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Many car dealerships struggle to find the right balance between profitability and productivity.
In 2020, the automotive industry had to step up and navigate the digital world as consumers were less willing to visit dealerships. Improving sales in an already challenging market meant improving dealership efficiency. While many believe car sales to be a very in-person process, there are many ways a dealership can use technology to improve its efficiency.
What is Dealership Efficiency?
Dealership efficiency is the concept of measuring how well a dealership uses its resources to sell more cars and make more profits. Unfortunately, car sales in the United States have been dropping since 2016, leaving dealers wondering how to increase sales.
Total car sales in the U.S. have been slowly decreasing since 2016, when total units (new and used) sold peaked at roughly 17.5 million. In 2017, it dropped to 17.2 million before seeing a slight increase in 2018, with 17.3 million units sold. However, total units sold from 2019 to date have declined significantly.
Many factors were responsible for this drop in numbers. However, one significant factor was overall dealership efficiency.
According to a Cox Automotive study, over half of the car buyers say the car-buying experience hasn't changed since they purchased their last vehicle (52%), while 9% believe the process has gotten worse.
One of the leading complaints? Dealership inefficiency.
They feel they are wasting their time sitting in the dealership having to deal with various processes that could be much more streamlined.
Dealership efficiency is vital for several reasons:
- Your employees will be more productive and satisfied with their work, leading to increased sales per employee.
- You better serve your customers, and they have a better experience.
- You can make necessary changes to meet consumer demands more quickly, increasing your chances of return buyers and customer recommendations.
- Reduced stress for employees and customers.
- Reduced overhead costs.
Why is Technology Important to Dealerships?
To improve dealership efficiency, dealers should focus on implementing new technology throughout the workplace.
Why? Technology can help reduce stress, increase productivity, and eliminate monotonous tasks from employees’ workflow. For example, technology can help you eliminate the need for filling out paperwork. If your customer has already filled out a credit application for financing, negotiated a price for the vehicle they want, and picked out their desired add-ons – all online – then there would be no need to go through all the motions and paperwork at your dealership.
These streamlined processes have already proven successful at many dealerships. By allowing consumers to complete these processes online, they spend about 45 minutes less (if not more) at the dealership and often walk away satisfied with their overall experience, according to the 2019 Cox Automotive Car Buyer Journey study.
Improving Dealership Efficiency: 5 Tips Worth Considering for Your Dealership
While it's essential to understand the importance of dealership efficiency and consider how technology can help you get there, it's even more important to understand the steps you can take to improve dealership efficiency through its implementation.
Here are five tips you should consider to improve your dealership's efficiency.
1. Improve Your Customers' Online Experience
Online shopping has been around for quite some time. However, due to the pandemic, more people were forced to move from shopping in-person to shopping online. 86% of consumers said they shopped for cars online because they didn't want to spend countless hours at the dealership.
With more consumers heading online to begin the car buying experience, you want to improve your customers’ online experience. Improving your dealership's website can help you increase sales by streamlining the entire car-buying process.
You can optimize your dealership website by:
- Posting high-quality photos of your merchandise
- Ensuring your website is easy to navigate
- Creating a website that is optimized for search engines
- Making sure your website is mobile-friendly
- Providing a car configurator to make it easier for your consumers to find the exact car they want
- Having direct contact information for salespersons or departments
- Including a chatbot that gives prospective car buyers answers to frequently asked questions at a moment's notice
- Ensuring you have an SSL certificate to ensure secure transactions
2. Improve Dealership Employee Productivity
The more productive your employees are, the more sales they can drive. The best way to boost workplace productivity is by getting rid of outdated paperwork and replacing it with digital workflows.
For example, you can use digital workflows to:
- Create digital forms that can be filled out online
- Send digital documents to customers instead of paper documents
- Create digital contracts that can be signed online
- Create digital work orders that don't have to be re-written every single time
- Answer questions online and sending the answers to your customers via text message or email
The idea is to cut down on the amount of tedious, repetitious work that each of your employees has to do throughout the day. By implementing digital workflows, your team can get more done throughout your day. Even better – the more time your employees save by not having to run back and forth for paperwork between departments, the faster the entire buying process will be, resulting in more satisfied customers.
3. Reduce Wait Times with Vehicle Location Technology
Confidence is key when attending to a consumer in-person, and nothing is more frustrating than not finding a specific vehicle on the car lot.
While inventory management software can help you keep track of what is in stock, GPS-based location technology will make cars easier to find on the car lot and thus improve customer experience.
Technologies such as LotVision, a GPS-based wireless device by Cox2M, are simple to use. All you need to do is insert the device into the vehicle's onboard diagnostics port, and it will report the vehicle's location within 10 feet. Instead of taking 30+ minutes (or even hours for some larger lots) to find a vehicle for a customer, it can take a matter of minutes.
4. Introduce Digital Vehicle Inspections
One of the biggest pain points for car buyers is having to wait for hours while their new car undergoes its final inspection at the dealership.This usually involves a dealership technician inspecting the car for any last-minute issues before the new owner drives it off the lot.
However, with the introduction of digital vehicle inspections (DVIs), this is a thing of the past.
DVI apps allow your technicians to quickly scan the vehicle for any issues, reducing customers’ wait times significantly. The DVI app will then generate a checklist of any issues found, which can then be presented to the customer. This helps to inject transparency into the process and removes any doubts the customer may have about the car’s condition.
5. Encourage Digital Communications
The automotive industry has always been one of the last holdouts when it comes to digital communications. However, more and more dealerships are starting to see the value in digital communications.
Digital communications can be used to:
- Communicate with customers in real-time
- Send appointment reminders
- Send automated emails with information about various promotions
- Inform customers when their cars are ready for pickup
- Share digital documents, such as quotes, contracts, and work orders
- Provide information about the dealership's service specials(e.g., oil changes, tire rotations)
- Notify customers of recalls
Improving Dealership Efficiency with Cox2M
If your dealership needs an efficiency upgrade, then LotVision by Cox2M could be just what you're looking for.
LotVision allows you to view your entire vehicle inventory and handle all maintenance and reconciliation without wasting the time of your team, and more importantly, your customers. From locating vehicles on your lotto tracking productivity, dealers of any size can improve their dealership efficiency and productivity.