Automotive retail started 2020 under significant strain. Dealership profitability in the UK already sat under 1%. Changing customer expectations, technological development and pressure from direct-to-consumer strategies by OEMs (original equipment manufacturers) created a demand for industry-wide change. Then, COVID happened.
Social distancing and shrunken consumer spending have accelerated transformation already underway, and created new challenges to be overcome. The European Automobile Manufacturers Association (ACEA) forecast a 25% reduction in EU passenger car registration for 2020. Success in 2021 requires answers to fundamental shifts around:
Business intelligence tools can ground your reaction to each of these forces in data about your organisation, customers and staff. The right tools will also help you manage and take actions based on the resulting insights.
This article is going to look specifically at what our own tool, Loop can deliver. Some of this will be applicable to standard BI software. The KPI functionality and performance management tools are more unique to our product. However, you should be able to find use-case inspiration for an existing tool, and gain a better general understanding of what quality business intelligence can do for you.
If you’re relying on paper records or Excel spreadsheets saved on different computers, work-from-home is a nightmare. It’s hard to overstate the value of simple remote access to your data — in the current environment and in general.
Investing in a business intelligence solution will force you to digitise your data. It will then provide centralised access to a single-source-of-truth for information about your entire network, and surface insights about how to put that data to better use. A good business intelligence platform will also help you transform those insights into actions.
Even if you don’t invest in a business intelligence tool, making sure that you have remote access to your data is a critical step to navigating 2021. Something to consider is that a BI provider might also be able to help you get legacy assets into the cloud, and then calibrate access — this is something we’ve helped many of our clients achieve.
Car sales were already moving online, COVID accelerated this trend. But this doesn’t mean the dealership is obsolete. Consider the following statistics:
The reality is that although online channels are critical to the buying process, people still want to visit a dealership. In fact, this same period of time in which online sales became a reality saw a rise in the average number of dealership visits by customers.
Things get even more complicated when you consider that a customer might visit a dealership, even visiting it multiple times, only to then make that purchase online. Network consolidation is part of recovery. But both short and long-term, dealerships remain important — they might, however, have to change.
There are three main challenges with online sales for dealerships:
X and O (experience and operational) data reporting can help hone in on points of friction between in-person and digital channels. Centralising your data will also help identify areas of product expertise within your business, information you can use to help create online sales collateral.
However, the central value of business intelligence here is gaining a clearer view of how your customers are interacting with staff, and where interactions lead to sales. You can use this data in a number of different ways. For example, distributing sales bonuses across every contact point a customer has before making a purchase, or looking at regional revenue as a driver of sales bonus criteria.
Fundamentally, online sales may change the role of the “car salesman”, and business intelligence tools can help you understand transformation. Business intelligence tools with KPI improvement functions can then help you communicate those changes and track outcomes.
Note: Transitioning away from the “high-pressure” sales environment of the traditional showroom floor may also make it easier to establish longer-term relationships with customers. This means more aftermarket sales and more growth — bringing us directly to the next point.
Facing squeezed margins, auto dealers need to find new ways to provide value to customers. Luckily, customer expectations are in a period of transition, paving the way for innovative and revenue growing solutions. Some interesting ideas are:
BI tools allow you to better understand your customers and track how they engage with new offerings. Use data to develop creative ways to better serve your customers and review how they respond. You can then use the KPI tracking and improvement infrastructure of a business intelligence tool like Loop to track how these different services are delivered, and roll out effective training and policy updates to match customer engagement.
Per-dealership sales have been on the decline in the UK since 2016. Although they began to stabilise in 2018/19, this was at levels below the early 2000s. COVID has sent these sales figures off a cliff.
We should expect to see these numbers recover as COVID recedes. But there is a more fundamental reality: dealership networks will need to consolidate over the next few years in order to remain profitable.
The reduction in sales per-dealership is directly related to online sales. However, as we have already discussed, these figures can be misleading. Just because a dealership didn’t “close” a sale doesn’t mean that dealership wasn’t instrumental in that sales process.
You need clear access to data and sophisticated analytics in order to dissect these numbers and actually identify all of the different ways in which different dealerships contribute to your sales process. Only by doing this will you be able to consolidate that network and reduce costs while growing sales.
To meet the challenges of the future, automotive retailers are going to need to be agile. Predicting change and reacting to change are both critical. However, your ability to do this will be improved by efficiency and clear channels of communication.
Efficient processes improve margins, providing much-needed breathing space. Communication lets you execute change with ease, draw feedback, and review success. Possible mergers and acquisitions that may result from the current economic situation only heighten the importance of efficient communication moving forward.
A fundamental use case for business intelligence is finding efficiency. Only with a detailed understanding of your operations will you be able to identify redundancies and reduce waste. Centralising your data, automating analysis and simplifying access also brings inherent efficiency to your organisation.
Loop, specifically, was built to simplify the transformation of BI insights into actions. We did this by including communication and KPI functionality within the tool. Again, this delivers improved efficiency itself, but also helps you address challenges around general communication — even within a remote working context.
When thinking about how business intelligence can help you, remember that data (alone) is not the answer. It’s all too easy to be overwhelmed by information. The future of “big data” will likely be dominated by analysis, not data collection. You need platforms able to direct you towards the right information at the right time. You also need tools that can help you take action on that data, not simply collect it. A BI tool should help you centralise access, get insights and then communicate and track actions. We’ve built Loop around these principles, but they should be central to whatever solution you pick.