Tag: Modal

DR and Dealer Websites

I was chatting with my pal Kiran Karunakaran about his new role at Fox Dealer.  You may recall that Kiran’s DR solution, TagRail, was acquired by Fox earlier this year.  At that time, I figured DR would be an absolute requirement for dealer websites, and I expected to see CDK bid for, say, CarNow.  Here are the pairings:

  • Fox Dealer, TagRail
  • Dealer Inspire, Online Shopper
  • Dealer Fire, Precise Price
  • Dealer eProcess, SARA
  • Dealer.com, Accelerate

Note that, with the exception of TagRail, these DR solutions were all developed by their website partners.  Missing are the pure DR startups I usually write about: Roadster, Modal, and Moto.  Maybe they’re better off uncommitted.  I decided to test this theory with a little research.

I went through Wards’ Top 100 Internet Dealers, identifying the website provider for each one, and their DR solution.  The Wards sample skews strongly toward DDC, at 60%.  The Datanyze survey (chart above) has DDC at 18%.  Remember, I am not looking for market share so much as patterns in DR adoption.

For example, 20% of “top internet dealers” had no DR solution.  That was a surprise.  A few of these had cobbled together the Dealertrack frame with Trade Pending and a homebrew payment calculator – not DR as it is usually defined.

Same-vendor pairings for DR and website were rare

Some dealers use the same website and DR solution across all their stores, and some skip around.  Herb Chambers uses DDC and Darwin faithfully except in his Chevy store, which uses CDK and Shop Click Drive.  Paul Rusnak and Fred Anderson are faithful to Roadster and Gubagoo, respectively, but vary their choice of website providers.  Of course, these choices are often mandated by the manufacturer.

Of manufacturer DR preferences, the best known is probably Shop Click Drive, followed by AutoFi.  AutoFi is historically associated with Ford, and still used mainly by Ford dealers.  I did find one Kia dealer in Peoria using AutoFi.  Chrysler’s DriveFCA is powered by Carzato.

Same-vendor pairings for DR and website were rare, at 12%.  These were almost exclusively DDC with Accelerate.  I found one instance of Dealer Inspire with its mate, Online Shopper.  Free-agent DR solutions did much better than those associated with website providers.  Roadster, Darwin, and CarNow together accounted for 59% of DR in the sample dealerships.

As it happens, CDK did not acquire a DR solution.  Instead, they sold their website business to Sincro, a digital marketing company.  The Sincro announcement reminds us that what I am calling the “website business” may also include digital content, advertising, SEO, social, reputation, CRM, and lead-gen.

The right framework is not DR plus website, or even DR plus website and marketing, but a continuum across the customer journey.  The journey begins with the various marketing services required to land the customer on the website, and ends with point-of-sale (POS) systems like menu and desking.

Recall that Roadster, Darwin, and Moto also play in the POS space.  At the other end, there are pure-play marketing agencies that don’t do websites.  You can evaluate strategy for these companies in terms of where they are concentrated along the journey, and where they are extending.

Dealer Fire moved up funnel, through their partnership with Stream, and Fox extended down a notch with TagRail.  Darwin is unique in having moved to DR from point of sale. (I am using the linear model for simplicity. To account for CRM and reputation, you need the loop model.)

My goal here was to explore the synergy between DR and dealer websites, and the answer is that they’re not as compatible as they appear.  Research showed much less crossover than I had expected, between marketing agencies on one side of the BUY NOW button, and DR specialists on the other.

Digitally Disrupting Dealer Systems

I hesitated to use the D word here.  So much of digital is normal, healthy evolution, that saying “disruption” is like crying wolf.  So, I will digress briefly into that discussion before presenting my thesis, which is: traditional dealer-system providers are about to be whipsawed bigly by digital retail.

According to Gartner, digital disruption is “an effect that changes the fundamental expectations and behaviors … through digital capabilities.”  This idea of changing expectations is echoed by Aaron Levie, to the effect that businesses “evolve based on assumptions that eventually become outdated.”

If your UI even vaguely resembles an airline cockpit, you’re doing it wrong – John Gruber

Another common theme in studies of digital disruption is that people will come from outside the industry, bringing new attitudes and techniques that incumbents can’t match – something I like to call “advanced alien technology.”

Modal’s Aaron Krane came from online sports betting, and famously wondered why there is no “buy now” button on the Mercedes-Benz web site.  Andy Moss of Roadster came from online fashion retail.  I think I am on solid ground arguing that DR pioneers bring something fundamentally different.

In fact, I can identify the baseline assumption which is now outdated.  In olden times, the user of auto retail software was an auto retail employee.  These were experts, executing an esoteric process, and they could be trained to deal with crappy user experience and disjointed workflow.

Today’s user is, of course, the car buyer.  A few years ago, I wrote that each of the six canonical tasks in DR would need a “buddy” on the dealer side, with which to share information.  For example, the website may disclose prices for protection products, and it would be nice to pull retail markup from the menu system.

It’s hard to believe how quickly DR has evolved.  Roadster had just launched Express Storefront when I wrote that article, and already the buddy system is dead.  If a car buyer can desk her own deal, at home in her pajamas, why use a different system in the dealership?

