Americans have always had a love affair with the car, which was first coined in 1961 as part of a television series designed to intensify that passion. The last 12-plus months have seen that love affair grow stronger still, as consumers, en masse, left the cities, public transportation and ride-hailing services behind. Work for home and the desire to control their community environment drove car sales to record levels. JD Powers reports that April 2021 sales of new cars are expected to be up 26 percent over April 2019. They also report that a tight supply of used cars has driven wholesale prices up by as much as 26 percent, and retail sales to date up by roughly 7 percent.
It’s also driving consumers online to make those used car purchases. That puts the connected consumer, not the car, at the center of the sale — and a starting point for a deeper customer engagement beyond the purchase and sale of a car. As online auto platform Vroom’s CEO Paul Hennessy told Karen Webster in a recent conversation, this connected experience is far more valuable than “buying a car” and much more complex to execute than a dealer with a website that also sells cars.
“We’re seeing an evolution [in the used car buying space], and it starts with a customer-centric philosophy built on top of an eCommerce platform,” he explained. “It has to be customer-led, and then the infrastructure must be built on top of an experimentation and data platform. And if you don’t do those two things, it’s really hard to understand what’s working well and what isn’t.”
Put another way, he said, it’s about serving customers well and then keeping score around that.
Vroom’s seen an 82 percent year-over-year growth in eCommerce units sold, which translated into an 89 percent increase in gross profits.
Shifting Digital Gears
Hennessy said that Vroom’s starting point was, logically, about buying and selling a used vehicle. The acquisition of CARFAX gives it the ability to track market pricing for used cars, along with car histories and location information. It allows Vroom to offer consumers optimized pricing for cars they want to sell and those they wish to purchase, including financing and warranties.
“Immediately, when you say you’ve got a car to sell, we need to know a lot about that car,” he said. “By tracking all of the things that may have happened to that car — and then marrying that with data about the car’s market demand, average pricing and location — we start to have a profile of the car’s worth. That means we can give customers great deals.”
Hennessy believes online platforms are better positioned to form long-term relationships than those at brick-and-mortar dealerships. As he pointed out, dealers interact with customers a couple of times and then may not see them again for four years, if at all. Vroom has the digital relationship and the data to tap customers when it might be a good time to sell their car, to provide monthly vehicle valuations or to offer additional services, which the company is just beginning to think about — including logical, adjacent markets around insurance, auto parts and service and even music choices.
Hennessy said that consumers today are really making their cars their homes now more than ever as cars become synonymous with freedom again — and the idea of connecting to the customer and their car, and then being a valued partner, is more than simply good business.
“The idea of us connecting customers to their cars and then becoming a valued partner in sending them tire replacement reminders, or offering the right services and products for their location based on the season, becomes an interesting platform extension that builld rich customer relationships,” he said.
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