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4 Predictions in 2016 for Car Dealerships

Eric Miltsch
Posted onJan 15, 2016 at 1:50 AM
Updated onUpdated on Jan 8, 2019 at 3:03 PM

Another new year and even more new opportunities.

If you’re not growing personally and professionally, irrelevance awaits you. I love pushing myself to continue learning more every year and if you’re reading this, you probably do too. Here’s my mental dump on the latest marketing strategies, technology trends and consumer behavior.

Let’s see what’s in store for 2016 in my annual DealerRefresh retail automotive predictions post.

Things are different compared to the last couple of years. We experienced a wave of new strategies and tactics, yet many are still puzzled about how everything fits together. Dealership GM’s, sales manager and Internet managers should be expected to have an understanding of the processes, not necessarily an understanding of the intricate details of core strategies. Management should be focused on building their marketing stack.

This year’s theme and general direction of things to come, is very simple:

  • Frictionless, seamless experiences. For the dealer with regards to managing their activities, and for the buyer during their shopping. Not necessarily automatic, rather programmatic.
  • Highly personalized, relevant interactions. Productivity will be based around tailored processes. Expect simpler experiences powered by more mouse clicks/screen taps and less keyboard strokes. Efficiency, time savings and answers to questions. The end result: greater productivity and results. These are the key ingredients which have been missing from creating the great experiences every one is promising – and expecting. This will apply to both dealers and to consumers.

Dealerships Become Martech Companies

The platform providers will continue to integrate user data into the customer profiles to connect on levels never seen before. Market data around our inventory will flow faster and easier. vAuto’s Marketing Stack - DealerRefreshnew Stockwave platform is a nice example. Automotive platform companies are helping dealers evolve into a unique version of a Martech company. (Not familiar with the Martech movement? They even have their own conference.)

CRM’s were merely acting as Customer Management tools. Expect to see an emphasis on the “R” – making it easier to enhance the Relationship.

Your platforms will tell you more about your customer, their journey and what means the most to them. Personalized data integration will help transform your CRM into a smart, contextual advertising platform rather than repetitive, broad-stroke actions. Larger companies have been plowing resources into acquiring data and additional platforms. (I mentioned DealerFire in a prediction for ’15, they were acquired later in the year) Now it’s time for the magic to happen.

Cheers to Sean Stapleton for being an early advocate of this philosophy: Focus on customer retention rather than solely on customer acquisition. It’s safe to say we understand the secret sauce is providing relevant, personalized information. Unfortunately, the disconnect is knowing how to piece it all together. Savvy dealerships will have a well defined marketing stack of the solutions powering more seamless processes.

The marketing stack maps the customer’s experience and creates consistency – here’s an example of the stack I created. Our new dealership built a foundation around our processes with many of the same elements. It’s an essential, continuous work in progress.

Content Marketing Matures While Display Advertising Dies

I’ll stop short of saying content marketing is dead. Many have lost sight of what content marketing’s purpose is in the first place. Content becomes valuable once it moves the customer from a Content Grows Up - DealerRefreshshopping phase to a buying phase. It loses all value when positioned to the dealership as the magical cure for every ailment the dealership suffers from.

Dealers will move away from futile efforts of creating content which, in the end, their only result is time and resources being wasted. There will be an awakening of tremendous force; the content is simply not helping and no amount of creative data spinning will make a difference.

Content will be simpler, delivered in short form and be incredibly valuable. This points directly at messaging platforms or apps, custom notification and solutions focused around providing more context regarding their situation. Diving in deeper, user activities, behavior and general location now have the opportunity to be realistic examples of context. A significant factor contributing to this is the drastic change in mobile behaviors in all age groups. Younger professionals understand this; parents of teenagers definitely understand this. Hopefully you’re seeing more of the reasons why Facebook spent $19 billion on WhatsApp.

Watch our interactions evolve. Each can provide a better understanding of what customers expect and even what annoys them:

  • Smarter notifications and actions based on our activities, location and behaviors – Nest, Hue and other Internet of Things devices
  • Usage of personal assistant solutions, such as Cortana, Facebook M, Google Now and Siri will create new search channels
  • Smart objects such as Dash and Alexa will try to help simplify our lives while also changing how we search
  • Interactions with connected cars will also help simplify our lives and data comes to us easier.
  • Virtual Reality and immersive content – more on this below

People interact much differently with ad content – specifically display ads. Rather, they won’t interact with them. The rise of ad blockers among younger users illustrates this trend. 27% of Internet users between 18-34 already use an ad blocker on their desktop.(The State of Ad Blocking 2015) Mobile ad blocking will help ruin this space. Display will become a wasted element of ad budgets going forward. Even more proof of how this ecosystem is evolving, Apple just announced they’re getting out of the advertising-sales business. If Apple is quitting a segment, they see the handwriting on the wall. Facebook has 38% of the mobile ad revenue market while Apple only had 5%.

Standalone SEO Gets Assassinated

SEO Is Dead - DealerRefreshSEO dies a horrible death. If you are the person searching for an individual search engine optimization service, you are not the person who should be managing SEO. If you’re selling a standalone SEO service, just stop.