The advantages to using the same system in store and at home include trust, transparency, cost savings, and reduced demands on the salespeople.  The new generation of in-store DR means that salespeople can be experts in customer service (and cars) instead of complicated software.

This marks the culmination of important trends in auto retail, from “one experience” at Sonic to “single point of contact” at Schomp, and it should serve as a wakeup call to old-school software vendors. Digital retail will drive a gradual shift in dealer process, but a rapid one in software.

Tier One Digital Storefront

Today, we continue our discussion of digital retail, this time from an OEM perspective.  Suppose you work for Morris Motor Finance and you want to get in on the fun.  The most straightforward way is to subsidize your dealers’ use of a storefront.  Simply negotiate a discount with one of the leading vendors and supply it to dealers who meet their penetration goals.  You may already have programs like this, encouraging dealers’ use of a credit system or a menu.

In addition, you may want to add digital retail capabilities to your tier one website.  This is a bit of a balancing act.  The customer is here to see the full range of vehicles and accessories, along with your financing options and Morris branded protection products.  Once you make the turnover to a specific dealer, the selection will be limited.

So, either you drop downfunnel straightaway, like ShopClickDrive, and the customer is only looking at one dealer’s inventory, or you run the risk of promoting something that a specific dealer doesn’t have.

Another conundrum involves the display of pricing online.  Dealers have gotten used to the idea of disclosing MSRP for vehicles, and maybe finance rates, but there is still resistance to online MSRP for products.

I don’t need to tell you how to handle the Morris Motors dealer council, but you might want to assert a division of labor.  Your site is higher in the purchase funnel, where 22% of new car buyers will start their journey, and serving a different purpose.  Now let’s consider the six canonical tasks:

  • Choose a vehicle – The customer is not choosing a specific vehicle from inventory, but a generic new vehicle by model and trim, or a build vehicle. This is also the time to upsell accessories.
  • Price the vehicle – Using MSRP simplifies the design, but it also impairs accuracy. If the price changes, the dealer may recalculate the deal with his own desking system.
  • Price protection products – Show products before structuring the deal, because they will be financed, and you don’t want the customer fixed on a payment that doesn’t include products.
  • Value the trade – In this scenario, I would recommend a simple KBB lookup with the customer choosing “good” condition from a list, assuming that it will be revised in the dealership anyway.
  • Structure the deal – The goal here is basically to choose lease or retail and promote your offerings, plus any incentives. Unlike the dealer’s desking system, you don’t need to be penny perfect.
  • Organize financing – Obviously, you want first crack at the credit apps, and then you need an interface so you can feed the result into your dealer’s credit system. Send your declines, too.

Lastly, the customer will save the deal and transmit it to their chosen dealer.  It is really more of a “lead” than a deal, at this point, and you have a “lite” version of the digital storefronts we have been discussing.  I toss out the interface thing lightly, because this is my specialty, but you will have to choose whether to work with Route One, VinSolutions, Dealer Socket, etc.  Back to the dealer council…

What is a Digital Storefront?

A digital storefront is a complete car buying experience that can be bolted onto the dealer’s existing web site, and integrated with the dealer’s instore process.  It must support all six of the canonical car-buying tasks:

  1. Choose a vehicle
  2. Price the vehicle
  3. Price protection products
  4. Value the trade
  5. Structure the deal
  6. Organize financing

This is not always a linear process, as I explained in Workflow for Online Car Buying, and not all customers will use the full process, as Andrew Tai explains in this video, but the storefront must support whichever tasks the customer chooses.  Details about the six tasks are given here and here.

… delivering an omnichannel experience that is unmatched and, we believe, will be the future of car buying – Bill Nash

When you think of a good online process, like the CarMax omnichannel sales experience, these tasks are a native part of the web site.  Dealers that don’t happen to be CarMax can offer an online process by bolting a storefront onto their existing web site.

As far as I can tell, this innovation is due to Roadster, but they are no longer alone.  Roadster’s Express Storefront went up at Longo Toyota two years ago.  TagRail, Modal, and Moto also compete in this space.  TagRail and Modal both brand their offerings as “digital checkout.”

By “bolted on,” I mean to include the various techniques used to move the customer from the dealer’s web site into the online buying process.  Modal is actually named for a programming technique, the modal window, and Roadster uses a link.

The transition, however, must not look like it’s bolted on.  Roadster shows a good example, here, of preserving the dealer’s original site design.  I can tell it’s Roadster by looking at it, and programmers will notice the “express” subdomain, but this is a seamless transition for the customer.

Also seamless should be the transition across platforms and into the dealership, an experience known as “omnichannel.”  Think of a credit plugin like Auto-Fi.  It allows the customer to apply for credit on the dealer’s web site, and also updates Route One in the dealership.  You never want to redo a task the customer has already done online.

For a storefront there are multiple potential integration points – inventory, CRM, desking, menu, and credit.  The customer may start a deal on the web and then walk in to finish it, or vice-versa.  They may engage the storefront on a tablet or kiosk in the dealership, and finish it at home.  The goal is to support all six tasks wherever the customer chooses to do them.