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2022 Dealership Playbook: State of the Industry and Creating Success

December 16, 2021

It is hard to believe we are in the last two weeks of 2021. I am still writing 2020 on most things, and I feel like possibly skipped over a year.

The automotive landscape has continued to develop, grow, and shift throughout the pressure-cooker of 2021.  The virtual retailing process is a mainstay in automotive’s digital transformation, and this is much more than just having a digital retailing tool on your site. We will review the state of the automotive industry heading into the new year, and then break down a playbook for engagement success. 

State of the Automotive Industry Year-End 2021 with Projections into 2022

Below is an “at-a-glance” view of the current state of automotive, with projections into 2022. As we continue forward and create the new landscape of automotive selling, there are key areas that we cannot ignore.  Inventory, the constantly evolving customer path-to-purchase, and merchandising and advertising vehicles should be top of mind for every dealer.

  • The SAAR (Seasonally Adjusted Annual Rate) declined from 13.2 M in October 2021 to 12.9M in November 2021
  • Reduction in inventory due to many factors, including a chip shortage, supply chain issues, and shortage of staff/workers are projected to continue into 2022.
  • Prices for new and preowned vehicles were consistently up in 2021 and inflationary pressures are expected to continue.
  • While North American factories are expected to produce (+/-) 2 million additional vehicles, it will still be well below demand levels
  • Expect pent-up demand to continue as buyers wait for pricing to reduce and/or manufacturer incentives to increase.
  • With low inventory on both new and preowned vehicles, the average time on-lot for vehicles has averaged 31 days and is projected to remain there or slim down even more. 
  • 76% of customers are open to a fully online car buying experience
  • 84% expect more of the buying process to be online/virtual
  • Dealership loyalty is down 1.6

While this may look like a dark and gloomy forecast, there are multiple positives woven throughout. Floor plans decrease as we keep fewer vehicles on-lot and customers become more accustomed to ordering vehicles. As the numbers suggest, inventory is not going back to pre-pandemic numbers of a 120 day supply. Customer expectations are driven by the current and transformative model of easy online transactions, and we need to bridge the gap between expectation and what we truly deliver. There are some key elements to enact to ensure your dealership is transforming with their customers and providing the relationship needed to help increase dealership loyalty and return service/sales customers. 

Automotive Playbook for 2022

As James Clear states in his book Atomic Habits

You do not rise to the level of your goals. You fall to the level of your systems. Your goal is your desired outcome. Your system is the collection of daily habits that will get you there. This year, spend less time focusing on outcomes and more time focusing on the habits that precede the results.

It is time to create systems in your dealership that are repeatable, that are based on consumer desire, and that are going to continue to move your dealership forward in regards to a digital transformation in the art of selling vehicles. 

Marketing: Meet Customers Where They Are

With less inventory and consumer acquiescence to purchase cars at sticker price, many dealerships have greatly reduced their marketing budget. And while in the short term this was a fiscally positive action, in the long term, you lose more than you gain by shutting down entire marketing channels. Social media is one channel you need to continue to broadcast on. And with the low cost of ads and the ability to grow an organic audience, this should be a focus for 2022. 

TikTok, Instagram, and Facebook

Many dealerships were reluctant to jump on the TikTok bandwagon when it first came out for many reasons: It was yet another platform that you needed to manage. Content had to be created. And seriously--only 14-year-olds were consuming dance content on this site. 

Well, the audience was greatly off, and just in the automotive sector, there were 60 Billion views of car-related material in the first half of 2021. There is a growing demand for automotive content, and the first to create quality content and curate an audience will win. Many dealerships have already started their professional TikTok channel for their dealership, and here is a guide that will help you get started. 

Facebook and Instagram remain the powerhouses, and remember--you can create 1 piece of content and share it on multiple platforms. Instagram highly favors Reels in their algorithm, TikTok videos can be uploaded to both Facebook and IG.

