The world is changing, over the past ten years consumers buying behaviours and habits have changed dramatically. Consumers have evolved, they’ve been adopting automated processes that disrupt traditional lending ecosystems, which in turn creates new norms for the industry to follow suit.
In this blog we cover:
- Digitising the automotive finance journey
- What is a virtual car showroom?
- How does it work?
- The reasons why virtual car tours are the preference of customers
- The reasons why virtual car showrooms will be the best place to sell cars in the near future
- How else can I make sure my business is keeping up with industry digitisation?
- What’s stopping dealerships, brokers, and car finance lenders from adopting digitisation?
- What’s the outlook?
Digitising the automotive finance journey
The automotive industry is undergoing a digital transformation, with data speed and accuracy driving the trend. With technology paving the way for the future of consumer finance, the push for digitisation can be felt across the financial services industry and is met with a need for automotive dealers, brokers, and lenders to implement a digital strategy to remain competitive.
What was once considered innovative has now become commonplace, and as the demand for smartphones amongst consumers grows so does their expectation that they will be able use these devices during every step of purchasing or financing a car. Some consumers are even going so far as demanding virtual showrooms which allow them to complete their full car buying journey without the need to leave home! Last year, dealerships reported an 25% increase in mobile device usage by shoppers looking for new cars.
What is a virtual car showroom?
Virtual reality car showrooms (VR Car Showrooms) enable customers to digitally experience a fully immersive car buying journey, from the comfort of their own homes.
The pandemic has fast-tracked adoption of virtual reality across the world, and what was once only used for entertainment is now being adopted by corporations across many industries worldwide.
Customers want to be able see many different cars in detail before they buy. If you’re a dealership, this is an opportunity for your company because it means more sales and happier customers! Virtual tours allow people who can’t visit the lot or showroom easily get access 24 hours per day 7 days per week via their phone’s browser app or VR headset while sitting at home on virtually any device imaginable – all without having go outside (or even leave the sofa).
How does it work?
Imagine yourself laying on your sofa and entering a car showroom, you’re greeted by Dave the dealership manager who helps to guide you around the available cars and even offers you a 360 tour of your favourite vehicle. You’ll get the opportunity to inspect the car in three dimensions, including the vehicles interior. You can even change the paint colour and internal specification to suit your individual needs, providing a more customer-centric experience vs what you’d receive in store.
There are many reasons why virtual tours of a car are preferred by customers. Here are just a few:
- It gives customers the freedom to see much more than high-quality images
- Wherever they are, they can see as many cars as they want and spend the time reviewing them without feeling pressurised
- They can personalise and tailor their experience
- They can access the virtual tour 24/7
Given the improved customer experience and levels of buyer satisfaction, it’s likely that virtual car showrooms will surpass online marketplaces and trade websites in the race for the best place to buy and sell cars online.
Let’s breakdown the reasons that virtual car showrooms will be the best place to sell cars in the near future.
Direct impact on sales
- The reach of VR is higher than a showroom walk-in, and with VR showrooms being accessible 24/7 customers are no longer confined to standard opening hours
- According to research undertaken by Google, 3D virtual tours increase online business traffic by 41% overall, and by 130% amongst young individuals aged 18-34
Provides a more customer-centric experience
- High quality videos and images are incredibly important on any website, but will find it difficult to compete with the fully immersive feel of virtual reality
- Customers can choose the make, model, colour and even specification of the vehicle they’re viewing – giving them more reason to make a purchase decision
It can help your business stand out
- We all know that the automotive retail and finance industry is a saturated market, so by utilising VR technology you can be one of the first in the UK to offer a fully digitised customer journey
At Marsh, we believe that virtual showrooms are necessary for the modern consumer, as most buyers wishing to purchase a new car utilise digital technology for research.
Whilst many organisations will not be able to adopt this level of technology straight away, there are other things that you can do to ensure that you’re staying ahead of the curve.
How else can I make sure my business is keeping up with industry digitisation?
Digital Marketing
Dealers and Brokers must adopt a multi-channel digital marketing approach, which leverages mobile, paid search, SEO, and social media platforms such as Facebook, TikTok and Twitter if they’re wanting to attract online-first car shoppers.
