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Driving digital 2017 presentation

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Driving digital 2017 presentation

  1. 1. DRIVING DIGITAL Welcome to
  2. 2. SUE ROBINSON Director NFDA
  3. 3. Line Up Nathan Coe Scott Sinclair Neil Addley Eddie Hawthorne Nick King Mark Squires
  4. 4. NATHAN COE COO AutoTrader Observations on Top Quartile Dealers
  5. 5. New Car growth is plateauing and may decline slightly * 12 month rolling -10% -5% 0% 5% 10% 15% 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 2,400,000 2,600,000 2,800,000 New Car Sales Rolling 12 month New Car Sales Rolling quarterly YoY
  6. 6. 7 However Used cars still have a strong tailwind
  7. 7. 8 And despite increasing supply, prices are holding up well
  8. 8. 9 Even when adjusting for vehicle age
  9. 9. 47%0 to 3 year old vehicles within franchise network 10 Creating an opportunity for Franchise Dealers to grow 6%3 to 5 year old vehicles within franchise network
  10. 10. The best vs. the rest?
  11. 11. 12 • Data is from Auto Trader’s market place • Approx. 45 million visits and 250 million vehicle views each month, over 70% of all minutes spent • ~4,000 franchise dealers and 200,000 cars removing individual forecourt and brand anomalies • Pricing is based off observed prices, which on the whole is fine but may overstate the margin achieved by dealers that over price • There are 10,000+ price changes on Auto Trader every day and 300,000 a month • Primary metric for quartiles is stock turn The data
  12. 12. 13 Top 25% of dealers days to turn is almost half bottom 25% Top 25% Bottom 25%2nd quartile 3rd quartile
  13. 13. 14 Which is consistent in premium brands (eg) Top 25% Bottom 25%2nd quartile 3rd quartile
  14. 14. 15 and volume brands (eg) Top 25% Bottom 25%2nd quartile 3rd quartile
  15. 15. 16 There average price position is “at-market” Top 25% Bottom 25%2nd quartile 3rd quartile
  16. 16. … by pricing to the real market using tools like iControl 17 Which they do from beginning to end! Top 25% Bottom 25%2nd quartile 3rd quartile
  17. 17. 18 The result of this on sales is dramatic over a year * Based on the average Used Car GP% from publicly listed UK groups … even when normalised for stock levels
  18. 18. 19 But what about margin? Below we have taken the average gross margin for listed retailers and adjusted it up or down for the final price position achieved (conservative?) * Based on the average Used Car GP% from publicly listed UK groups
  19. 19. 20 1. Largely fixed operating costs will mean a bigger impact on operating profit 2. Top quartile dealers use less working capital to sell the same number of vehicles 3. Vehicles held longer will absorb more operational effort and cost 4. Less inventory devaluation risk and more flexibility Four reasons why this benefit may be understated
  20. 20. So what are they doing differently
  21. 21. 1. Driving fast stock turn at margins that deliver a better profit outcome Through a digital-led selling and data based stock and price decisions 2. “Bought in” managers in key roles with the right tools Where buying, pricing, re-pricing and disposal decisions are made 3. And then reinforce consistency from top to bottom Every day, every car, every person … 22
  22. 22. 23 The prize … Top 25% Bottom 25%2nd quartile 3rd quartile
  23. 23. Which combined with excellent online advertising (imagery, descriptions, trust etc) generates more ad views for the same cars 24 They focus on selling online where car buyers are Top 25% Bottom 25%2nd quartile 3rd quartile
  24. 24. … for example using tools like iControl that capture the market real-time 25 By ensuring most of their stock is price to market Top 25% Bottom 25%2nd quartile 3rd quartile
  25. 25. 26 And confidently staying at market from start to finish Top 25% Bottom 25%2nd quartile 3rd quartile
  26. 26. 27 Staying in line with market requires regular re-pricing Top 25% Bottom 25%2nd quartile 3rd quartile 10,000+ price changes a day on Auto Trader or 300,000+ a month!!
