I’ve had the unique opportunity to witness the evolutionary impact of technology on dealer operations throughout the years, and the automotive industry moves faster than you might think. Tech has grown to become the main focus and the biggest pain point for dealerships of every manufacturer, of every size, and of every market, either making or breaking the experience from both sides of the register.
With the industry constantly evolving, one thing remains constant: the customer experience is everything. Technology allows dealers to connect with customers in strategic and unique ways – but can their vendors make it happen?
Let’s explore the top areas that dealers should consider when evaluating technology providers.
1. Integration and Data Cohesion
Integration is the key. There are so many vendors in the market who offer exceptional technology, but the exceptional stops there. Their tech doesn’t integrate, which perpetuates a fragmented approach to retailing, marketing, and customer communication. A lack of integration leads to inefficiencies, cross-system miscommunications, and disjointed customer experiences. Here are a few ways to avoid fragmentation and deliver a better customer experience:
- Prioritize Integration: The Automotive Industry Action Group (AIAG) published a report in 2023 that said a whopping 70 percent of automotive dealerships reported issues with data fragmentation across their systems. It should be common practice to have vendors that integrate with each other and your internal platforms (CRM, DMS, etc.) for a unified look at your customer data and activity.
- Personalize Messaging: Customers expect personalized interactions. Your third-party vendors must be able to tailor their messaging to each individual customer’s engagements and preferences. When vendors can access and utilize integrated data, they can deliver more relevantly personalized messages for customers that enhance their overall experience, leading to more transactions.
- Communicate Smarter: If vendors aren’t using predictive analytics to engage their shoppers, they are simply missing the mark. Being able to actively reach your audience with messaging relevant to their last viewed vehicle, upcoming service needs, and likely upgrade options is invaluable for the customer shopping experience.
2. Cybersecurity and Data Protection
Of course, with more pressure put on data comes more risk of cyber attacks. Implementing strong cybersecurity policies and procedures in line with industry best practices is imperative to keeping your customers’ data safe from outside sources. A few steps you can take to prevent any type of damaging breach are:
- Creating immutable backups as a highly secure way to protect sensitive info from being accessed and/or deleted
- Regularly assessing your dealership’s cyber threat initiatives to identify vulnerabilities and taking proactive measures
- Securing IoT devices by updating their software regularly to prevent unauthorized access
- Encrypting all critical data, including customer and financial records, both in transit and at rest
- Using firewalls to create a barrier between your internal network and potential threats
- Requiring multi-factor authentication and limiting user access
- Developing a comprehensive business continuity plan to ensure the ability to respond effectively to cyberattacks and maintain operations.
Protecting your customers’ sensitive information is the most important thing you can do to avoid breaking the trust you’ve worked so hard to build (see the recent CDK data breach).
3. Compliance and Risk Management
Adhering to federal and state industry regulations and implementing effective risk management practices are essential for maintaining customer trust and avoiding any level of legal blowback. The Federal Trade Commission (FTC) Safeguards Rule outlines specific requirements for auto dealerships to protect customer information in all areas.
On the brand side, there are OEM compliance guidelines that need to be met by each dealership 100 percent of the time. Vendors should have an in-house compliance team that keeps an active pulse on all advertising guidelines for guaranteed adherence at all times, taking the responsibility off of dealers.
Maximizing Value and Mitigating Vendor Risks
While working with outside vendors has the potential to bring incredible value to car dealerships, it also introduces a number of potential risks. Dealers should prioritize customer satisfaction and trust by proactively protecting their most valuable asset: customer information.
To elevate your dealership’s security and efficiency, think of partnering with vendors who understand the unique challenges and nuances of the automotive industry. These partnerships should focus on enhancing the customer experience and streamlining operations while working behind the scenes to safeguard your sensitive customer and dealership data.
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