By Ken Hill, Managing Director, 700Credit
The U.S. economy entering 2023 is much more strained compared to even the early days of the pandemic just a few short years ago. Inflation continues to affect U.S. retail and automotive shoppers, with ongoing fears of a recession this year. Vehicle prices are still extremely high and now there’s even talk of gas prices rising again.
However, auto retailers and their lender and OEM partners continue to push forward, knowing that despite the economic pressures and higher prices from interest rates, pent-up demand for car shopping will continue in 2023. Many dealers continue to ponder the right digital retail strategy, and it is becoming clear that an omnichannel approach is the best approach.
The right way to go digital
In 2023 it’s no longer just about “going digital” and establishing the car-buying process as online-forward. This thinking has evolved, and many in the industry now realize that the sweet spot consumers want when shopping for a car will take a true omnichannel approach – where customers want to research and build deals online, but still appear in the showrooms at some point in the process when it’s convenient.
Driving this omnichannel movement will be continued economic uncertainty and shifting consumer behavior. These trends include consumer desire for convenience, do as much remotely before coming into the store, saving money and having the flexibility to buy when, where, and how they want. These trends began accelerating during the pandemic, and digital retailing tools, dealers and lender partners today are evolving them further. Transitioning the consumer from the Digital Retailing experience into the dealer’s CRM experience and not starting the car buying process over for the consumer is still a significant challenge for the dealership.
Omnichannel will be key for dealers in 2023
Ecommerce retail experts believe omnichannel and a more unified shopping experience will be among 2023’s most significant consumer trends. Roughly 90% of consumers now expect retail businesses to offer omnichannel experiences across their preferred online and in-store channels and touchpoints. Brands using at least three channels in their retail strategies see a 287% higher purchase rate than single-channel brands. Auto dealers and digital retailing so would be wise to pursue this as a primary shopping strategy.
This path of unified commerce not only improves the customer experience, but it also enables greater personalized shopping possibilities creating an environment where dealers can collect and own valuable data that enables further personalization that drives loyalty and customer satisfaction levels.
But omnichannel also poses great challenges, as well. Auto dealers continue to struggle with shopper verification, especially now that a heavy dose of shopping takes place online. Factor in a true omnichannel strategy and you have a recipe for disaster if you don’t have the right system in place.
Many dealers today still rely on driver’s license scans for customers at the dealership, but a large number of dealers still fail to conduct this verification properly. Currently, most dealers utilize scanning technology to scan a person’s driver’s license to satisfy compliance, procedural checklists and to OCR the data to populate the CRM at the time of loan application or even during a test drive. While this process is important, it lacks a significantly critical element that can potentially prevent or even thwart the vast amount of synthetic fraud attempts.
How to implement the right omnichannel experience
Scanning the driver’s license is important, but dealers must also utilize verification technology to validate the driver’s license and the person’s true identity. This additional step helps to validate and verify the individual via address verification, red flag, OFAC, and synthetic fraud checks. It is estimated that a vast majority of dealers today still don’t include this verification step in their process, which is why photocopying is muscle memory for dealers, and a false sense of security.
Furthermore, sales personnel are repeatedly having over-the-phone customer inquiries send them a “text” of their driver’s license. These images (NPI /PII) can remain on the sales person’s phone indefinitely, which is a direct violation of one of the new 2022 Safeguards Rules. Dealers and their partners can leverage new technologies today that combines prescreen, prequalification and ID verification tools to prevent fraudulent activity from happening.
These new tools and technologies are in place today to not only satisfy compliance requirements, but they are also designed for an omnichannel environment so that verifications can safely and securely take place whether the customer is inside the dealership, behind a computer screen at home, or over the phone.
With the proliferation of today’s digital and online shopping, the verification and validation of one’s identity is even more critical when a potential fraudster is leveraging these omni-channel environments sitting in the privacy of their own home filling out a loan application. Mobile and ID scan technologies are now widely used in online banking applications, and these could significantly help dealers during an online transaction.
As more dealers and partners continue with their digital retailing transformation they will embrace the omnichannel strategy with their car-shopping consumers. Having the right tools in place will help them elevate their customer satisfaction scores, prevent fraudulent threats and ultimately sell more vehicles.
About the Author
Ken Hill is Managing Director for 700Credit, the automotive industry’s leading provider of credit reports, compliance, identity verification and soft pull products. For more information please visit www.700credit.com.