  27. 27. 28 Monitoring and adjusting across all vehicles all the time Top 25% Bottom 25%2nd quartile 3rd quartile
  28. 28. … through retailing and avoiding knee jerk discounting and trade outs 29 This results in top quartile dealers having a lot less overage Top 25% Bottom 25%2nd quartile 3rd quartile
  29. 29. Summary of the observations of the Top 25% of franchise dealers, on average … 1. They focus on selling the car online first and foremost 2. They turn cars in 37 days (on AT) 3. They price to market from day 1 and stay there 4. They re-price every 15 days 5. 84% of their stock re-priced every 30 days 6. Only 15% of their stock is 60 days+ 30 Fast stock turn delivering a better profit outcome
  30. 30. 31 Delivering the potential margins we saw earlier … This understates the benefit to the bottom line profit due to fixed costs and greater operating costs on vehicles held longer * Based on the average Used Car GP% from publicly listed UK groups
  31. 31. 32 But … its difficult to make happen without
  32. 32. 1. Driving fast stock turn at margins that deliver a better profit outcome Through a digital-led selling and data based stock and price decisions 2. “Bought in” managers in key roles with the right tools Where buying, pricing, re-pricing and disposal decisions are made 3. And then reinforce consistency from top to bottom Every day, every car, every person … 33
  33. 33. 1. Centralised functions vs. dealership level 2. Dedicated teams vs. the universal soldier (with 15 other things to do) 3. What do you measure and how do you review? Measuring inputs not just P&L • % inventory priced to market • Stock sold under 30 days (US: 45% is “good”, 60% excellent) • % F&I penetration (gross profit) • % Overage vehicles and price position • % retailed stock that goes to wholesale (US <10%) • Stock online – marketplaces and website 34 How top dealers think about leadership and consistency
  34. 34. 1. Driving fast stock turn at margins that deliver a better profit outcome Through a digital-led selling and data based stock and price decisions 2. “Bought in” managers in key roles with the right tools Where buying, pricing, re-pricing and disposal decisions are made 3. And then reinforce consistency from top to bottom Every day, every car, every person … 35
  35. 35. leaving only two questions: why not start tomorrow? what are the implications of not changing?
  36. 36. thank you
  37. 37. SCOTT SINCLAIR Industry Manager Google The Consumer Journey & Winning MicroMoments
  38. 38. We don’t go online. We live online.
  39. 39. Moments 7:05am Text Jim 7:45am Check time 8:12am Read text from Jim 9:03am Send work email 1:23pm Post vacation photos 3:29pm Text Karen 5:38pm Take picture of traffic 5:40pm Post picture of traffic
  40. 40. 7:15am Find brunch place 7:53am Watch how-to fix boiler video 8:59am Research holiday destinations 10:07am Read about best running shoes 1:23pm Watch mountain biking videos 5:38pm Look up mortgage rates Micro-moments
  41. 41. Google is the largest omnichannel measurement provider in the world
  42. 42. Proprietary + Confidential Which-Car-Is- Best Moments Where-Should- I-Buy Moments Am-I-Getting-A- Deal Moments Can-I-Afford-It Moments Is-It-Right-For- Me Moments
  43. 43. finding better answers to your marketing challenges
  44. 44. Proprietary + ConfidentialProprietary + Confidential Proprietary + Confidential WHICH-CAR-IS-BEST MOMENTS
  45. 45. Buyers often change their mind during the research process Key decisions have not been made at the start Showing up gets your brand in the game not just to be seen half of buyers will end up buying a new make to their previously owned vehicle are not fully decided about what make or model to buy at the start of their research journey. buyers did not purchase the car they originally had in mind at the beginning of their research journey.72% 1 in 2 50% Changing loyalty to brands they currently own
  46. 46. There has never been such little differentiation in cars as there is today.
