Data is the lifeblood of AI. In the last two years alone, approximately 90% of the world’s data was created. In combination with processing power, data has allowed for companies to make greater advancements in the automotive retail industry now more than any other time in history.
The big question to ask is: how will AI impact automotive retail in 2018? While everyone is looking for specific applications, the reality is that AI will impact nearly every part of the industry’s approach to doing business.
Here are five areas to explore in the year ahead:
Recent eMarketer research shows over a third of U.S. retail executives are experimenting with AI for their customer service efforts. Another survey found that 41 percent of respondents believe that customer service is the aspect of their operations that would benefit most from AI-driven services.
How will customer service change? All we have to do is look at how some of the big brands are using AI to handle customer requests or deliver customizable shopping experiences.
For automotive retail, these same practices can be used to predict car shopping preferences, from model type, to color or feature recommendations. Automotive shoppers engage dealers throughout the day and they expect an immediate responses. AI can automate and enhance these experiences, which helps improve loyalty, customer satisfaction and sales.
Augmented and virtual reality shopping
“Augmented Reality is definitely the next big computing platform,” Marc Jensen, chief innovation officer at agency Space150 said in a recent Business Insider article. “It is inevitable.”
We’ve already seen Augmented Reality (AR) employed by major brands to help consumers visualize how their products will fit in with existing environments. For example, IKEA launched an app back in 2013 that uses AR to let customers see how furniture would look in their house, using a smartphone’s camera and display. Converse, the American shoe company, has a similar app that allows customers to virtually try on shoes, to get a better sense of how they would look.
Today, an automotive shopper needs to be on a website or on a physical lot to shop for a car. With AR and a mobile phone, customers can shop anywhere just by raising their phone and pointing it at a car they like. While on a lot, a customer can scan a car to instantly display pricing data along with other information about a vehicle. We’re just at the beginning of what is possible with AR.
Predictive ad targeting
Businesses do all they can to put their products in front of the eyes of customers most likely to buy them. AI will make this much easier. Big data, AI-powered advertising tools, and predictive analytics help retailers examine buying habits and target advertisements better than ever before.
Predictive ad targeting has already proved to be a drastic improvement over previous methods. One study from Ohio State University found that targeting ads based on behavioral cues improved click-through rates by up to 670% over ads not behaviorally-targeted.
As reported in the Harvard Business Review, “retail giants have been using machine-learning algorithms to forecast demand and predict sales for years.”
This use of AI will have a tremendous impact on automotive dealers.
The pressure on dealers to move inventory is unlike any other in the retail space, and setting appropriate prices based on sales prediction is critical to success. As further noted in the HBR article: “retailers need to think more like tech companies, using AI and machine learning, not just to predict how to stock stores and staff shifts, but also to dynamically recommend products and set prices that appeal to individual consumers.”
By analyzing supply, demand, vehicle features and price, dealers can get predictions on when cars will sell and for how much, giving dealers the power of AI to sell cars at the right time, for the right price.
Like predictive ad targeting, intelligent marketing allows retailers to examine current and past customers, determine where they are in the sales funnel, and market to them. At a time when customers expect meaningful experiences everywhere, AI delivers automated personalization based on location and demographics.
For example, if AI determines someone is considering taking their business elsewhere, dynamic offers could reel them back in. In the future, all marketing will be powered by AI. The days of 1-2% conversion on mass campaigns are over, all thanks to AI.
Every step counts
Automotive retail has seen a lot of change in the past five years, but nothing compared to what’s coming next. Dealer operations will be better able to serve, understand and predict what customers need. Customers will be able to rely on a smart, AI-driven automotive assistant to escort them through every step of the shopping, purchasing, and ownership experience.
Is your business ready for the coming change?
Chad Bockius is the CPO of CarStory, where he leads the product and go-to-market efforts of the company’s suite of products offering comprehensive insights for used cars around the nation. He brings more than 15 years of high-tech & executive experience from companies such as Bazaarvoice, Socialware and Trilogy. Chad has combined his automotive expertise with a deep understanding of online marketing to help dealers and OEMs tap into the power of big data to help build consumer confidence and accelerate decisions