Search is powered by the machine. Semantic technology and machine readable data are learning faster than ever and will never stop. The machines understand the content and can predict our intent. Mobile behavior and location is already connected with our desktop activity. Two worlds are colliding and the contextual explosion is happening right in front of us. There is talk of contextual elements within our mobile devices which lie dormant. Apple has said they will not turn it on yet, due to how much information it can provide will frighten us.

You don’t need to hire an SEO professional, you need to hire a team of marketing professionals who also understand data science, shopping psychology and user intent.

Is This Real Life?

Towards the end of the year, we’ll see the early stage of a massive transformation of consumer behavior. Users will interact in ways which are more acceptable and even expected in certain situations. Motion and gesture controls will be more familiar once devices such as the Oculus and HTC Vive quickly become the must have entertainment gadgets. This should also indicate how massive the divide will be, between old-school content creation and this new version of real life  – virtual reality.

The OEM’s will be a leading indicator, creating incredible virtual reality experiences for new vehicles. I don’t expect to see this hit the retail level. This will launch the most significant wave of content development and consumer interaction.

I do expect VR products to influence more video usage within dealerships and eventually we’ll see 360 degree video used more frequently. Customers will expect more immersive video experiences. Dealers choosing these formats will change the minds of customers even quicker. A tip of the hat to Doug McIver and Andrew McIver for not wasting any time and shooting 360 video driving tours.

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What Do You See Happening?

As usual, you guys shared amazing thoughts, ideas and predictions for this year. Regardless of whether they’re spot on or completely off-base, it’s still great to see so many people share their vision for the industry.

Thanks for sharing. Keep the passion strong, push the needle and have an amazing 2016!

Andrew DiFeo More transactions, both sales and service, will take place at the consumer’s home or office versus at the dealership.
Aaron Schinke Dealers will *hopefully* finally realize technology can’t replace process and start to leverage their technology as part of a process. Or at least adopt processes to fully leverage technology. A man can dream, anyway.
Tom White Jr. whether you win or whether you lose, it is always “The Manager, Stupid.” We win or lose (and serve customers well or don’t) based on the quality of our managers. I’m on a mission to find, hire, train, and develop the next level… I’m hoping you will join me on this quest…
Alex Schoeneberger 1. Car vending machines and other novelties will continue to grow towards a market saturation point over the next few years, taking some market share and putting pressure on dealers to evaluate their processes. Everyone, industry-wide, will need to ensure the consumer experience they provide truly matches what consumers (or their niche of consumers) want.
2. Third party vendor revenue generated from dealers will begin (or continue in some cases) to shrink due to pressure from other channels, including those homegrown by large dealer groups.
3. As in-car tech evolves, the number of product experts at the dealership will need to increase.
Gary May Truth Alex, however dealers are massively underserved with the investments they make and lack of real guidance they undertake. Yes, the pressure from outside “vending” and growth of third-parties will continue because of the near-exhausting resistance to what consumers (read; US) want.
Most dealers continue to over-invest in high-cost areas that underserve them while underinvesting in the critical areas. Heard it again in Chicago last week, “we have that covered” when they, in fact, don”t. The moment you stop gaining insight form outside, you lose your edge. The moment you stop listening, investing, and measuring, you lose.
Love reading those articles about when dealers should and shouldn’t see a n outside person. The smartest, most successful dealers I’ve met take the time whenever they need to in order to learn, evaluate their business and grow.
Yes, more pressure will come. The first pieces will come when the Fed lending rate goes up (maybe this week?), any downward pressure is applied (wall street, employment/unemployment figures, etc), incentive changes and the like halt people in their tracks.
And, just like with our clients in 2009 and 2010, those who are prepared will increase market share. 80%+ of the dealers aren’t prepared for a more-integrated digital consumer or improving their digital performance.
Brad Hensley The most successful dealerships in 2016 begin to implement a “paperless, sign via email/phone/tablet at home, and an after hours delivery to the consumer’s driveway” process.
Third party lead advertising such as Cars.com & Autotrader lose the most steam and merely hold onto relevance because we, dealers, aren’t prepared to “cut the cord” yet. Without some major shifts this year they lose 50% of subscribed dealerships late in 2016. 
Will McGinnis Towards the end of 2016 we will start to see the trend move down on volume in Used and New vehicles. I’m with Brad Hensley on the way to be the one to capture the most market share. It has to be an easy, fast, and most importantly a quality experience for the consumers.
Joey Little Customer Experience Management will take over the old buzz words of Online Reputation Management.
Tom Gorham I predict that all of your predictions will come true to some degree. Customer experience will reign supreme and transparency will lead to more one-price shopping. Some smart OEM will provide dealers with in-store virtual reality stations that will provide how-to technology assistance for consumers and allow for the virtual test drive. Dealers will begin using more in-depth software to analyze, evaluate and improve their customer experience at any given time from their structure and processes down to individual employee level. Customer experience is still based on gut instinct rather than illuminating data. With the right data, dealers would find it easier to make intelligent choices. That doesn’t mean they will necessarily be altruistic choices. But as customer experience becomes the essential competitive factor in customer acquisition, they will make changes based on success.
Daniel J. Mondello I predict that the oems will continue to push dealers to use sem solutions that benefit them not the dealer and continue to keep consumer reliance on quality digital low
Sean Williams Here’s Why Cars Will be the Next Huge Platform
Jae Chang The traditional Used Car Manager will become less important. Sales Managers will assume additional roles. Sales Consultants will begin to present back end menus. Average transaction time will come down to 90 minutes.
Doug MacIver Small players will continue to vanish thus making medium players small.
Joe Chura HTTP2 will be something people start talking about but many won’t really understand.

