The Social Security hurdle facing online sales

Auto retailing is shifting online, but a major hurdle stands in the way: getting customers past the credit application.

Some online shoppers are reluctant to enter personal information — especially their Social Security number — on a dealership's website. That's hampering dealerships' efforts to move more digital buyers deeper into the sales funnel before they walk into a store.

Take Asbury Automotive Group. The nation's seventh-largest dealership group is working to add lenders to its digital retailing tools to boost vehicle sales. And shoppers are responding with "a tremendous amount of activity on the tool," CEO David Hult said on the company's third-quarter earnings call in October.

"But the exit point right now for most consumers that aren't converting [is] around the credit application piece, where they are putting their Social Security number online," Hult told analysts. "It's a difficult challenge to convince a consumer in this day and age to put their personal information out there."

Asbury's experience is indicative of the challenge — and the opportunity — franchised auto dealers have in winning over the trust of consumers who, for instance, might submit personal information without hesitation on Amazon's site but balk at the idea when buying a car.

There are caveats, of course. Amazon doesn't ask for a Social Security number. And when shoppers hand over credit card and address information to Amazon, they're anticipating multiple purchases in the future. Car shoppers, unless they're thinking about returning to the dealership for service work, view acquiring a vehicle as a one-off event.

The challenge for dealers is winning trust from the modern car shopper, who often researches vehicles online before deciding to buy but probably has less experience completing a five-figure purchase, or applying for a loan or lease, on the Web. Dealerships that successfully convert buyers online also have the opportunity to win new business from rival stores by speeding up the transaction process and creating satisfied customers, digital retail vendors and compliance consultants told Automotive News.
The good news: It can be done — particularly if dealerships offer consumers value, such as convenience or time saved, which the customer perceives to be greater than what they're giving up by parting with sensitive information.

Dealerships can build trust by providing accurate information about pricing and payments to digital shoppers, creating a user experience that feels safe and transparent and communicating to consumers up front about how they secure the consumer data they're asking for.

"In my experience, there is a certain type of customer that, in the right context, is quite eager to provide their information because they believe it is a real transaction that will really save them time," said Aaron Krane, CEO of Modal, a San Francisco company that provides digital auto retailing platforms. It changed its name in June from Drive Motors.

"When you apply context to the Internet, what you wind up with is basically user experience," Krane said.

"That is going to be perhaps the most significant determining factor as to whether the buyer is willing to give that precious personal information."

Consumers' trust in dealerships' financing operations has room to grow. A Cox Automotive survey of roughly 500 consumers in 2018 found that nearly three-quarters of respondents would be willing to fill out a credit application on a bank or credit union website. That willingness falls off sharply for a dealership's website, to 53 percent. Just over half of consumers would think about filling out a credit application online at all, Cox's research showed.

The findings are similar to the experiences of some third-party digital retail providers, who say they have noticed customers drop off upon reaching the online credit application stage.

Another explanation, according to Cox: Consumers are more familiar with their financial institution, and certain online retailers such as Amazon, than they are with a dealership.

"Everybody's used to [Amazon] because they've done it a million times over. For most customers in today's [vehicle] market, this is their first digital retail experience," said Mo Zahabi, senior director of product consulting for Cox Automotive, which offers online retailing software. "It's how we communicate the message of what digital retailing is, and honestly, I think we need to do a better job of communicating that message."

Digital retailing today is less an end-to-end transaction and more intended to help a shopper become ready to buy, Zahabi said. He said dealerships likely will keep online requests for personal information optional, rather than mandatory, to accommodate people who want face-to-face interaction.

Employees at Jordan Ford in San Antonio, Texas, are alerted when customers who have submitted their name and contact information stop at the credit application, said Noah Caballero, the store's new-vehicle sales director.

An employee can follow up with the customer to ask if he or she has any questions and explain how the credit inquiry works in the financing process, Caballero said. Some customers eventually proceed with the credit application, whether online or in store.

"The beauty of it is, we recognize that they stopped there and we have the opportunity to follow up with them," he said. "We're not mind readers, and we're not going to know why they stopped. If they had a question or any type of reservation, it's our job as a dealer to find out how does the customer feel."

For customers who want to start the financing process online, one message from dealerships resonates more than others: "Explore your payments," said Kevin Singerman, co-founder and CEO of AutoFi, a San Francisco digital auto retailing vendor. "We know that if a dealer puts that verbiage on top of our experience, we get many more click-throughs."

Krane, of Modal, said that while the crafting of the message is important, it's second to the design of the user experience. Third-party vendors share responsibility to build customers' trust in dealerships by providing well-designed digital retail tools, he said.

"You can have the perfect messaging for asking for a Social Security number," Krane said. "If it's locked up inside a disorienting product, it's going to have diminishing return."

Digital retailing isn't going away, so dealerships that don't make the process "as seamless as an Amazon purchase" are going to lose out on the next generation of car buyers, said Jim Ganther, CEO of Mosaic Compliance Services in Tampa, Fla. Part of making the process seamless is convincing the customer that the data is secure and won't be misused, he said.

That means informing consumers up front what data is collected, why it's needed and how it's protected. Dealers should communicate those practices "in plain English," and avoid promising security protocols the dealership doesn't use, said Randy Henrick, a compliance expert and principal of Randy Henrick & Associates.

The timing of the request also is important, AutoFi and Modal executives said. They recommended the request come after a consumer has been able to find most or all of the information he or she needs to decide on a purchase.

At Modal, consumers can model their payments, explore F&I products and value a vehicle trade before they're asked for their personal information, Krane said.

AutoFi doesn't need any personal information to estimate a customer's vehicle payment, Singerman said.

"Bad user experiences hurt trust, and trust takes time to build," Krane said. "I also think buyers have short memories, and so a business can improve any time they want."

Jackie Charniga contributed to this report.