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Steve Schmith, Automotive News: Hi everyone, this is Steve Schmith with Automotive News. Welcome to episode four of the All Ears Podcast, a 10-part series sponsored by Ally and produced by the Automotive News Content Studio that is designed to explore topics that are disrupting and reshaping the automotive industry. In each episode, we delve into topics important to executives working in automotive retailing and gain insight and perspective from some of Ally's best thought leaders, who also share their recommendations on how dealers and others can navigate transformational changes underway. Our objective is to provide actionable insight that you can use immediately in running your business and offer perspectives to help inform your business decisions. In this episode, we're catching up with Mike Kane, Senior Vice President of Consumer Credit Operations at Ally Financial. We talk about how the coronavirus pandemic has forever changed how people shop for cars and why the time to invest in digital is not somewhere in the future. The time is now, particularly if you're interested in delivering an online, seamless customer experience that consumers today have come to expect. How have consumers changed in response to the pandemic? What changes are here to stay? And how can dealers create customer experiences that harness both the power of technology and the power of in-person moments that happen when doing a test drive or taking final delivery? Here's my discussion with Mike Kane, Senior Vice President of Consumer Credit Operations at Ally Financial. Mike, thanks very much for joining me today on the All Ears podcast. How are you,.
Mike Kane, Ally: Steve, I'm wonderful. Thank you. And thank you for having me on the podcast this morning.
SS: Well, we've got an amazing conversation today, and that's around creating customer-centric purchasing experiences, which has gone through a lot of transformation over the last year in response to the coronavirus pandemic and consumers shifting a lot of their retailing online. What behaviors do you think are going to be permanent in the car shopping process in terms of how people shop and buy vehicles?
MK: The answer to your question really is the lead generation or from a consumer's perspective, the kind of investigating and deciding what they'd like to purchase and where they'd like to purchase. I think that's going to happen online now. I think it's going to be a mobile as well as an online scenario. I think consumers are locked in and very comfortable getting through the lion's share of the purchase process in an online and a digital, more comfortable type environment. What remains to be seen is how how fast will consumers revert back to prior behaviors? What percentage of the vehicle buying consumer will want to take delivery or finish the transaction at the dealership versus have that that full digital experience, which is maybe a remote delivery or an at-home, curbside delivery, touchless. I think that's going to end up being a smaller percentage going forward than it was through the pandemic.
SS: The focus of this is really creating that customer engagement, the beginning to create that stickiness around either a brand, a specific dealer, a specific type of vehicle. That's where really this digital engagement and this way to engage customers in a way that they're used to, whether they're shopping for groceries as the way they do now, that's really where all of this matters, in your view.
MK: Yeah, and I think the transaction itself, Steve, is is going to dictate the level of digital activity or touchless full automation, if you will, in the process. If you're viewing the purchase as more of a commodity, like a grocery or from a purchase perspective, you might probably always opt for that that very efficient, effective, full digital experience. But I think when the vehicle, which is still a largely an emotional purchase and a very large purchase for a lot of people, that involves really an event plus is an experience. And I don't think we can forget about that. We see people who have the ability to fully complete the transaction in an online digital environment and take delivery somewhere other than the physical dealership. And they're opting to complete most of it online in kind of a remote-type fashion. But at the end of the day before it's done, they want to go to the dealership, they want to see the vehicle, they might drive it for a few minutes, they want to talk to, potentially, someone at the dealership who can demonstrate all of the features and how they work and they make an event of it. I think that's the hybrid approach that we're going to see. And it's a good thing because it really means that the industry itself is responding to, you know, consumer desires.
SS: Let's stick with the this notion, this this moment in the shopping experience. That is the transaction. True story. About a month ago, I have a 16 year old son and I bought a vehicle for him at a local dealer and on the way there for him to do his test drive said, son, you are going to experience your first automotive customer experience. And at one point we're going to sit in front of an individual who is the F&I Manager. And historically, that has been one of the most painful parts of the shopping experience. Surprised, delighted, by the way, that that experience, very traditional, was seamless. It seems to me that dealers are embracing not only the technology, but they are also finding ways to improve the traditional process. And so when you look at the holistic finance transaction portion of the shopping experience, what are you seeing and what do dealers need to be doing to adjust their processes?
