Tag Archive | "Mike Burgiss"

Cox Automotive’s Future of Digital Retail Study Reveals Dealerships Remain Central to the Car Buying Experience


Cox Automotive released the findings of its Future of Digital Retail Study, with results showing that the current dealership model needs to change with consumer preferences, but that the dealership remains central to car buying. While most consumers prefer completing at least one step of the car buying process online, most car buyers want to complete the transaction at a dealership.

On the digital front, 71 percent of consumers want to get accurate, detailed information on the deal online and 83 percent of consumers want to complete at least one purchase activity online. Consumers indicate they want to complete a majority of the legwork before they enter the dealership. They want to agree on an accurate price that does not change later in the process, understand and select add-ons and warranties, agree on a trade-in value and other costs ahead of time, reducing – or eliminating – the time necessary to negotiate the final purchase price in-store.

The average buyer currently spends three hours at the dealership during a car purchase, with 90 minutes spent on negotiating the financial details[1]. Consumer satisfaction with how long the process takes at the dealership continues to decrease, dropping from 55 percent in 2016[2] to 46 percent in 2018[3].

On a parallel track, the dealership is important for consumers in both initial research and final purchase processing. Nearly nine in 10 respondents want to complete their purchase at the dealership; only 11 percent of consumers want to review and sign paperwork online away from the dealership. However, Cox Automotive research shows a growing percentage of people are interested in completing the entire purchase online in the future.[4]

The dealership continues to have a significant role. Eight in 10 consumers would never purchase a car without a test drive and seven in 10 would never purchase a car without physically seeing it first, even if a condition report is offered – both activities typically conducted at a dealership. The survey also indicates that most car shoppers want dealership staff to be valuable consultants during the process, especially for learning about the individual products, features and vehicle capabilities.

“The results of our study show that the most successful dealers are the ones who offer a connected in-store and online experience, where consumers start car-buying activities online and seamlessly finish them at the dealership,” said Mike Burgiss, vice president of Digital Retailing at Cox Automotive. “Importantly, a more efficient process is not only better for consumers, it’s better for dealers as well.”

[1] 2018 Car Buyer Journey Study

[2] 2016 Car Buyer Journey Study

[3] 2018 Car Buyer Journey Study

[4] 2015 Car Buyer of the Future Study, 2018 Future of Digital Retail Study

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Digital Retailing Solves Top Consumer and Dealer Issues


The automotive industry is in a frenzy over selling cars online. Pure online retailers and rising consumer expectations are applying enough pressure for traditional dealers to know that they have to add the online option for car buyers. However, when dealers hear Cox Automotive Chief Economist Jonathan Smoke say that we are moving into a “post peak period” for the U.S. auto industry, they may wonder how a tightening market and digital retailing can coexist.

What’s Next, a Car in a Shopping Cart?

Let’s face it, ordering Thursday night’s dinner or a pair of shoes online does not begin to approach the complexity of a vehicle purchase. Why can’t automotive easily replicate that success? We can definitely learn from these nonautomotive examples and integrate some of the consumer-friendly options offered in other retail categories. However, it is up to the automotive industry to meet consumer expectations for making car buying easier, more efficient and fun.

Consumers are in the driver’s seat when it comes to how they want to purchase vehicles. As a result, dealers need to adapt or they will get left behind. In recent years, Cox Automotive research has shown the persistent frustrations car buyers have with the F&I process, which includes negotiating the purchase price, finding a good deal, and valuing the trade-in.

So if dealers do nothing other than address these ongoing frustrations, they will be miles ahead on the journey to provide consumers with a superior buying experience. In other words, putting the paperwork online isn’t the first place dealers should look to begin their journey into the digital retailing transformation.