It is important that dealers and brokers increase visibility on search engines when potential customers are searching online about cars at nearby locations. Geolocation advertising technologies allow businesses to not only track when users go within a certain distance of the car showroom, or any chosen location but also to send them automated alerts related directly towards their car buying preferences. This creates curiosity and re-engages customers who may not otherwise think of coming back to the showroom, unless specifically alerted via text message/email during specific times throughout each day.
Dealers should be paying attention to social media, as it is an important way for customers and potential buyers alike find information about cars. In fact, nearly one quarter (24%) of prospective car-buyers use Facebook before making any purchase decisions!
Millennials are becoming one of the most sought-after demographics in advertising because of their growing need to connect with others on social media. This generation has grown up surrounded by technology, so it’s no surprise they’re utilising its capabilities more than any other before them.
Customer experience and UX
Dealers and Brokers must realise the importance of implementing enhanced digital capabilities to deliver benefits for both their business and for the consumer.
In the not-so-distant future, car finance lenders will be able to offer a fully digital customer lifecycle which includes everything from digital marketing, to purchasing and servicing.
The digitalization of dealerships, brokers and lenders has many benefits for both customers and businesses alike. Not only can it help consumers find their perfect car at the touch of a button, but it can also increase operational efficiencies within your organisation, which means better quality control in addition to fostering customer loyalty with every new purchase!
Ok… so we now know the benefits of digitisation, but what are the things stopping dealerships, brokers, and car finance lenders from making these changes?
Whilst we all agree that digitisation results in better efficiencies, more streamlined processes and a better customer experience, the process to obtain these levels of success is one with many bumps in the road.
Traditionally, car financing has relied heavily on face-to-face interactions which has created a pattern of ease and routine for most organisations, and some reluctancy to embed the change. But as the needs of the consumers are shifting more and more towards a fully digital experience, it’s important that organisations are reacting to the new-world – if they don’t, they may get left behind.
Here are the top three areas preventing dealerships, brokers and car finance lenders from adopting digitisation:
- Compliance – many dealers fear a fully digitised retail experience will increase non-compliance penalties and find comfort in their tried-and-true processes
- Profitability – unlike in-person sales, when a customer is making a purchase digitally there is less room for negotiations and in turn decreases their profit margins
- Budget – smaller dealer groups and introducers may not have the budget to allow employees to focus on a digital strategy
Did you know that recent research found that almost 64% of car dealerships do not offer customers the ability to purchase a car digitally? The feedback from these car dealerships, brokers and lenders stated that the biggest challenge ahead of implementing a fully digitised service is the in-ability to negotiate the financial terms or purchase price in person.
Whilst there are concerns and reluctance to change, many dealers, brokers and lenders in the automotive industry see that the benefits of a digital business model outweigh the costs and would like to incorporate technology into the backbone of their goals to embrace the digital future and will look to lenders and brokers to assist them.
Let’s solve these challenges:
- Compliance – at Marsh, we know that as a lender we have the knowledge, experience and competence to build a fully compliant digital solution. We’ve been in the automotive finance industry for almost 50 years, so are confident in our ability to support you through this period of change.
- Profitability – having worked with numerous dealers and brokers through a digitisation process, Marsh has tried and tested processes that will help to ensure you maintain the same levels of profitability. In fact, we’re sure that we can increase your profits utilising technology to improve process efficiencies.
- Budget – Marsh has an industry leading API portfolio which is being utilised by a wide range of partners. We’ve done all the hard work for you to ensure that your journey to digitisation is a breeze, with minimal budgetary requirements.
What’s the outlook?
The innovative early adopters who invested in digitisation are already reaping the rewards through an increased return on investment, which has enabled them to deploy technology more broadly.
Many customers are now opting for used cars which has caused an increase in both demand and pricing – large used car dealerships and brokers are now having to rely on digitised platforms to effectively manage the volume of transactions. Post-pandemic the demand for fully digitised sales processes and virtual engagement continues to increase in the motor finance industry, especially with D2C sales and refinancing activity.
The question is no longer ‘Should the automotive industry adopt digitisation’, instead it’s a race to implement these changes to prevent getting left behind.
Fancy a chat about how Marsh Finance can support you with process digitalisation as a dealership or brokerage? We offer FREE support to all Marsh Partners, get in touch today!