The forces that compel car buyers to invest in protection products aren’t changing anytime soon, but the experience those customers demand already has.
 - Photo via iStock.

The forces that compel car buyers to invest in protection products aren’t changing anytime soon, but the experience those customers demand already has.

Photo via iStock.

At NADA last month, we heard from numerous leaders and innovators, all talking about the changing landscape of our industry. We can argue about timing, but there’s no doubt that our industry will undergo a period of rapid change at some point soon. The rise of electric and autonomous vehicles, increasingly connected vehicles, and a changing retail experience are all converging at once, leading to extensive and rapid changes in the years ahead.

The Starbucks Effect

Changes to the vehicles themselves — more electric, more autonomous, and more connected — will force providers and administrators to make changes to our products. We’ll need to get ahead of these growing trends and tailor our products to these new types of vehicles. But our industry has been doing this for years and will continue to do so. Constant product tweaking will continue, but the underlying reasons that consumers buy them will not change. Consumers want their vehicle to be in working condition at all times, they want it to look good, and they want to be covered from the financial risks that vehicle ownership creates. And they want these things at a reasonable price. Those key tenets don’t change.

The emerging retail experience, on the other hand, has the possibility of impacting our industry more than any changes you can make to the vehicle. Let’s draw a comparison to a cup of coffee from Starbucks. When they were growing at a rapid pace in the 2000s, Starbucks focused on bringing a coffee experience to consumers across the world. Consumers wanted a quality cup of coffee, but they were also looking for a place to hang out while relaxing, meeting with friends, or working. As part of the experience, people chat with the cashier, and then the barista, while sipping their lattes and cappuccinos.

But with the changing consumer expectations, Starbucks now does 13% of their transactions through their mobile ordering capability, up 44% since 2017, and they just announced that 80% of their new stores will have drive-thru lanes. When customers use the mobile ordering capability, they can have as much or as little interaction as they want. In many cases, the customer walks up to the counter, grabs the drink, and leaves the store in less than 30 seconds. … Yes, a growing number of customers prefer this experience.

Cars and coffee are vastly different goods, but we see this trend happening in many industries, and we’ve already experienced it in ours. Consumers want their stuff, and they want to get on with their day.

Sell the Vehicle, Not the Appointment 

So how do we sell F&I products in a world where people prefer drive-thrus and mobile ordering?

In looking at the products themselves, nothing needs to change, simply because of the way they are sold. As mentioned above, we will always offer new products based on changes to the vehicles, and we will always look for innovative ways to protect the value of their vehicles.

What will likely change is how we have to offer our products. Not only do customers prefer quicker transactions, they want to make informed decisions whenever possible. As other industries offer consumers more information, they will demand it in ours, and they will demand it upfront, gathering information on their own time before they swoop in to make a purchase.

The days of selling the appointment are coming to an end. Dealers must now sell the vehicle, the dealership, and any additional products, all on the web. Imagine an Amazon-like product coverage page where potential buyers can see reviews from customers who have purchased the products, and even show product recommendations based on previous purchases or items that have been placed into a shopping cart. We’re not far away. It’s more than building intrigue; we must create information and content that builds value and leads directly to product sales. 

If we don’t build the value of our products when consumers are gathering information, they will dismiss them. We must equip our consumer-facing clients with the information and resources needed to bring this information to the forefront of the car-buying process, whether online, in-person, or even through a mobile order app.

John Lutman is vice president and head of the agent channel at IAS. 

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