Efficiency is the new benchmark for success, according to Michelle Denogean, CMO of Roadster, and the second speaker of the DealerTalk 2020 virtual event.
During her presentation, Denogean explored findings from the company’s latest Dealer Impact Study that was conducted by Roadster and the National Automobile Dealers Association (NADA) in the United States. It was done in two “waves” to analyze the effects of COVID-19 on the auto retail industry.
The first wave found that sales declined, online engagement and sales efficiency increased, and dealerships using digital retailing at the time the survey was conducted were able to sell more cars, per person, with less staff. The second wave found that the pandemic paved the way for greater efficiencies for both dealerships and consumers.
“The big takeaway, because I think this one hits the bottom line the most, is that it (digital retailing) allowed dealerships to sell more cars per person,” said Denogean during her presentation.
In an interview with Canadian auto dealer, Denogean said they started tracking this progress back in May when showrooms were closed or only open by appointment. This is when they started to see the trend around efficiency.
“For the first time in 35 years, NADA, who we also partnered with for this study, also started to see that the units per salesperson was growing,” said Denogean.
She said the units remained “pretty static” around nine or 10 units per person over the last decade, but now it has increased. In the first wave of the study it was 13 units per person (May 2020), while the second wave of the study showed that number jumped to 16 units (September 2020).
According to the report, the increase comes thanks to a combination of two things: reduced staff and increased sales.
Based on the study, 44 per cent of dealership respondents are still operating with less staff, with the average staffing level at 92 per cent. The average dealership is also at 104 per cent of pre-pandemic sales volume. Many dealerships have moved to a digital environment since the first study was conducted. In fact, 46 per cent of omni-channel dealers say they can sell more per person now, versus 24 per cent last spring.
An example in the study indicates that in 2019, a dealership sold 160 units monthly of new or used vehicles with 16 salespeople, resulting in an average compensation per units sold of $584.45. Data from the 2019 NADA Dealership Workforce study shows a new potential model of a dealership potentially reaching those 106 units with only 10 salespeople by boosting its level of efficiency, which can help reduce the compensation per unit sold to $368.94.
“We’ve been talking for so long about how digital retailing as a category is really helping dealerships modernize the customer experience. But really, if we can’t figure out how to become more efficient in selling to our customers, then we can’t really modernize it,” said Denogean.
She adds that “We all know that the number one thing consumers have complained about for years is the time it takes to purchase (a vehicle). If we can get faster at it, and empower them to have a faster transaction, then it’s a win-win.”
In 2019, 10 per cent of consumers on average completed a portion of their purchase online; that number increased to 44 per cent in September 2020. Furthermore, 63 per cent of survey respondents said their vehicle purchase was faster when compared to their last vehicle purchase.
Selecting a vehicle was the most common car-buying activity online for 61 per cent of consumers, followed by financing/ leasing (35 per cent), credit application submission (34 per cent), price negotiations (34 per cent) and F&I selection (23 per cent). At the bottom of the list, the least popular car-buying activity performed online was the trade-in submission, although that also increased — to 22 per cent in 2020 — versus 10 per cent in 2019.
Of the dealers surveyed for the study, 88 per cent are using digital retailing tools, while only 34 per cent are using an omni-channel solution. Dealers found that an omni-channel approach to digital retailing helped its team complete transactions in a contactless way (52 per cent in wave one versus 64 per cent in wave two).
Between the two studies, more dealers in the second survey found the omni-channel approach made their sales process more efficient (faster), and it allowed their team to sell more vehicles per person. However, the study also indicates that the broader picture is not just about the technology and effectively using the right tools — it is also about hiring the right talent.
In May 2020, survey respondents listed their most valued skills in an employee as being customer-service friendly and going the extra mile, followed by tech savvy and process-oriented. In September 2020, tech savvy and process-oriented moved up to take the number one and two spots, respectively.
“As we move forward, hopefully we’ve learned the skills that we need using the technology to just hit the ground running if we really do get into a situation where showrooms are really closing again, and having to sell completely, remotely like that (online),” said Denogean.
Wave two of the study was conducted between September 8-25, 2020 and included 320 dealers across the Roadster client base, NADA Academy Students, recent NADA Academy Alumni, and NADA 20 group members, in addition to 1,000 consumers who purchased a vehicle between April and August, 2020.
