Gone are the days where prospective car buyers show up to a dealership lot wide-eyed and uniformed on the dealership’s inventory. Today, car buyers no longer visit the dealership to learn the details on what models, features, and prices are available on the market, as buyers now meticulously research car offerings online before ever stepping foot in a physical dealership.
Instead, today’s car buyers visit the dealership primarily for the sensory experience of seeing and feeling their car(s) of interest, an experience that online research cannot provide. This trend can leave the physical dealership as simply a showroom for the dealership’s competitors. In this scenario, customers visit the dealership to see and feel a car that they end up purchasing from another dealership that features a better offer online.
In this competitive environment, where the internet places all other dealerships and their offers virtually next-door to your own dealership, how is a car dealership to get an edge over their competition?
Automotive industry studies lend support to mobile apps being a way to provide this competitive advantage.
DMEautomotive, and automotive marketing research group, led a study that examined 366,000 car purchases. Their findings include:
- Car buyers were 73% more likely to purchase a car from a dealership with a mobile app
- Users of a dealership’s mobile app spent 7% more on their car purchase than customers who did not use the dealership’s mobile app
These results are significant, as not only do they state that mobile apps can make the likelihood of a purchase increase, but they also state that mobile apps can lead to an increase in the total transaction amount. Additionally, this research found that 85% of purchases from users of the car dealership’s mobile app came from users with a previous purchase history at the dealership. This finding suggests that mobile apps play an important role in all-important repeat purchases from dealership customers.
But how exactly do mobile apps do this?
First, a dealership’s mobile app allows the dealership’s inventory to be instantly accessible to the prospective buyer 24 hours a day and 7 days a week. The native experience and faster load times that a mobile app provides over a website offers buyers a quick and convenient way to research and shop for a car. This increases the buyer’s interactions and familiarity with the car dealership’s brand, and this activity may lead to the increase in the buyer’s likelihood to both purchase and purchase at a higher price.
Second, a dealership’s mobile app can employ useful marketing features through “geofencing” technology. Geofencing allows the dealership to put a virtual perimeter or “fence” around their premises. When the mobile app user visits the car dealership, the mobile app can be programmed to send specific, personalized offers to the user. For example, the mobile app can show the user special extended warranty or financing options for the specific cars the user has been researching within the app. Additionally, car dealerships can use geofencing to send these special offers to mobile app users when they visit the locations of other competing car dealerships.
Car dealerships need to operate at the intersection of (a) the plethora of online car offerings and (b) the trend of customers now making even large purchase decisions based almost entirely off of internet-based research. To operate profitably at this intersection, car dealerships must make themselves available in customers' preferred communication channels, and car dealerships must tailor their marketing efforts to take full advantage of these channels. Research suggests one way to achieve these imperatives is through the use of a custom mobile app for your dealership.
To read more on the intersection between mobile and the automotive industry, check out our previous post on an opportunity for mobile in the automotive market here or our post on mobile apps and connected cars here.
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