What Consumers Want vs. What Dealers Provide

Consumers want a convenient (and that means digital) buying experience. Research proves this over and over. For now, let’s focus on millennials. It might not be the greatest generation, but it is certainly the largest, comprising 75.4 million potential buyers. This generation was shaped by the smartphone and has never lived without the internet. They account for 29% of new car sales today and will make up 40% in 2020. Perhaps wiser from recent student debt, millennials are driven by budget more than any other generation, and 83% say that an affordable monthly payment is very important.

Across all generations of car buyers, we find that 61% want dealers to allow them to review prices, payments and add-ons before the F&I process begins. A convincing 83% are interested in learning about F&I products before entering the dealership. Finally, 63% are more likely to buy F&I products if they can learn more about them on their own time, before finalizing the vehicle purchase.

Since we already know what consumers want, what is the problem? The problem is what most dealers provide. By not adapting their sales process and operations, dealers put consumers on an emotional instore roller coaster. Most of the time in the dealership is spent in a valley of negative emotion during a prolonged and stressful buying process.

The Way Forward

Dealers should embrace digitizing the buying process to meet consumer expectations. Digital retailing is a win-win because it can vastly improve dealership efficiency — and profitability — by enabling dealers to work deals, not leads.

As a first step, dealers need to replace the payment calculator on their dealership website with a self-penciling tool on the vehicle display page (VDP) in order to start deals online. Basic payment calculators give buyers bad information because they have an uncontrolled tool that allows them to enter unrealistic deal terms.

Shifting the conversation from price to payment meets 90% of consumers’ needs who buy based on their monthly budgets. And because buyers lead themselves to the “Yes” through a more comfortable and convenient online process, dealers can achieve higher profits when the conversation shifts off price to payment.

A digital retailing self-penciling experience on the VDP allows the dealer to control the parameters that build the deal structure and the vehicle-specific advertised monthly payments. When shoppers select their credit tier and/or finance or lease term, enter their trade information and adjust their preferred cash down, they are leading themselves to the right amount of car and farther down the path to the purchase.

This self-directed part of the journey is happening before dealers invest the time and money of the traditional labor-intensive sales process — a process that consumers would rather fast forward through online. With a self-penciling tool, dealers and consumers can avoid payment misunderstandings because the consumer is seeing a real payment based on real terms.

In the second step, car buyers and dealers agree on terms and make deals online. This is when dealers negotiate price and consumers fill out their finance application and receive approval. This step should include a full protection product catalog and monthly payments. In today’s virtual world, it is possible to build strong online relationships. Using tactics and tools to nurture a good virtual relationship will translate to a strong in-person relationship when the customer comes into the store to confirm the deal, test-drive the vehicle and sign the paperwork.

Contrary to what some people might lead you to believe, the final step in digital retailing is not putting a car in a shopping cart. There has been much fanfare about the prospect of buying online, but consumer research doesn’t support the idea of end-to-end click-to-buy for the majority of consumers. However, most consumers will appreciate — and expect — the convenience of electronic paperwork and esignature after test-driving the vehicle.

By digitizing the F&I process, dealers can simultaneously solve the top car buyer frustrations, achieve higher F&I product penetration, and become more efficient and profitable. While we are still in the early adoption phase of digital retailing, we have surveyed people who have used existing digital tools and they report being two to three times more satisfied with the process. They are more satisfied with virtually communicating with the salesperson, negotiating the deal, and the amount of time spent in the dealership.

Research says that, rather than being a concern, online F&I presentations are an opportunity. Most consumers report that they are more likely to purchase certain F&I products if they do part or all of the research at home or online. Additionally, digital retailing can be a profit center for dealerships because we found that cars sell faster and average more gross profit. And, by eliminating that “valley of negative emotion” for consumers, you will have happier and more loyal customers who enjoy visiting the dealership for the delivery and service.

 

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Embracing Digital F&I


2016 will be another year of accelerated growth in the ongoing shift toward online retailing. Thousands of auto dealers are already taking advantage of this evolution in the car-buying experience, and thousands more are sure to follow this year.

