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Dealer Systems in the Consumer Space

July 18, 2015

I was writing an article about how I look at tech strategy, and it was getting a little long, so I thought I would just stop and give an example. I have had the good fortune, over the years, to develop early versions of online credit, menu systems, and e-contracts. These are primarily dealer-facing systems, with the attendant limitations.

If you have been reading my blog, or McKinsey, or pretty much anything, you are aware that the next challenge will be to put these tools into the hands of online customers. The table below lists the capabilities these customers have today.

Gadgets Table

You can gauge how much room there is to improve the customer experience by comparing your favorite dealer systems to the gadgets available online. Dealers operate at a distinct advantage and, through competition, we can expect that advantage to diminish.

I am not saying that an online customer is going to run, say, a credit aggregation system. Dealer systems are feature rich, and designed for trained professionals. What I am saying is that there will be a component of your favorite dealer system designed to run in the consumer space, and that it will be a competitive differentiator.

If you are in the dealer system business, this insight is not new to you. You are already working on ways to engage customers before they come into the dealership. My point is that this strategic imperative applies equally to all the functions listed above (plus some I didn’t want to get into, like pricing).

This means that you can take strategy tips from systems outside your functional area, and outside the dealer space. There are some common themes, leading to a generic strategy. Schematically, the strategy looks like this:

B2C Diagram

I included “partner system” as a placeholder for, say, a DMS if you are upstream of one, or a finance source or product provider network. You and your partners are facing the same strategic imperative. You will want to make sure that your responses to this imperative are in alignment.

By “plugin,” I mean any webpart, Iframe, or redirect that exposes your core system’s functionality to the online customer. A web service might do the job, but you lose control of your distinctive customer experience. Plus, they’re harder for the host site to adopt.

As with any software, success in the consumer space requires good functionality balanced with ease of use, but the decisive factors are:

  • Which web sites you’re on
  • Which dealer systems you plug into

As I like to say, the interfaces are the strategy. If you are an independent, like eLEND, plugging into every system fore and aft (see diagram) is an option. If you’re Route One, you have a special relationship with the captives and their dealers. If you’re Dealer Track, this is why you bought Dealer.com. Among credit systems, the battle for consumer space is already underway. I will survey the space in a later post. For now, let’s consider the other dealer systems.

The interfaces are the strategy

I listed menu systems as “TBD.” I know something about menu systems, and I don’t think anybody has a good way to present a menu on a consumer web site – much less an iPhone. I have seen a four column menu attempted, and I have seen “click here to run video.” Remember that the goal is to present products, and a menu may not work in this space. Instead, I would recommend using an expert system.

Ironically, the customer end of Customer Relationship Management is basically passive. I listed “personalization,” above, as one possibility for opt-in marketing. My profile on the BMW web site tells them about my vehicles, where I bought them, and how they were financed. The site offers some useful features in exchange, which unfortunately most sites do not. Because it’s an infrequent purchase, customers are unlikely to create profiles on automotive sites. Portable profiles like “log in with Facebook” are a partial solution.

Payment calculators are a disgrace, and blatant fronts for lead collection. They have more contact fields than they have numbers. Those on dealer sites ask you to configure the vehicle first. Finance sources do a better job, for obvious reasons. You may think it’s clever not to give a payment until the customer has chosen paint and rims, but – she is one click away from her credit union’s web site.

This recaps a key point from the generic strategy – dealer advantages will be arbitraged away. It also touches on an interface question. What is the appropriate recipient of customer payment data? Is it just a lead, or should it dovetail with your credit system? My purpose here is not to answer all the questions, but to demonstrate the principle.

Your web plugin is like a survey marker, with which to stake out territory in the consumer space. Some sites are more valuable than others and, of course, the host site must also find value in the relationship. In my next post, we’ll explore this space and discuss the opportunities for specific dealer systems.

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