In my last post, I talked about what car buying should look like in the age of Apple , Amazon , and #AI. In short, the auto industry has fallen behind while other industries have raced ahead to take advantage of new technologies and meet customers’ digital-age expectations. To catch up, we need to merge Apple’s intuitive and elegant online-to-in-store shopping experience, Amazon’s obsession with convenience and seamless operations, and AI’s ability to streamline and enhance the lending process, and apply them all to car buying. 

Now I want to show how this connected retailing experience can dramatically improve the metrics that matter to dealers. After all, this grand vision means nothing if it doesn’t make business sense. And in an era of tightening budgets and shrinking margins, what matters most is the bottom line. Dealers need to know that the money they’re putting into attracting browsers converts them into buyers. Connected retailing is designed to deliver on that, especially in three important areas: profitability, efficiency of sales, and customer experience. Let’s take a look.

Profitability

Product penetration rate (PPR): 

As everyone knows, Finance & Insurance (F&I) is where dealers make money. The problem? It has been the last step in a long journey for car buyers, who by then may be tired of negotiating and hesitant to hear one last sales pitch that will increase their monthly payment. There is now a growing trend to introduce those options earlier in the journey to build trust with customers, thereby making a purchase more likely. Enter connected retailing, which allows dealers to curate the sales process any way they like and put those products in front of customers long before they meet the F&I team. Moreover, by making the car-buying experience more like the everyday online shopping experience that consumers are used to—where they can browse, research, and compare prices—they are more likely to feel comfortable making a purchase. 

Profits per vehicle retailed (PVR):

This metric is an easy follow-on from PPR because an increased product penetration rate translates directly into higher profits per vehicle retailed. In short, the more the F&I office sells, the bigger the margin for dealers. For example, J. Bertolet Volkswagen in Orwigsburg, Pennsylvania, saw its PVR climb 400% when it switched up its sales process using Upstart Auto Retail (UAR) and allowed customers to browse add-ons and protection plans online before they even entered the showroom.

Efficiency of sales

Lead-to-close conversion: 

Research shows that 54% of consumers will use dealers that provide a better experience over those with lower prices, and one of connected retailing's biggest advantages is the ability to deliver a superior customer experience. A strong connected retailing solution allows dealer websites to offer virtually everything buyers need to find and build the vehicle they want, including financing estimates and trade-in car valuations, and then carry that research over into the showroom. It's a seamless experience from online to in-store. That continuity—and transparency—builds trust with the buyer. This is why Buckeye Honda in Columbus, Ohio, was able to grow its lead-to-close rate by 76% when it switched to Upstart Auto Retail. And the aforementioned J. Bertolet Volkswagen generated a lead-to-close rate of 40% using UAR, which is significantly higher than the 18% average for other VW franchise dealers using approved digital retail providers.

Here are three more metrics related to sales efficiency that benefit from connected retailing: 

Time saved: 

Connected retailing cuts time at the showroom—as much as 90 minutes for some of the dealers using UAR. That’s because a customer’s online searches are saved to the dealer’s CRM, allowing them to pick up at the store where they left off online. At the same time, onsite aspects of the deal, from price negotiation to payment options, are handled more quickly. This is a win-win for both the customer and the dealer because it means a more enjoyable buying experience for the former and the chance to move on to the next sale more quickly for the latter. 

Number of new cars sold per new salesperson: 

OK, I’ll admit this isn’t an official metric. But it’s true that new salespeople can hit the ground running with connected retail. And what if you could make every salesperson as good as your best salesperson? Every step of the sales process is right there, and so are the vehicle specs, making customer service easy and seamless. You can quickly train the newbie, give them the in-store solution, and set them loose on the lot. So where’s the stat? Well, one loyal Upstart customer at Community Honda in Baytown, Texas, had a new salesperson sell 14 cars in their first month because connected retailing made the whole process a lot easier. It changed the game.

Customer experience

Customer Satisfaction Index (CSI):

Let's face it, customers want to buy how they want to buy. And it's up to dealers to deliver on that. I think the points I've laid out show that connected retailing truly provides customers with a transparent buying experience unlike any they’ve had in the past. That translates directly to customer satisfaction metrics such as CSI and reputation.com scores. In fact, in a review last year of dealer scores on reputation.com, which tracks customer satisfaction across a range of industries, Upstart found that Mitsubishi dealers who used connected retailing earned a reputation score that was 45 points higher than those who didn't. And those who used Upstart Auto Retail scored 61 points higher.

Improvements in the above metrics aren’t the only benefits I can point to. Things like word-of-mouth marketing by customers to their family and friends, referrals from those discussions, repeat buyers, and service for the life of a vehicle are all additional wins because customers will want to return to the place where they had such a great buying experience. They create a virtuous circle of growth and more efficient business for dealers, all powered by connected retailing.

In my next piece, I’ll look at how Upstart’s approach to lending is also a game-changer that delivers on the metrics that matter for dealers. Stay tuned!