Consumers can buy nearly everything online, from TVs to paper towels, an experience we call “shopping cart ecommerce.” And those expectations of convenience are translating to auto retail and finance experience as well. However, cars don’t fit in shopping carts and the shopping cart ecommerce model doesn’t work for automotive retail.

Selling cars is a relationship business. It always has been and it always will be. The personal connection will always be an integral part of the equation. For F&I specifically, the Internet is a communication power tool that enables consumers to research products and put them in their consideration set before going to the dealership to verify and buy.

Frustration With the Buying Experience

For most people, the car purchase is the first or second largest investment they’ll ever make. Despite the size of this purchase, the top five frustrations of car buyers are all related to the buying experience. Research from MakeMyDeal and Autotrader provides us five important insights:

  • Less than 1% of consumers prefer today’s car-shopping process.
  • 54% of consumers will pay more for a better experience.
  • 84% of consumers say they would rather learn about F&I products at home.
  • 63% of consumers are more likely to purchase F&I products if they learn about them before visiting the dealership.
  • 72% of consumers find online F&I paperwork appealing, particularly in order to save time and avoid pressure when filling out paperwork.

When looking at these insights together, it’s clear dealers have a huge opportunity to improve the customer experience by digitizing the F&I process. Dealers are already using online menus and econtracting, and some have added esignature to their growing list of digital tools. These improvements not only provide an experience consumers are expecting but also reduce errors in data entry and simplify recordkeeping.

But focusing exclusively on digitizing paperwork leaves out what is perhaps the biggest opportunity to increase profit: It’s time to take the F&I product sales process online, starting with product presentation and pricing.

Prominently displaying product information, benefits and pricing within the inventory pages of dealers’ websites provides vehicle-specific information that will improve the consumer’s shopping experience. More importantly, it also enables the dealer to educate and inform consumers early in the buying decision, which increases profitability.

Without an online approach, the F&I product sales process is compressed into a high-pressure process amidst confusing paperwork during the hour or more the customer spends in the F&I office. Decompressing the F&I process by bringing product information to the consumer early and often allows them to self-educate and build interest in products before the F&I conversation, which in turn shifts this activity to an upsell instead of just a discovery process.

Busting the Trust Gap

From the time a customer enters the dealership until they complete the purchase, the main question on their mind is, “What’s your best deal?” Their sales professional knows, but they hold back until they get well beyond the meet-and-greet, qualify, walkaround and test drive.

From the time they shake hands with the customer, the sales team’s behavior is primarily driven by the need to get as much information about the consumer as possible —name, contact information, credit situation, cash on hand, monthly budget, trade-in — all the information the CRM and the DMS software need to book the sale.

With both parties doing their best to pry information loose from the other one, the stage is set for destroying trust between the customer and the dealership. This is a relationship dynamic you read about in major publications under headlines like “People Would Rather Go to the Dentist Than Buy a Car.” I call this phenomenon the “trust gap.”

Why is trust so important? Research from Autotrader shows over half of consumers won’t buy from a dealer that delivers the wrong customer experience, even if they do have the lowest price. After all, the car-buying process is a relationship process, and what’s a relationship without trust?

About one in five customers do make it through the sales process to the finance office, where this process continues. Buyer and seller continue to pull in opposite directions, with the customer primarily interested in leaving as quickly as possible and the finance manager working hard to spend as much time selling as many F&I products as possible. This process only reinforces the lack of trust in the process.

Busting this trust gap is surprisingly simple and profitable but requires a change in perspective about the sales process. Rather than hold back information as a means to try to control the customer, sharing product information and estimated pricing upfront and online gives consumers the feeling of control in their buying process and builds trust.

Giving customers pricing information and the ability to personalize their monthly payments doesn’t give them control of profitability, only a feeling of control over their buying decisions. When dealers stay in control of the deal structure (and profitability) and consumers have a feeling of control, both parties win.

