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Personalization Will Change Your Car Dealership Experience Forever - Forbes

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There is a lot of discussion today about the digitalization of marketing. We are shopping online for practically everything. Market researchers say that we will continue this behavior post-pandemic.

A benefit of digitization is increased personalization. Personalized experiences promise to meet an individual’s distinctive physical, psychological, social, and emotional needs. Personalization reinforces respect, status, and positive self-image.

Personalization is not the same as customization. Customization focuses on features and functional characteristics. When you customize a Nike shoe online, you are selecting features that you like such as color schemes, designs, and laces. Personalization is about the emotional experience.

In the automotive industry, shopping for vehicles, new and used, has changed. Many customers are using online solutions for automotive purchases, and in many cases, skipping the in-person car dealership experience entirely.

Car dealers have begun to incorporate online into their sales processes. These dealerships are digitizing the car purchase. Dealerships have put many of the functional aspects of buying a car online.

But, something bigger is on the horizon. In an increasingly digital world hyper-personalizing the car purchase experience will be a path to success. Individualizing the entire car-buying process, from start to finish, for you and you alone creates a market segment of one person.

Right now, the situation with car dealerships is fluid. But AutoNation believes it has the right formula for personalization.

Michael Jackson, the temporary CEO of AutoNation (until 2022), told analysts that AutoNation has the omni-channel infrastructure to put customers in control of the degree of personalization that is just right for them. The customer decides, “where that line is” between online and in-person. He said, “So what I can tell you is where the consumer is happiest is right where AutoNation is. And, we fully originate 45% of our business through the digital channel. And, then at some point, there's a crossover, and we let the customer decide where that crossover is, and we give them a fabulous experience from that crossover, and they can move seamlessly back and forth.”

In order to personalize, the marketer must know a lot about the customer. For years, car dealers just wanted to move the metal out the door. Who the customer is, why they want the vehicle, and for what occasion the vehicle is needed were not a dealer’s focus. Just make a sale. Every customer who walks into the dealership receives the same treatment.

A think piece from the global consulting group, McKinsey & Company, discusses individual customer personalization at the auto dealership. The dealer must understand exactly what type of customer just walked in. McKinsey & Company recommends that car dealerships build their business models around “… what customer types are you actually addressing?” To do this, a car dealer will need to know all about you.

So, are you willing to divulge a massive amount of personal information just to buy a car? McKinsey & Company believes this will be the case. The takeaway from the McKinsey & Company report is that you will cede all your intimate information in order to receive a personal car-buying experience and the dealership will use it, hopefully wisely.

In order for the dealership to stay alive as a desired and valuable venue for car purchasing, McKinsey & Company sees a few critical components for car dealerships. If car buying goes down this road, here are just a few of the ways your future car buying will change.

Dealerships will deliver the brand experience to you, personally.

Since you know what you want before you arrive at the dealership, car dealers will create a “hospitality-service” relationship, similar to a high-end hotel. According to McKinsey & Company, by the time you show up at the dealership, you are well known and understood. Everything you decided upon during your online search will be waiting. The dealer will know what brand experience will be the one that best appeals to you. The salesperson will know so much about you that you feel as if the time spent was designed for you and you alone. You feel that the service you received matched who you are. You receive the exact vehicle that you want. The F&I person knows exactly how you will pay for the vehicle. There will be no need for up-selling, as your decisions are already understood.

The dealership’s subscription model will need to change.

Car companies are experimenting with subscription models. These models allow you to pay a fee so you can change car models depending on what you wish to drive this week or weekend. Not all of these subscription packages have been successful. In fact, several car companies abandoned their subscription offerings prior to coronavirus.

But, think about this scenario from a McKinsey & Company consultant describing the thoughts of a potential car buyer: “Do I still need this car seven days a week? Or do I need a bigger car for the weekend? Or do I need a bigger car when I want to go skiing?” Based on this scenario, the consultant added, “And so, it might be the purchase of a car, plus a package to have access to a different vehicle in the summer, the convertible for fall weekends, and in the winter the SUV to go to the mountains –something that is really… tailored to who you are and what you want your vehicle for.” This implies that a sale may be a sale plus a subscription. Personalizing your vehicle choices based on your usage occasions.

Dealerships will need to change their understanding of the competition.

The customer defines the competitive set. The car you want may be available online or in the town next door. McKinsey & Company even suggests that one day the OEM (original equipment manufacturer) will be selling directly to consumers. Tesla is an early example. And, it is not only vehicle competitors that are changing. There are now online insurance offerings and online loan offerings. The customer has redefined the competitive sets for all aspects of the car buying experience. For decades, car dealerships have had the benefit of being the only game in town. Not anymore.

Here is what Mr. Jackson added about hyper-personalization at AutoNation: “… we have a central understanding of 9 million customers that if you're taking your daughter off the school and you buy her a car in California. And then, the following week, you're back here in Miami, and you walk into one of our dealerships, we know exactly what you did the previous week with your daughter out in California. And, if you come into service in New York and then you have a house in Florida, we know exactly. We know the entirety of your relationship and your history with AutoNation and everything that happens, what your preferences are, and what is the likelihood of what you're going to buy next and think is next, and we proactively market to that.” Apparently, AutoNation is already very close to the scenario drawn by McKinsey & Company.

In order to survive, car dealerships will have to change dramatically, and very soon. For dealers to make it to the next decade, they will need to face the facts. Personalization is about making the customer feel special. Hyper-personalization is focusing on an audience of one for each and every customer, each and every day.

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Personalization Will Change Your Car Dealership Experience Forever - Forbes
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