Chad Bockius, CPO, CarStory, says in a new report that : “Data is the lifeblood of AI, and 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.
Bokius says that the
big question to ask, for him, 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, says the report:
- Recent eMarketer research shows that over a
third of U.S. retail executives are experimenting with AI for their customer service efforts. Another survey found that 41% of respondents believe that customer service is the aspect of their
operations that would benefit most from AI-driven services.
- 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 response. AI can automate and enhance these experiences, which helps improve loyalty, customer
satisfaction and sales.
Augmented and virtual reality shopping
- We've already seen Augmented Reality (AR) employed by major brands to help consumers visualize how
their products will fit in with existing environments, says the report. For example, IKEA launched an app let customers see how furniture would look in their house; 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.
Predictive ad targeting
- 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… 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…"
- 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. “The days of 1-2% conversion on mass campaigns are over, all thanks to AI,” says the report.
Automotive retail has seen a lot of change in the past five years, but nothing compared to what's coming next, concludes the report. 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.
To review the complete report, please visit here.