The commonplace tools today are payment calculators and pricing promises. Payment calculators give consumers bad information about car payments and pricing promises focus on third parties as the source of truth instead of dealers. These tools widen the trust gap between consumers and dealers.

As for F&I products, a quick Google search for “extended warranties” reveals plenty of reports on whether the products are really worth the investment and warnings from consumer advocate groups about potential “rip-offs.” At best, consumers might find a website with direct-to-consumer sales of aftermarket products that short-circuit the dealer’s profit opportunity.

Rather than leave the airwaves open for negativity, dealers can flood their customers’ screens with relevant and positive messages about the coverage, benefits and pricing for available protection products. Replacing negativity with straightforward information builds the dealer as a trusted relationship and source of information. But that battle begins online, not in the finance office.

Converting the Dealership Visit From a Negotiation to a Confirmation

When dealers offer information upfront, the in-store visit totally transforms. Dealers cause this transformation by providing online vehicle payments and F&I product information and pricing.

When the consumer engages in an online deal-making experience, this shifts the uncomfortable price negotiation and budget conversation to a place where the consumer feels totally at home: the sofa in their living room. Getting customers past the unpleasant part of the purchase puts them at ease before they arrive at the store and reduces time spent at the dealership.

Connecting with customers and leading them to a “Yes” online involves receiving their first pencil, then answering their questions and responding to their proposal. Simply gathering customers’ contact information and working to set appointments is not enough to build a relationship and earn their trust. Actually engaging in the deal-making process with the customer while they are still at home earns their trust and shifts their state of mind for the in-store visit.

The in-store experience thus becomes a confirmation rather than a negotiation. Instead of coming to the store with their guard up, customers visit with their estimated deal structure in mind. They’ll be looking to validate those numbers, and if everything checks out, then the transition to the finance office is a seamless one. Customers will enter the finance office more relaxed, more comfortable and more receptive to a conversation about the F&I products that might be best for them.

As with any significant industry shift, digitizing the sales and F&I process will take a commitment to change and some trial and error. But it will ultimately result in more satisfied customers and higher profits. I firmly believe that online deal-making can close the trust gap and improve the overall car shopping experience for consumers. We can build an interactive conversation that starts online and ends in the dealership with the consumer driving away thinking, “That was the best car-shopping experience I’ve ever had!”

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Digitizing the F&I Process Increases Consumer Satisfaction, Study Shows


ATLANTA — Digitizing the F&I process can have lasting, positive impacts on customer satisfaction for automotive retailers, a new study from MakeMyDeal and F&I Express has concluded. Titled “The Digital F&I Experience Study,” the study showed that consumers who had one or more digital elements in the F&I experience were more likely to purchase F&I products, more satisfied with the experience and more likely to recommend the dealership.

The study grouped participants into two categories: those who had at least one electronic element in their F&I experience and those who had a traditional F&I experience. Overall, only a third — 37 percent — of people were satisfied with the amount of time they spend in the F&I office. Add at least one electronic device to the experience and 49% of respondents said they were completely satisfied with the process. That’s compared to 34% of respondents who were satisfied but had a technology-free experience.

“As an industry, we know that the F&I experience is more difficult than it should be, but what we haven’t had until now are the numbers to show how that experience could be affecting the long-term profit potential for the dealership,” said Mike Burgiss, founder and vice president of MakeMyDeal. “By digitizing the experience, dealers will not only have happier customers, but they’ll also reap the benefits of more word-of-mouth recommendations and repeat business.”

The study found that 74% of respondents who had an electronics F&I experience were completely satisfied with their purchase experience vs. 56% of those who had a traditional F&I experience. Additionally, 60% of customers who had an electronics F&I experience were very likely to recommend the dealer vs. 39% of those who did not.

“F&I is one of the few remaining areas of the dealership that hasn’t been digitized, and this study clearly shows that there is a real need — and opportunity — for more of the process to be brought online,” said Brian Reed, president and CEO of F&I Express. “Consumers have an expectation to have digital options for just about anything they are shopping for. Auto dealers have a chance to strengthen relationships with existing customers, and ultimately improve their profitability by shifting to a digital F&I strategy.”

