How Mobile Apps Can Boost Revenue For Auto Dealerships
June 14, 2016
We all know vehicles are high-risk investments. In the past, purchasing a vehicle required a significant amount of on-foot research, and the dealership visit was central to a buyer’s research and purchase experience. All the necessary information a buyer needed to purchase their dream car was in one place: a full inventory showcase, ability to take a test drive and thorough model information provided by a salesperson. However, the increased use of smartphones has disrupted both the way consumers research their next car purchase and the way companies market their vehicles to those consumers, significantly impacting auto dealership sales. With 74% of American adults owning a smartphone, every brand must think about how to leverage mobile to reach these customers.
App Users Spend More
A 2014 study by DMEautomotive showed that vehicle buyers using a branded app were 73% more likely to make a purchase from the dealership, and after making a purchase, booked 25% more service appointments than shoppers without an app. They also spent more money than non-app users when purchasing a vehicle, 7% more according to a study commissioned by Cars.com.
App users also tend to be younger, more affluent individuals who have plans to buy cars ranging from $20,000 to $40,000 with a median price of $28,419. This opens up opportunities for auto dealerships who embrace mobile technology to create relationships with these younger customers that can last a lifetime, resulting in repeat purchases.
Empower Mobile Users with Information They Seek
Auto buyers who use mobile are 72% more likely to repeat visits to the dealership. Customers cite that receiving access to relevant information served up to the car buyer along their purchase path is the primary driver of visits to a car dealership. They use apps to seek out competitive inventory, pricing, dealer information and payment options. These virtual dealership experiences have transformed the way dealerships are meeting the needs of car buyers who conduct online research prior to visiting dealerships. But, according to a study by Google and Ipsos, 90% of smartphone users are not absolutely certain of which specific brand they want to buy when they begin looking for information online. It’s in the best interest of dealership management to understand the impact of mobile in this decision-making process and leverage it to improve sales.
The study also revealed the activities that mobile car shoppers engage in the most:
While mobile growth is disrupting the automotive industry, it’s clear the basic principles behind selling a car have not changed. Mobile users, like the in-person customers before them, want easy access to inventory, the ability to compare prices and access to customer reviews. However, now they have more access to information.
Drive Sales By Empowering Your Sales Departments
When a customer walks into a dealership, half the battle is already won. However, sales teams continue to play a strategic role in converting these on-site visitors into actual customers and then to your most loyal referrals. With the rise of mobile prevalence comes new challenges, and showrooming is one of those challenges. Showrooming is when a car buyer visits a dealership to research a vehicle and then goes online to find a cheaper rate from a competitor. Showrooming is an increasing phenomenon and is becoming more of a concern for dealership managers.
Mobile apps can help sales teams effectively combat this challenge by offering on-site customers options that a competitor doesn’t. A sales department’s app can equip sales teams with competitors’ inventory and pricing options, allowing sales people to compare competitors alongside the customer and offer lower rates.
A dealership’s customer-facing app could include features such as:
- Geofencing to deliver location-specific content through push notifications such as limited time offers
- Mobile point-of-sale to process on-site purchases and then email customer receipts instantly
- Currency converter or translator
This immediate and personalized level of service from the sales department will improve a customer’s experience and increase the likelihood of making a sale, especially since the presence of a customer at a dealership already increases purchase intent by 20%.
Competitiveness Through Geofencing
Geofencing not only helps keep on-site customers engaged in the purchase process, it also allows dealerships to be a little sneaky in their tactics of enticing customers away from competitors. Within an app, geofencing creates invisible perimeters around a dealer’s lot and the lots of nearby competitors. Through geofencing, dealerships can push special promotions to car buyers once they are within a certain distance of the dealership and track the car buyer’s actual location in real time. If a customer is sitting in the showroom of a nearby competitor, dealerships have an opportunity to “steal” that customer by sending the right message at the right time to that person, assuming he or she has previously downloaded that dealer’s app. If the customer receives a push notification from a nearby dealership letting him know that a better price is available if he acts now, this can be a powerful, effective marketing tool. In fact, dealerships that used geolocation tactics experienced a 295% increase in foot traffic! Currently, only 2% of showrooms are leveraging this strategy, providing substantial opportunities for dealerships to differentiate themselves.
Improving Sales Through Follow-Ups
Keeping a customer or potential customer engaged at each stage of the purchase process is a key component of a successful sales and marketing engine. Follow-ups conducted during the decision-making process prior to a sale can improve the chance that a customer will return to the dealership. Follow-ups conducted after sales have proven to enhance customer retention and may generate referrals from happy car purchasers.
Mobile apps can help sales and service managers market directly to their existing customers with targeted, follow-up messaging such as:
- Send potential buyers who left the showroom without making a purchase follow-up messaging about vehicles they may have looked at or provide information they may have sought out while on the premises
- Engage with shoppers as they walk the showroom floor with relevant information about the vehicles they are interested in
- Advertise discounts and promos in a cost-effective, unobtrusive manner
- Send post-sale follow-ups to drive loyalty, engagement and customer retention
- Send customers notifications when the user’s vehicle needs an oil change, new tires or other maintenance check-ups, etc.
- Allow customers to book appointments online without having to call
Any tool that helps your sales team stand out from your competition and makes your customer experience unique and satisfying is worth exploring. Mobile offers your dealership a chance to engage with your customers and turn them into brand loyalists who will always refer your business to others.
Boost Revenue Through Servicing
With the cost of customer acquisition so greatly outpacing the cost of customer retention, dealerships must focus their marketing budgets on keeping existing customers engaged in their brand. Dealership-branded apps have the ability to lure customers back again and again, especially through vehicle servicing. The service department produces a dealership’s highest profit margins, and customers equipped with branded dealership mobile apps are 25% more likely to make service appointments than customers who do not download the dealer’s app. According to study results from DMEautomotive, car owners are spending more money on servicing their vehicles than ever before. Dealers without an app are missing out on a lucrative opportunity to generate more revenue through the service department. Dealer-branded apps can enable customers to:
- View service hours
- Book service appointments in minutes
- Pay repair orders
- Consult with dealer staff on services through chat functionality
- Save phone call, text, and email history
- Update service profiles with every visit
Dealerships have been slow to adapt to mobile marketing, even though it has proven to be the most effective way of improving a dealer’s bottom line. Most online sales efforts are still focused on product and brand awareness as auto dealerships have not yet learned to use mobile apps to effectively generate leads and convert them into sales.
Auto dealerships that develop effective digital strategies can leverage a new generation of vehicle buyers who expect to be able to do business online seamlessly. Overhauling a dealership’s sales and service processes in order to be competitive in the digital landscape may seem like a daunting task, but with a technical approach in place, dealerships can achieve this strategy through organization and planning.
Running a lucrative auto dealership business requires having the right tools to build lasting customer relationships and increase revenue. To improve profits and increase chances of success in today’s mobile-driven world, dealerships must not only adapt to mobile technology but continue to empower the sales and service departments to respond to today’s customer.
Published June 14, 2016