Early findings of newly launched digital retailing tools reflect a predictable twist with online sales — that digital sales require more math than emotion when appealing to customers.
And it's a trend that's designed to grow: As digital shopping and sales increase, algorithms better identify predictive signs and become more efficient — leading to more and faster online transactions.
Lithia Motors Inc. CEO Bryan DeBoer told investors April 21 that digital sales are far more formulaic than in-store operations.
"It's quite different than what we've experienced in traditional auto retail. On the vehicle side, there is some art in it," he said. "And this is not as much art. It's a lot of science."
Recommendation engines, which use machine learning and algorithms to suggest products to shoppers, run on transaction data and customer data. The more successful transactions the system processes, the better equipped it will be to replicate the circumstances that led to a sale.
If X number of unique visitors begin their vehicle journey in a digital retailing platform, then a dealership group can expect Y sales. How do you get a bigger Y? Companies such as Lithia that engineer and operate their own platforms can compare findings in real time, and make adjustments to marketing materials and customer touch points.
If digital sales are a science, does that mean data scientists are best suited to master online retailing?
For the foreseeable future, more science means lessening reliance on vehicle sales tactics that require reading a customer's expression or hand gesture, analyzing specific responses during the finance-and-insurance interview and responding to objections. Dealerships can expect fewer handshakes across a table and perhaps more tinkering with font size and photo display to ensnare potential customers.
For DeBoer, after two years of developing Lithia's customer care associates, who are in-store F&I managers — along with the Driveway platform — the change is exciting, as the dealerships can please more customers and close more sales at a lower cost.
"There is a trajectory that is different with unique customers than our traditional channel where we've had to really roll up our sleeves and fight those battles and find solutions," he said, "whereas here, you're throwing a much broader net with a lot lower closing ratio."
Should the automotive industry lament the loss of artistry in a vehicle sale? That depends on what practices constitute that art. Dealerships should shrug off a choreographed dance between the sales team and customer that leaves the latter exhausted and dissatisfied. But the art of in-store sales can also build relationships and improve loyalty, especially when sales associates help customers navigate financing challenges while adhering to compliance standards.