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Digitizing the F&I Process Increases Consumer Satisfaction, According to New Study


ATLANTA – Digitizing the finance and insurance (F&I) process can have lasting, positive impacts on customer satisfaction for automotive retailers, according to a new study from MakeMyDeal and F&I Express. The study, titled The Digital F&I Experience Study, showed that consumers who had one or more digital elements in the F&I experience were more likely to purchase F&I products, more satisfied with the experience and more likely to recommend the dealership.

Much of the car shopping process has been digitized, either through online tools or desktop tools at the dealership. However, a significant portion of the process for automotive aftermarket insurance products still involves cumbersome printed documents and manually signed 5-ply forms.

“As an industry, we know that the F&I experience is more difficult than it should be, but what we haven’t had until now are the numbers to show how that experience could be affecting the long-term profit potential for the dealership,” said Mike Burgiss, founder and vice president of MakeMyDeal. “By digitizing the experience, dealers will not only have happier customers, but they’ll also reap the benefits of more word-of-mouth recommendations and repeat business.”

Brian Reed, CEO of F&I Express, is helping lead the charge to digitize the F&I sales process.

“F&I is one of the few remaining areas of the dealership that hasn’t been digitized, and this study clearly shows that there is a real need—and opportunity—for more of the process to be brought online,” said Brian Reed, President and CEO of F&I Express. “Consumers have an expectation to have digital options for just about anything they are shopping for. Auto dealers have a chance to strengthen relationships with existing customers, and ultimately improve their profitability by shifting to a digital F&I strategy.”

The study grouped participants into two categories: those who had at least one electronic element in their F&I experience and those who had a traditional F&I experience. Overall, only a third—37 percent—of people are completely satisfied with the amount of time they spend in the F&I office. However, people who had an electronic experience reported higher satisfaction with their time spent in the F&I office than those who did not: 49 percent of people who had at least one digitized element in the process were completely satisfied, versus 34 percent of people who had no electronic elements.

Further, those who had an electronic element in the F&I experience reported greater purchase satisfaction and a stronger likelihood to recommend the dealer:

  • 74 percent of those with an electronic F&I experience were completely satisfied with their purchase experience versus 56 percent of those with a traditional F&I experience.
  • 60 percent of those with an electronic F&I experience said there were very likely to recommend the dealer versus 39 percent of those with a traditional F&I experience.

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PALS Room Block Nearly Full


LAS VEGAS – Organizers of the 2015 P&A Leadership Summit have announced that the event’s room block at Paris Las Vegas is nearly full. The event, which will be held Sept. 9–10, is expected to once again draw a large crowd of executives representing the F&I product and administration segment.

“Given the caliber of speakers, content and opportunities for interaction with experts and thought leaders, it should come as no surprise that we are already near capacity,” said David Gesualdo, show chair and publisher of F&I and Showroom and P&A magazines. “I encourage those who are on the fence about attending the conference or staying at Paris Las Vegas to register for both today.”

Organizers reported surging registration numbers spurred by press releases announcing new speakers, including the National Automobile Dealers Association (NADA)’s Bill Fox and Andrew Koblenz, Kristen Gruber of Dealers Assurance Company (DAC), The Warranty Group’s Aaron Lunt and Brian Reed and Mike Burgiss of F&I Express and MakeMyDeal, to name a few.

Additional highlights will include hard-hitting panel discussions and Q&A sessions with speakers as well as evening receptions and other networking opportunities.

Registration and information about accommodations and travel is available the event’s website. Attendees who register for the P&A Leadership Summit by Aug. 7 will enjoy a $100 early-bird discount.

To inquire about sponsorship or exhibition opportunities, contact David Gesualdo via email hidden; JavaScript is required or call 727-947-4027.

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