Discover how AI-powered operations across sales, marketing, and service help dealerships achieve more with less in a challenging economy.
Despite record profits and demand in the years after the pandemic, unit margins and sales are once again under pressure in a potentially recessionary global economy. Moreover, buyers remain cautious in the face of looming recession, putting dealerships under pressure to focus on maximizing customer lifetime value (CLV) with a more compelling service drive. Dealers can’t afford to return to pre-pandemic staffing levels, and productivity and efficiency are increasingly vital to sustainable business results.
Auto retailers need to find new ways to navigate fluctuating demand and an uncertain economic environment. The customer experience is more important than ever, and it demands data-driven, personalized engagement at scale across multiple channels. Fortunately, artificial intelligence (AI) capabilities that are seamlessly integrated with dealership operations can be the winning combination to enhance the customer experience and dealership staff performance efficiently and at scale.
Identifying and nurturing high-intent sales leads with generative AI technology
It’s every car salesperson’s nightmare: the prospective customer who initially appears really interested in buying a car but drags the sales process on with endless questions and requests, hogging time and resources without ever making a purchase decision. Worse, other leads seem to be high-intent and initially engage, then go dark. Some are only interested in window shopping, while others might want to know their vehicle’s trade-in value.
Sales and marketing teams simply cannot afford to waste time manually responding to every inquiry, writing hundreds of emails and texts, responding to routine questions, and chasing bad leads. Fortunately, generative AI technology can respond to every online lead at scale, providing human-like engagement, answering even VIN-specific questions, and moving shoppers along the purchase funnel. Using Natural Language Processing (NLP) and Machine Learning (ML), generative AI can easily identify the most promising leads by analyzing shopper language and intent for key purchase indicators and interests like financing or trade-in. That way, BDCs and marketing teams ensure that only the most qualified, ready-to-buy leads are handed over to the sales department, saving time and increasing productivity.
Enhancing sales and service engagement with AI-powered personalized outreach
Consumers aren’t just interested in products and pricing, but in the customer experience. Buying a car is no different. They expect a personalized and immediate approach that traditional methods of lead handling or outreach like mass email campaigns, auto responders, or uninformed phone follow-ups can’t achieve. Conventional generic outreach solutions are also generic and impersonal, leading to low engagement rates at best and damage to brand reputation at worst.
New and emerging AI technologies, such as generative AI and Large Language Models (LLM), can communicate in a manner that’s almost indistinguishable from humans. When it comes to both sales and service outreach, AI can both mine the DMS database for opportunities and deliver highly personalized, relevant messaging based on customer behavior and history. This frees up time for sales and service personnel to focus on activities like live calls, showroom appointments, white-glove service, and nurturing relationships.
Maximizing customer lifetime value (CLV) with an AI-powered lifecycle model
The reality is that approximately seven out of 10 of customers are more likely to go to a third-party independent mechanic or lube shop than the dealership of purchase. That’s a lot of lost profit for dealers, especially considering fixed ops’ higher margins when compared to unit sales.
Dealers that strategically prioritize fixed ops as the hub of the end-to-end customer experience are much better prepared to generate sustainable revenue and margin growth. The more effective and efficient fixed ops departments are, the closer dealers can get to 100% service absorption, which occurs when the parts and service department’s operating gross profit covers a dealership’s total operating expenses. Higher service absorption means better protection against market swings and a more competitive sales department. Unfortunately, the average service absorption rate in the first quarter of 2021 among US dealerships was only 57%, which means most dealerships risk operating at a loss if there is a drop in sales.
Fortunately, AI technology offers a solution that can deliver enhanced customer service. AI-driven automation can continuously mine customer records and deliver personalized outreach based on sales data, service history, and OEM recommendations. When deployed at scale, AI can be used to streamline the entire service communication function by providing a full-fledged business development capability without the need to hire more staff. AI-powered communication solutions can enhance service team productivity by handling routine outreach, automating follow up, and driving customers to book service appointments directly on the dealership’s service scheduler. The most robust AI solutions can even help with data cleansing by flagging outdated DMS records, such as customers who have moved out of the area or no longer own the vehicle on file. Better DMS hygiene improves message deliverability and reduces wasted marketing spend.
Driving new levels of productivity and efficiency in a challenging climate
With the automotive industry facing continued disruption and uncertainty, dealerships need to invest in digital engagement solutions that help them automate at scale and streamline their operations to better support the entire customer lifecycle. From qualifying leads to automating service outreach, today’s AI solutions are fast proving essential for dealers to thrive, even in a down car market during recession.
Want to gain actionable insights into the processes and technologies that can enhance your dealership’s revenue and profit in a recessionary environment? Check out our latest white paper.