There will more platforms to help consumers buy a car online but adoption will be low, although intention will be high.

Given the estimated growing increase of connected devices, responsive and adaptive will be replaced with “are you online-or-offline”? (most consumers will be connected). Many more 3rd parties will make interesting products and solutions for vehicles to grow the connected consumer experience (auto segment is predicted to grow the fastest). These products will connect to interesting dashboards and push new interesting data to power websites, CRM’s, etc.

More vendors will realize the customer journey is not linear and will make disrupting products to accommodate for that . At the end of the day process will become more important than ever and the new gadgets that could be powerful will not be utilized to the fullest. These new technologies will be akin to fitness trackers like Fitbit, Jawbone, etc which provides great data, but unfortunately don’t make you lose weight (yet)…Dealers with the strongest processes will win. The minority that can introduce these new technologies while strengthening their processes will jump ahead even further.

Jeff Kershner NADA Predicts 17.6 million new car and light truck sales for 2017. That’s a lot of vehicles. Meaning many lazy dealers will be allowed to be lazy and still sell a fair amount of vehicles. However, the dealers that that are getting their sh&t together will have an even greater opportunity to increase market share while increasing their opportunities for service rev. Mobile ad blockers – there was a small wave of these services 2014 early 2015 until they ran into some security issues. Will we see a return in these services as they improve?…especially since they’re allowed on iOS9’s playground. When and if we do, will it be something to consider? 
Bill Playford Sales will plateau on weaker demand, with only a slight uptick, if anything. The Fed will be forced to raise rates, which means there will be more pressure on captive financing. We’ll see incentives close to pre-2008 levels to try to maintain the sales momentum from the previous two years. These three things combined will put pressure on overly-leveraged OEMs,

Dealer consolidation will continue at an even more torrid pace. Vendors will be forced to consolidate further to offer the required scale to service the larger dealer entities. Larger, vertically integrated vendors, will leverage their data gathering capabilities to strengthen OEM partnerships, filling the chasm between specialty consulting and existing preferred-partners. Traditional venture capital and private equity will be readily available to fuel the retail automotive growth, as tech-startup valuations soften dramatically. The big will get much BIGGER.

Consequently, the small will have to deliver tremendous value. Mom and pop stores will have to create a differentiated experience, or be forgotten. Those who strategically focus on a specific market segment will win big. The small providers on the vendor side will be collecting their last checks. The scale and complexity of today’s business will wipe out the “generalist.” Those who specialize, and can scale to the necessary level, will soldier on. It’s the time in history to eat or be eaten. Boldest prediction: Despite record sales, FCA goes on life support.

Jason Stum I predict that Star Wars: The Force Awakens will be the #1 Movie of All Time! Oh wait…wrong thread…But seriously, I believe that this year progressive dealers will take this little stat from a recent Gartner Survey to heart: “By 2016, 89% of companies expect to compete mostly on the basis of customer experience, versus 36% four years ago.”
Subi Fernando Ghosh I think in 2016, we will see more dealers actually, truly selling cars online… selling, paperwork, f&I via webcam… the whole 9. Consumer experience is becoming far more important and widely reaching if done correctly and hurting dealers significantly if done incorrectly.
We will also see Dealership Culture becoming more and more embraced by dealers looking to overcome price objections and looking to steal (or steal back) marketshare.
Glenn Pasch May more dealers invest in their education. Thanks Eric Miltsch as always
Owen Moon Mobile will continue to dominate shopper behavior. It’s no longer a buzzword, but now a way of life. If you want to reach consumers you need to have a strategic mobile strategy in place in 2016 and beyond.
Mary Siobhan In-market, more brands will leverage facial recognition and eye tracking to analyze shopper reactions & digital content will become unlocked and flow from brand sites to showrooms; in-vehicle, improved natural language processing for voice commands.

 

For more of Eric’s yearly predictions check out his previous posts:

https://dlrfr.sh/predictions2018

http://dlrfr.sh/2017autopredictions

http://dlrfr.sh/refresh2016predictions

https://dlrfr.sh/4predictions2015

https://dlrfr.sh/6predictions2014

Eric Miltsch
Husband, Dad, and Co-Founder of DealerTeamwork.com - we made the car industry’s patented #MPOP for dealers. Aspiring race car driver, terrible golfe...