  47. 47. Explosion in growth of the SUV market has meant increased competition. How well are you associated with these searches? Are you present in the moment? Benchmark your moments Nissan Qashqai SUV Ford Kuga VW Tiguan Audi Q3
  48. 48. Proprietary + ConfidentialProprietary + Confidential Proprietary + Confidential IS-IT-RIGHT-FOR-ME MOMENTS
  49. 49. of car shoppers say that search provides the most useful online source when helping through their research journey of buyers say that online video sites are most helpful sources when helping through their research journey Multiple touch points in the auto consumer’s journey provide many useful moments 62% 59% of consumers say that regularly getting useful information from an advertiser is the most important attribute when selecting a brand
  50. 50. Proprietary + Confidential Win the is-it-right-for-me moments Source: https://youtu.be/fJl72jUSY7I. https://youtu.be/OEJYD6PS9q0. Be There Promote your video content on YouTube and Google search results. Be Useful Create your own auto review, walk around video content and get it seen. Be Quick Make auto reviews and educational content easy to find on your mobile site and YouTube channel. Carwow Arnold Clark Lookers VW Reviews
  51. 51. Proprietary + ConfidentialProprietary + Confidential Proprietary + Confidential WHERE-SHOULD-I-BUY-IT MOMENTS
  52. 52. of smartphone users have bought from a brand other than their intended one because the information provided was useful of smartphone users say they're more likely to buy from companies who customize mobile information to their location Without utility in the moment, not only will consumers move on, they actually might not ever come back 51% of dealer visits, phone calls with sales persons and test drives informed their final vehicle purchase 76%
  53. 53. Where-should-I-buy-it Moments 2008 2015 search term: dealership location dealerships near me
  54. 54. Use location signals to highlight relevant locations, driving directions and call contact 73% of conversions are not counted under traditional ‘online’ conversions Buyers don’t tell you they are going to visit the dealership - they just ‘turn up’
  55. 55. Visit s store Store Visits Device location data Signed and opted in Ongoing data validation surveys Physical world data Extrapolated, aggregated and anonymized Click User behavior Backend data Store Visits
  56. 56. Proprietary + Confidential Win the auto shopping moments that matter Source: Be There Put yourself in the car shopper’s shoes and walk through each moment. Are you there at every step? Be Useful Build relevant marketing that helps customers in the moment. Be Quick Eliminate steps, anticipate needs and load like lightening. How long does it take shoppers to complete their key action on your mobile site? Be There Be Useful Be Quick
  57. 57. Proprietary + ConfidentialProprietary + Confidential Proprietary + Confidential CAN-I-AFFORD-IT MOMENTS
  58. 58. Proprietary + Confidential +8% +296% +126% Computer Smartphone Tablet Source: Google internal. UK Car Finance searches by device Q3 2014 vs Q3 2016 (overall searches increased 14%) Car finance searches are becoming increasingly mobile
  59. 59. Source: Lorem ipsum dolor sit amet, consectetur adipiscing elit. Duis non erat sem Proprietary + Confidential 71% of car buyers would like to begin the finance process online Source: MakeMyDeal survey 2015 US
  60. 60. Proprietary + Confidential Win the can-I-afford-it-moments Source: https://youtu.be/fJl72jUSY7I. https://youtu.be/OEJYD6PS9q0. Be There Geo modify search results to dealer location. Be Useful Create your own auto finance and aftersales content to reaffirm product proposition. Be Quick Make video content easy to find on your mobile site and YouTube channel. Audi UK Financing Volkswagen Geo Modify Bids for Finance Terms
  61. 61. Be There - Anticipate moment for the open minded car shopper Be Useful - Create relevancy to inform and connect Be Quick - Frictionless experiences to act swiftly Connect the Dots - Reframe how you align with the car buyer Succeeding in a micro-moment world
  62. 62. WIN THE AUTO MOMENTS THAT MATTER
  63. 63. NEIL ADDLEY MD NFDA Trusted Dealers The Trusted Consumer
  64. 64. The Trusted Consumer • Introduction • The Trusted Consumer • Performance
  65. 65. NFDA Trusted Dealers • Dealer backed classified • Controlled by the NFDA (National Franchised Dealers Associaton) • 10 Points of Difference • NFDA Used Car Standards • ADR (Alternative Dispute Resolution) service • Generate leads • Campaign to promote franchised dealer benefits • “where not just what” • Stock management and marketing partnership with AutoTrader
  66. 66. Who is “The Trusted Consumer” • Who is “The Trusted Consumer” • Why are they important? • How do we target them? • What are they looking for? • How do we measure effectiveness?
  67. 67. Who is “The Trusted Consumer”
  68. 68. Who is “The Trusted Consumer”
  69. 69. Who is “The Trusted Consumer”
  70. 70. Who is “The Trusted Consumer” • Who is “The Trusted Consumer” • Why are they important? • How do we target them? • What are they looking for? • How do we measure effectiveness?
  71. 71. Why is “The Trusted Consumer” Important?
