By Al Bredenberg
Right now, auto dealerships are tightening their belts, and with good reason. With many showrooms closed, digital sales and “contactless” delivery are dominating many markets.
In spite of the situation, though, now is not the time to shut down marketing efforts. Why? Because, even though consumer purchases are down, they are not zero. People are still buying cars, and when things recover they will be buying even more. The dealerships that keep up their marketing efforts now are the ones who will scoop up today’s sales, and who will be in the best position when money starts to flow again in a few months.
Imagine that a consumer calls your sales line and says, “I see you’ve got the make and model I want there on your lot. I want you to draw up the paperwork right now and deliver that car to me this afternoon!”
A salesperson’s dream, right? That might not be a realistic scenario just now, but technology solution providers are offering what could be the next best thing: Daily leads made up of active car buyers whose behavior proves they are ready to buy a car now. Artificial intelligence (AI) and machine learning, combined with very large data repositories, have made it possible to follow consumers throughout their car-buying journey, and identify the moment when they are ready to make a purchase.
Not Creepy at All
One might think that a consumer would be spooked by getting an email, a text, or a phone call from a car salesperson right at the time they’re thinking of buying a car, but experts in this field insist this isn’t the case — in fact, consumers will see that contact as part of a good customer experience.
“Many dealers are still stuck in the mindset that AI-tech is ‘creepy’,” says Chase Abbott, vice president of sales at VinSolutions, in his book, Accelerating Sales with Artificial Intelligence. “But at the end of the day, nobody has a problem with Amazon’s recommendation page, which is responsible for 35 percent of their revenues. Nobody minds when Spotify curates a perfect playlist to their preferences. They think it’s cool.”
Abbott writes that his company’s machine-learning tools, applying a “ready-to-buy” filter, “are able to predict the make of the vehicle that will be purchased with 91 percent accuracy. It’s taking the guesswork out of the car-selling process, and consumers like that because it’s instantly relevant to them, and it saves time and effort.”
Using Massive Data Resources to Pinpoint That ‘Ready-to-Buy’ Moment
John Parkinson, of Parkwood Advisors in Chicago, has worked in the development of AI models and has advised companies in many industries on digital transformation, including automotive OEMs. Parkinson told Dealer News Today that AI-driven marketing is just a logical extension of a long-term trend: “What you’re doing is using data and behavioral models to make predictions about possible future behavior. We have been doing this with various statistical tools for most of a hundred years. The data has gotten a lot better and there’s more of it. The tools are more sophisticated. But the process is still basically the same: presenting the right offer to the right person at the right time.”
We reached out to Chase Abbott and spoke with him about VinSolutions’ CRM platform, which aggregates data from the various holdings of parent company Cox Automotive, such as AutoTrader, Dealer.com, and Kelley Blue Book, to feed into its platform’s predictive models.
With the extensive base of web traffic and other touchpoints among its properties, Abbott said, “Cox Automotive touches some 75 percent of all vehicle transactions in the U.S.” It’s impossible to analyze manually all of the resultant data in a way that could be useful to a dealer’s sales staff, Abbott emphasized: “For the last few years, we’ve been trying to put together all the data from our best-of-breed brands. The problem we ran into at first was that there was no way to take the thousands of points of shopping behavior and make it all consumable for the dealer. The customer was going through hundreds of clicks before coming into the store. The dealer wasn’t going to be able to go through all of that.
“But now, AI and machine learning are doing that for us. The solution is looking for all this treasure trove of breadcrumbs customers have left behind for us and curating it, putting it on a silver platter so it can be relevant to dealers.”
“The more you can understand consumers through looking at their real-time behaviors and intents, the more you can learn to communicate better with those consumers, and the better opportunity you have for them to become your customers,” said David Finkelstein, CEO of BDEX, speaking with Dealer News Today. BDEX provides a data platform designed to help marketers reach consumers through AI-powered analytical technologies.
“It’s really less about AI and more about the ability to merge assets from disparate sources,” said Finkelstein, explaining his company’s offering:
“I want to understand who you are beyond your basic demographics. If I can understand your purchase trends, other things that you buy, your life events, when your lease expiration is, what you’re doing online, when you’re searching for a vehicle — then tying that in with other sources like geolocation data to find out if you’ve walked onto a dealer lot — with all that, I can create a real interesting picture of what the consumer is doing, and use that information to reach the right person at the right time.”