MK: Well, I think you just described it very nicely, Steve. There are dealers, many of them, who are adopting a I'll say, a smoother, easier process in the in the F&I office. And I think all dealers eventually will need to get there because consumers will select the dealers, the retailer, if you will, that that provides that kind of an experience because it's part of feeling good about the end to end purchase, right? It's not just doing the shopping and the excitement of the new vehicle that you want to buy. At some point in time, somebody says to you "how are you going to pay for this?" And that's typically where the F&I office comes into play. I think what we see the cutting edge of dealerships today, they're gathering that information very quickly and seamlessly on their digital sites for digital properties from the consumers who are willing to come in. I think the industry itself, the auto finance industry, which we're part of, we're finding ways to help streamline and smooth out and make that experience seamless for the dealer, as well as the consumer, so that when the consumer is ready to make the purchase and is looking for the options to finance the transactional purchase, we're mostly done. And I would say, you know, in today's environment that end-to-end transaction from a lender back to the traditional dealer finance office, if you will, happens in most cases in about 30 seconds. And so the speed of the transaction helps eliminate quite a bit of that friction, if you will. And then dealers who have kind of adopted that user experience, effectively, they are offering digital tools on kind of menu based activities, kind of limiting the amount of time that a consumer has to spend, thinking about protection products that are out there making it very, very easy to gather information, but also very simple and very easy to understand with low friction so that you can move through the process at the pace that you'd like to move through the process and feel like you've had a good experience. And the dealers that are at the front edge of this, that's what they're doing and that's how they're managing their business. Many of them will engage the consumer prior to them getting to the dealership and really line up and complete the transaction from a financing perspective before you even show up at the store. And so if you finally get there and drive the vehicle and like the way the color looks like in the sun or in the rain or whatever happens, you can really have a seamless experience to wrap it up and move out. And I think our industry has been working on this for for a lot of years. The pandemic convinced dealerships that that consumers really like that streamlined experience, effectively. And it doesn't hurt the retailer. It doesn't slow down or change the effectiveness or the profitability, because, as you know, Steve, you know, it's part of the dealer's business to offer financing and other protection products to consumers. I just I think it's now old school. It's it's it's in the past. Right. The where were you locked down inside that finance office. And you got to spend a lot of time sitting there going through paper and paperwork and everything else while somebody is talking about all the other things that you know, that you might want to purchase to protect the asset that you're getting ready to buy. That's that's in the rearview mirror. And dealers who don't jump on board will be way behind the curve and consumers will vote with with where they make their purchases.
SS: Thanks for listening. We'll be right back with more.
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SS: Can you talk about the tools that Ally provides that can help dealers deliver this customer-centric purchase experience?
MK: Absolutely. And Steve, it's really about what you were talking about a minute ago, one of your questions. It's really Ally is better-integrated, effectively, than most lenders. And so by being better-integrated, we have access to data and information and the tools that are out there, effectively. And we also have access because we do business with quite a few dealers around the country and some of the dealers that are cutting edge digital retail dealers. We provide them kind of the fuel to to make their businesses go. So that gives us some insight and ability to develop our credit products and services, effectively, so that we can we can respond to and provide the dealer the tools for that seamless experience. When you couple that with the breadth and depth of our product offerings, whether they be for the dealership itself, you know, the commercial products that we have and floorplan products that we have to help them acquire inventory quickly and efficiently and move it through their system so that they can make it available to the consumer for sale. Whether it's the retail installment products, lease products or commercial products we have a small fleet customers, effectively. Our digital online SmartAuction, allowing them to to find the vehicles they need in a seamless way and get them available very quickly to consumers who have demand for that kind of a vehicle. And of course, our protection products that come from our insurance division that are delivered in a fully-digital and kind of menu-based activity. Everything is integrated and we're integrated in those processes, and so, however and wherever a dealer wants to do business or needs to do business within their business model, Ally is there and we can provide the solution that that dealer needs and do it in a way that both the customer experience and the dealer experience is very seamless, very efficient. And that's that's our objective.
SS: You mentioned great examples a moment ago, any you want to highlight and why you consider them great examples?
MK: I've got a dealer that I'm working with right now in Louisiana who figured out how to deliver vehicles in the local market. And if you think about a dealership on average, they probably generate sales from about a 30-to-50 mile radius, effectively, and have historically generated all their business from that radius. And what they realized was if they could sell vehicles to consumers inside their market area and a completely tortuous and remote type delivery environment, that why couldn't they do that in a further geography? And so they started marketing, you know, in hundred mile, 200-mile, 300-mile away increments in their market and realized they could double, triple, quadruple their sales from from their normal market area. So it's very exciting for for for the dealer and for all of us that they're actually supporting them in the industry.
SS: Absolutely. I think that is an 'a-ha' moment that dealers are going to continue to recognize that this type of approach to the purchase process certainly impacts those people that are in my geography. But the markets that it opens, I mean, we've learned this in the events side as well, right? The markets that it's opened by doing this stuff digitally, it just creates such a competitive advantage that you can pull consumers from all over the all over the country. Mike, thank you very much for joining me today on the All Ears podcast. Terrific conversations. Appreciate you taking a few minutes and sharing your perspectives.
MK: My pleasure, Steve. Thank you. Have a good day.
SS: That's episode four of the All Ears podcast. Join us next time when we'll talk about preparing for an influx of younger, tech savvy customers that grew up on the Internet and are now in their mid 20s. On behalf of Ally and the Automotive News Custom Content Studio, thanks for joining us.