Managing your Customer Engagement

Once you have curated your audiences and have content being published, customers are going to engage with your content. This is the magic of social medial--the building of relationships on multiple platforms that could ultimately turn a fan into a follower (and car buyer). 

This means you need to have a solid process in place to handle customer engagement on social platforms. Nothing is worse than asking a question or stating a concern and not receiving a response. Customers have been trained that instant communication is the normal--especially on social platforms. Ensure you have at least 2 people monitoring and “listening” to your social channels and responding to comments, suggestions, complaints, and inquiries. This engagement will not only benefit your social media standing, but will increase customer satisfaction and build relationships with current and potential customers. 

Digital Retail vs. Virtual Retailing: Knowing the difference and getting it right

Digital Retailing Tools have been around for quite some time (I remember being part of an OEM launch for one in 2017) and have continued to evolve for dealership ease of use and process.

But what if I told you that having a widget on your website is useless if you do not have a full virtual retailing process in place for your consumers?

Digital Retailing will continue to be a push in 2022, and with other “made to order” manufacturers coming on the scene, customers will not only look for but expect a virtual retailing experience. 

Virtual Retailing is different from a Digital Retail tool in this sense: dealers need to utilize a digital retail tool on their site to help facilitate customers down the path to purchase. Dealers need to create a virtual retailing process to set expectations for customers, guide them down the path, remove any roadblocks to purchase and create an easy and seamless process. Virtual Retailing includes the DR tool, but goes beyond and truly focuses on engagement and relationship building. 

When a customer lands on your website, interacts with the tool, possibly starts to fill out a credit app and then stops, your team should reach out to the customer and pick up where she left off. Your team should be able to answer questions, direct the consumer to the links on the website needed, and ask questions to help diagnose where the customer is in the process and why she/he abandoned the tool in the first place. 

Follow this process and you should have a solid Virtual Retailing process in place for 2022:

  • Map out the customer journey from first click on the VDP to finalized paperwork
  • Decide what the defection points look like and how to re-engage the customer
    • Calls, texts, emails
  • Train your staff on the DRT as well as your process for an online purchase. Make sure everyone is well versed and comfortable with the plan.

Digital Retailing will continue to be one of the bigger areas of opportunity for dealerships, but there is truly one thing that will make this more successful than it is for others. Make sure to create a process that truly puts the customer first. Stop focusing on what will work with your current processes, and look for ways to surprise and delight your customers. Look for ways to remove any roadblocks or friction points in the virtual sales process. This is where you will find the magic in your digital retailing tool.

Engagement = Relationships and Customer Loyalty

Bridging the gap between customer expectations and your engagement process should be your focus in 2022. With customer loyalty down 1.6%, inventory hard to come by, and customers expecting instant responses from live people, this is the year to not only manage customer engagement but perfect it. Your BDC (whether on-site or off-site) are the chief relationship creators. They are the face and the first voice of your dealership for the 95% of customers who shop online before they ever decide to come into a dealership.  

There are some areas that you need to evaluate to ensure you have the right team/people in place.  First, do you have a BDC or a team to answer consumer questions and/or comments? Are they answering these 24/7/365? Are they answering them quickly and knowledgeably? 

If the answer is no, or I don’t know, it is time to evaluate your BDC needs and either hire and train up a staff or find a reputable partner who utilizes Collaborative Intelligence and not only AI to connect with customers. 

While AI definitely has its place, there needs to be a human element that can, at a minimum, address questions that a bot may misinterpret or ignore. Ensure your technology has a solid mix of technology and people to best serve your current and future customers. 

What Now?

This Playbook has focused on three areas of priority for 2022: Marketing/Developing new social channels, Virtual Retailing, and most importantly engaging with customers. 

If you would like assistance with customer engagement or are looking for solutions that utilize collaborative intelligence as opposed to AI only, Better Car People is here to help! We would love to help your dealerships perfect omnichannel communication with your new or existing customers.

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