  72. 72. Why is “The Trusted Consumer” Important? Post Brexit “vote” Millennials Squeezed by raising interest rates (car loans, mortgages, rent) New car finance subvention wiggle room reduced by exchange rate Trusted Consumers Fixed incomes, pension access Equity release Savers benefit from interest rate rises
  73. 73. How do we target the “Trusted Consumer”? • Proposition • Search Marketing Demographics • Social media advertising and content • AutoTrader • Public relations
  74. 74. Demographics: Targeting • Higher PPC bids for older car buyers • Messages target value and proposition over price • Goal: no clicks wasted • Bespoke Scottish activity
  75. 75. Entertainment: Social Media • Facebook page more active than even leading classifieds
  76. 76. Marketing • Branded “tick mark” against stock on AutoTrader • Monthly email campaigns • Consumer awareness promoting franchised dealers
  77. 77. Exposure: PR • Twin strategy • Consumer & trade audiences • Next: Energy Saving Trust
  78. 78. What are they looking for? • Information • Peace of mind • Consumer validation (reviews) • New cars(!)
  79. 79. Consumer has to click on “New Cars” to start journey
  80. 80. Shopper contact details
  81. 81. Shopper new car request
  82. 82. Shoppers part exchange vehicle
  83. 83. Submit Shoppers submits new car enquiry with PX details and appraisal to get “Cost of Change” proposals from dealers
  84. 84. Who is “The Trusted Consumer” • Who is “The Trusted Consumer” • Why are they important? • How do we target them? • What are they looking for? • How do we measure effectiveness?
  85. 85. How do we measure success? • “Hard Leads” v Engagement
  86. 86. According to Comscore* Trusted Dealers is second only to Auto Trader in terms of views per visit in the used car classifieds sector *September 2016 Engagement Market Position: Views per Visit
  87. 87. • Improved management of tracking numbers • Lowered call costs • Increased quality of calls through main marketing channels • 82% of traffic driven are genuine used car leads Enquiries: Call Quality Call Quality Used Car Enquiry New Car Enquiry Service Booking Parts Dealer Engaged Unanswered Call Other
  88. 88. • All on site actions logged against a postcode • All email enquiries logged with postcode • Matching against sales data • Proving unique sales matches or touchpoint in customer journey Enquiries: Postcode Matching neil@trusteddealers.co.uk
  89. 89. • Only 18% customers will use tracked media (79% are internet generated walk ins) • 22% of members customers visit Trusted Dealers Enquiries: Postcode Matching
  90. 90. Who is “The Trusted Consumer” • Who is “The Trusted Consumer” • Why are they important? • How do we target them? • What are they looking for? • How do we measure effectiveness? • Record January – tracked leads @ £13 • Now’s the time to put us to the test!
  91. 91. COFFEE
  92. 92. EDDIE HAWTHORNE Group Managing Director Arnold Clark
  93. 93. NICK KING Insight Director AutoTrader
  94. 94. How dealers adapt to service consumers in a changing digital environment
  95. 95. 123 Our behaviour is changing
  96. 96. 2001 2007 Design changes before our eyes…
  97. 97. 2010 2017
  98. 98. Things from a few years ago seem antique
  99. 99. 14 years ago
  100. 100. 10 years ago
  101. 101. 5 years ago
  102. 102. today
  103. 103. Not only didn’t test but didn’t evolve….
  104. 104. 1974
  105. 105. 5127!
  106. 106. 1993 2017
  107. 107. I fear not the man who has practiced 10,000 kicks but the one who has practiced 1 kick, 10,000 times… Bruce lee
  108. 108. 50,000 practice kicks
  109. 109. 500,000 kicks
  110. 110. Small changes to routine – BIG DIFFERENCE
  111. 111. If you break down a big goal into small parts and then improve on each of them, you will deliver a huge increase when you put them all together
  112. 112. Search engines carry out 12000 Random Control Tests per year!
  113. 113. 5% of our audience on our test site …all the time
  114. 114. 14 years ago
  115. 115. 10 years ago
  116. 116. 5 years ago
  117. 117. Today
  118. 118. Research from KPMG confirm the growing importance of the dealership…
  119. 119. So how do retailers adapt with all this tech and heightened consumer expectation?
