Innovation expert: Speed to dictate dealers' success

DETROIT — Make it easy for customers to interact with your business, or they won't be customers for long.

At a time when customers can call a business at nearly any time or order a product online and expect it delivered in hours, car dealers should expect their businesses to be in a constant state of change going forward, said innovation expert Howard Tullman, executive director of the Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship at the Illinois Institute of Technology.

To stay relevant, car dealers must take a broader view of their business than 30-day sales cycles, Tullman said last week at the Automotive News World Congress here.

To reinforce the point, he outlined economic shifts that could upend businesses and the broader economy: Robots will soon replace truckers, oil field workers and cashiers. Amazon can ship packages before customers actually order products. Uber can respond to calls for help faster than an ambulance. Yesterday's innovations, he said, are as fresh as day-old bagels.

Amid that frenetic pace of change in technology and consumer expectations, the longtime entrepreneur and general managing partner at investment firm G2T3V warned dealers and industry executives that they must overcome inertia or risk being overrun.

"Every business is about the same thing — it's about speed," he said. "If you are not in a hurry, you are probably too late.

"The question to ask yourself is not 'How fast am I going,' but 'How fast am I getting faster?' " he said. "If industries around you are changing more rapidly, you are toast."

IHS Markit data show loyalty rates inched upward during the 2018 model year — 53.7 percent of customers returned to market to buy or lease another vehicle from the same make they owned. But Tullman cautioned that shouldn't breed complacency or hope. He said loyalty merely means customers haven't yet found a better product.

But in a world where the average consumer checks a smartphone 163 times per day, that's bound to change. Whether it's picking up preordered groceries or car shopping on their schedules, consumers are increasingly in control of these transactional relationships.

"You don't get to drive the relationships. You've got to be there when the buyers are ready to buy," he said. "Blue laws? Give me a break."

As customers have more alternatives to traditional car ownership, the potential complications increase for dealers. But there's reason for optimism if dealers can pivot from legacy advertising methods and points of customer contact to new techniques that enhance engagement with core customers.

Only 22 percent of consumers open email, for one example, but more than 98 percent open text messages. And new data streams can help the car industry develop a wealth of innovations.

"We've got an enormous flow of data and information, and we have to make it useful and meaningful," Tullman said. "Businesses in the future will look at needs out there, and build systems that are responsive."

Businesses should have frank discussions about what procedures will be replaced by automation in coming years and what unique advantages they have.

"Double down on those," Tullman said. "And do it before someone does it to you."