Finkelstein said that BDEX works, not directly with dealerships, but with third-party marketing firms that produce sales leads for dealerships. The AI-powered lead generation capability will generally be pretty seamless for the dealership, and Finkelstein described the cost to dealers as “not that significant. It’s not a deal-breaker for any small dealership. Often the third-party marketing company will just bake it into their costs, or there may be some small up-charge. It can be as simple as that.”
The Coronavirus Crisis: Competing for Customers
Are auto retailers pulling back on their marketing efforts, given the recent drop-off in car sales? Not the smart ones, said Finkelstein. “As many parts of the country have issued stay-at-home orders, physical dealerships have experienced a dramatic decline in foot traffic,” he told us. However, “online activity has surged to greater heights than ever.” This, he said, is actually a boon to businesses using AI in sales. The increased online-generated data is “giving marketers even more critical insight into the desires and predictive behaviors of consumers who are in-market and eager to resume their normal lives.” Finkelstein said that many marketers right now “are actually investing in deeper data-driven market insights during this time to take advantage of the current influx of online consumer activity, so that they can get ahead of the competition when the light turns green.”
Abbott of VinSolutions told us that the capability of AI to read consumer sentiment has just as much relevance to sales now, even in the difficult selling environment occasioned by the coronavirus crisis. The technology allows the dealer “to see in real time consumers who are on their website and can predict which make or model the shopper is most interested in, or it can indicate if a customer has posted a negative sentiment about their experience. The dealer, who might be operating remotely or with reduced staff, can then triage and deploy staff to the customers who are most likely to buy or who are having an issue that needs to be resolved.”
Abbott also pointed out that the remote selling environment isn’t really a new phenomenon. “Text had become the preferred communication channel for many customers, even before the need for social distancing and remote selling became acute,” he told us. This is a good thing, he stressed, because CRM solutions like his company’s “have full MMS messaging capabilities that allow dealers to share highly-engaging videos and photos of vehicles with customers directly from the CRM platform’s mobile app. With these tools, you can build deeper rapport and transparency with the customer without them setting foot in the dealership. Depending on the sophistication of the system, it can also compile all text communications across the dealership, including between multiple salespeople, with a comprehensive text conversation history stored in the customer record.”
Mohawk Honda of Scotia, N.Y., uses VinSolutions’ Connect Automotive Intelligence to reach customers at the ready-to-buy moment and personalize its communication with them. “Because we’re using this technology,” says Mohawks’ general manager Andy Guelcher in a report from VinSolutions, “we’re able to improve the interactions that we have with customers and really tailor conversations based on their interests.”
The report attributes a 40 percent increase in volume at Mohawk to these new marketing capabilities and says that salespeople using the Automotive Intelligence solution have been selling 25 to 30 cars per month.
We reached out to Mohawk Honda to find out how they are managing during the coronavirus crisis. The dealership is still operating, although its showroom is closed due to state restrictions. The company has implemented a “contactless process” for car sales. Sales staff are working remotely, and customers can buy vehicles through Mohawk’s online Express Store. An internet sales consultant told us that “We can arrange one of our sales consultants to deliver the vehicle to you if you are local, or we do have curbside pickup.”
Challenges and Pitfalls
Parkinson of Parkwood Advisors thinks one of the pitfalls of this kind of AI-driven supercharged marketing could come from simply overwhelming consumers. “You could start to annoy customers if you get the timing wrong,” he told us. When people are being bombarded with offers, “they get pretty good at ignoring these solicitations.” He also thinks privacy concerns could get in the way. “For some, it could be a little bit creepy that someone knows something about you. There’s a potential invasion-of-privacy issue. It could have a negative impact on a dealer’s business.”
“But my guess,” Parkinson stressed, “is that we’re going to see more and more of this in more and more places. As the buying public gets used to this, it’s going to become essential for businesses to have it. You’ll be at a disadvantage if you can’t do it: There’s a finite number of buyers, and they’ll all have been solicited by someone else before you get to them; they will have bought from somebody else already.”
“One of the biggest challenges with CRM in dealerships is just usage,” Chase Abbott of VinSolutions told us. “Sometimes salespeople just don’t use the tool. They’re still writing customers’ info on pieces of paper and things like that, so you can’t track it or call it up or even read what they wrote. The tipping point is when the salesperson realizes they can increase the number of cars they sell, that with artificial intelligence they can be armed with data and go out and be extremely effective. If you’ve got a weak manager, it’s going to be hard, but if the salesperson can say, ‘I wouldn’t have got that deal if it wasn’t for that AI data,’ they’re going to adopt it, as long as they have the manager backing them up.”