  120. 120. Average vehicle desirability Stock over 60 days Average days to price change Ad view performance vs similar ads Average days to turn
  121. 121. The world’s changed and is set to keep changing From To Finance not key to success Power shifted to the consumer High Tech World UK Wide Much slimmer marginsDecent profit margins Local area Influence Low Tech World Power sits with the retailer Finance penetrations grows Car sales As a career Car Knowledge less necessary n: 60 automotive retailers 2017 Acacia avenue
  122. 122. Dealer mind-set Retailer mind-set n: 60 automotive retailers 2017 Acacia avenue
  123. 123. Retailer mindset are much more open to change 159 • More open minded • Data is an opportunity (as is everything) • Customers are more empowered • Don’t have to spend time haggling, relationship is less adversarial • Margin is eroded but they spend less time selling each car • Meet customer on own terms, adapting retail model and retail space Vicious circleVirtuous circle • Were good when they started (and good at sales) • But don’t adapt • New things seen as a threat • Margin is eroded • Less able to drive traffic • Resent customer empowerment n: 60 automotive retailers 2017 Acacia avenue
  124. 124. Successful dealers see themselves as good at marketing and stock management rather than selling 160 0 10 20 30 40 50 60 70 80 Customer service Marketing Stock management Sales teamFinancing services Forecourt strategy Servicing Successful Less Successful Perceived Strengths SU1. What would you say are your real strengths which make you good at what you do in today’s environment?
  125. 125. The less successful are more reliant on passing trade, the majority agrees is declining 161 23 34 32 7 0 27 47 27 0 10 20 30 40 50 0% 1-5% 6-20% 21%+ Less Successful Successful Proportion of Passing Trade Change in Passing Trade F2. Roughly what proportion of your business comes from passing trade? / F3. And is this much less than before, or about the same? 0 10 20 30 40 50 60 70 80 Customer service Marketing Stock management Sales teamFinancing services Forecourt strategy Servicing Successful Less Successful
  126. 126. Successful dealers are over twice as likely to embrace digital (41% vs 20%) 162n: 60 automotive retailers 2017 Acacia avenue
  127. 127. …Ensure a seamless customer experience • “Make sure that you make the sales experience as seamless as possible.” • “We don’t see ourselves as a car business we see ourselves as a people business – if you have great people delivering a great customer experience, then you make some money.” • “Customers want a retail environment that they recognise.” 163
  128. 128. Futurology…..
  129. 129. Voice Activation
  130. 130. • Chatbots on Facebook messenger can now take payments via PayPal. • Useful for existing customers…. • Already an essential part of doing business in China with Wechat
  131. 131. 30%
  132. 132. Live video
  133. 133. Summary • We continually evolve and consumers expectations will only increase • Technology will evolve, so your business needs to too. • Fuse instinct and experience with data • Trust and Transparency becomes ever more relevant • Create a seamless customer journey • Talk to customers in their language • Retailer mind-set, that embraces the future • …with a Positive Mental Attitude
  134. 134. Thank you
  135. 135. MARK SQUIRES Chairman NFDA What to concern ourselves with in The Way Ahead
  136. 136. “A change is gonna come”
  137. 137. Autonomous cars
  138. 138. Autonomous cars
  139. 139. Digital disruption
  140. 140. Manufacturers’ online sales channels Fiat / Amazon BMW Volvo Hyundai Peugeot
  141. 141. Carvana vending machine
  142. 142. China ICDP July 2015
  143. 143. The quickest to adapt, survive
  144. 144. CHANGING THE PUBLIC’S PERCEPTIONS OF THE FRANCHISED DEALER  Consumers  Influencers and Opinion Formers  Government and Statutory Bodies  The Media  The Industry
  145. 145. CONSUMER ATTITUDE SURVEY
  146. 146. Overview • Twice yearly survey of consumers • Assess attitude to franchised dealers • Currently focuses on aftersales only • Wave 1 :Dec 2015 Wave 2: Jun 2016 Wave 3: Dec 2016 • 15 minute phone interview • 1000 interviewees
  147. 147. Purpose • EXTERNAL – Fighting our Corner • Explain the Value we offer • Differentiate ourselves from the competition • Shift the battleground in aftersales from Price to Quality • Shift negative perceptions • INTERNAL – Consumer Insight • Align ourselves with consumers’ interests • Fresh insights into consumer’s real wants & needs • Encourage best practices to deliver a stronger customer proposition
  148. 148. Alternative strategies for the future Plan A Plan B
  149. 149. QUESTIONS…
  150. 150. THANK YOU SAFE JOURNEY

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