profit in past years, 2020 has changed those dynamics as consumers spent 10% more for a vehicle and dealers maintained gross by less negotiation on limited inventory. Yes, inventory is a significant part of increased profit, but so is the shift dealers made in customer experience especially during temporary dealership closingsand initial public concern over Covid-19 cases. Obviously, digital retailing is key here, but let’s not miss the shifts in marketing which are influencing gross profit – specifically the concerted effort to create a 1:1 experience for a consumer.
At Client Command, we have been focused on helping dealers deliver a customer-focused, omni-channel journey for years. This means marketing to people on a 1:1 basis with messages relevant not only to where they are in the purchase funnel, but also to the vehicles they are researching and considering. Coming into 2020, our data reports dealers were experiencing 14% more gross profit per transaction when they leveraged a customer-focused approach.
This is crucial for engaging new buyers who come into the market with different expectations of the car buying experience. And for them, that experience starts long before they walk in or engage on a dealer’s website. They are going to want to know if you have the inventory they want and know if you will provide the experience they expect. When you showcase both in the early stages of their journey, trust is built and transaction prices rise.
Application: Make sure your marketing delivers relevant messaging that is customer-focused. This is only possible if you know where a shopper is in their purchase journey. Knowing this will enable you to bring the showroom to a shopper’s online device, the team culture to their social media feed and messages that make their experience easier to their inbox.