I’m going to give you 5 key trends of digital transformation and some of the secret sauce from AutoTrader, which may be applicable to your business.
Understand the effects of the internet
To understand them, we have to first understand the journey of the internet.
While we have 38 million internet users in South Africa, so we can all agree that we are online.
But, of these 38 million internet users in South Africa have more than five years’ experience on the internet – a number that continues to grow. This means that we have to become better platforms. We have to provide our users with better online experiences because they are becoming more experienced.
Building platforms and products online is correlated to internet speed
Building a successful platform and products online is very closely correlated to internet speed. I’m sure you will agree with me that internet speed is incredibly important to building products and services. And while 38 million people are online in South Africa, getting them to your platform to use your service is important.
Where are and what are users on the internet in South Africa doing?
- where are they?
- what are they doing?
- and, how do we harness the benefits of these people?
I can tell you for the most part, where they are – they are on social media. We have 25 million users of social media in South Africa, and that’s growing at a rate of about 14% annually.
Social media platforms are growing incredibly fast in South Africa. If you ever thought Facebook was dying, it’s not. Facebook has over 20 million users in South Africa alone. You’ll notice that YouTube now has over 24 million users in South Africa. Three years ago, YouTube had 9 million users in South Africa. Take a moment – pause and digest that.
The South African car buyer is not only on these platforms, but they are on other platforms too.
AutoTrader SA sees 75m pages opened per month with 10m visits and an almost 6-minute stay per visit.
If you juxtapose that in terms of worldwide websites and how much time people spend on average on a website, it’s about 2 minutes. AutoTrader benefits from more than two to three times the amount of time versus other websites. Believe it or not, Facebook trumps AutoTrader, with Facebook users spending up to 30 minutes per visit.
We can now all agree that’s where the consumer’s attention is today. The internet is here and everybody is on it.
2 key tactics to get consumer attention
I would like to propose two key tactics you can start implementing tomorrow to get your share of consumer attention.
- Focus on the bottom of the funnel.
- Building a brand.
Many car dealers in South Africa focus too much attention on the bottom of the funnel and not enough attention on building a brand.
First, let’s focus on the bottom of the funnel. If you think about the car shopping journey as a funnel and remember it’s not linear. Consumers continually go back and forth within the car shopping journey – something we’ve researched, seen, and can prove.
Non the less, think of the car shopping journey as a funnel, AutoTrader and Google Adwords operate closer to the bottom of the funnel. AutoTrader is incredibly astute at finding the user that is in the market to buy a car today. We’ve learned how to do that over a long period of time. Google has also learned how to do that over time.
AutoTrader then spends money on Google to try and get those users onto our platform as well. Why give the car buyer the best search experience for a car.
It’s beneficial for anybody in the market trying to sell a car, to leverage these two platforms for immediate results. As a side note though, AutoTrader is going to be more cost-effective than Google though and this is a result of AutoTrader bidding on Google.
AutoTrader is a two-sided marketplace
AutoTrader is what’s referred to as a two-sided marketplace.
What is a two-sided marketplace?
Simply put, a two-sided marketplace not only brings buyers and sellers of cars together (classified), it helps each side of the marketplace through the car-buying journey.
How? By applying the right Automotive Digital Retailing principles in communicating to the consumer that is on the platform.
Never leave the bottom of the funnel because your current sales volume may dry up.
Build a Car Dealership brand online
The internet commoditizes everything to the lowest price over time and margins get thinner and the only businesses that will be left standing are those that have built a brand.
How to build a car dealership brand?
You start by giving the consumer value before you expect value back. Not everything is about getting leads immediately. Sometimes you need to give value and you may not be able to correlate that value back to a lead or car sale. You give value without expecting anything in return except consumer attention. That’s how you build a brand. Consumers today want to trust the brands they interact with.
So, you can imagine if you built a brand that is all about trust and service, even if the price of your cars are slightly higher than the next dealer, the consumer will more than likely buy from you. There are plenty of brands that charge a premium.
A study published by Hootsuite, suggests that 60% of consumers on social media are researching your brand before they buy from you. If you communicate in the context of the consumer, build trust with the consumer, when 60% of them go and research you on social media, guess what they’re going to find? They’re going to find what your brand stands for. You will stand out
What if you’re missing? What if you’re not there? What if all you’re doing online outside of lower-in funnel platforms like AutoTrader or Google is putting up retail ads up? Consumers are going to view you as a business that wants to sell them something all the time and not really add value to them. We all want to sell consumers things all the time, but there’s a time and a place for that. And when the consumer is going on to social media platforms to look at your brand, give them interesting information that builds trust, don’t just sell sell sell.
5 key trends of digital transformational companies
I said I would give you 5 key trends of digital transformation. Businesses:
- are focused on becoming more of a subscription business.
- want to become platforms.
- are now becoming far more social.
- are becoming employee or customer-centric.
- are leveraging data and technology to their platform’s advantage using network effects.
Everybody knows Apple. If you don’t, just Google them and you’ll be able to find them very quickly, but I’m pretty sure you’ve seen an Apple device. Is Apple a product business or a platform business?
Apple is a platform business. iTunes, cloud storage, and Apple TV. They’re all subscription elements of Apple’s platform business. Is Apple social? Do you know who the CEO of Apple is? The answer is yes. Apple maybe a little bit antiquated when it comes to social media and being social, but you still know who the key people are.
The developer conference talks which people flock to watch. Is Apple customer or employee-centric? I would say, yes. Look at the devices they produce. Do they leverage data and tech? I’m pretty sure I don’t have to convince you that the answer to that is yes. They’re one of the most privacy-driven companies on the planet, you have to use data to do that.
Next is Amazon. Now Amazon makes quite a crappy tablet if you ask me, but Amazon is not trying to be a producer business, but they have to have a product in order to sell their subscriptions. Just because they produce a product, doesn’t mean that that’s where their focus is.
Today more than 50% of Amazon’s income or revenue is from their two-sided marketplace, or their platform, with network effects, but it’s just taken 20 years to get there. So, are they a platform? I would argue, yes. Are they social? I’ll ask you, do you know who the CEO of Amazon is? Are they employee or customer-centric? I would say yes.
Look at the first book that was written in the early days of Amazon and you will see that they are employee and customer-centric. Do they leverage data? Absolutely. Are they a subscription businesses? Example – Amazon web services. Yes. Very few people know how many websites are on Amazon’s platforms. They’re not a hardware business but they do have hardware products.
AutoTrader. Are we a subscription business? Yes, we charge per listing or per dealer per month to be on our platform to have access to 10 million visits and millions of searches. Are we a platform business? I think I’ve described that to you. Are we social? If you search for AutoTrader South Africa on Google, you’ll be able to answer that question for yourself. Are we employee or customer-centric? We believe that culture and leadership are the bedrock of the success of any business and we’ve taken 10 years to build it. Do we leverage data and tech? Yes. Visit reports.autotrader.co.za and you’ll see examples of the data that we put out into the market for free.
And then finally, I’d like to introduce you to a business that is not only a product business but is also a platform business – Tesla. You might ask yourself the question, they produce cars? Yes, they do produce cars, but where’s the platform? While they were producing the Roadster, Tesla was also designing and implementing a charging infrastructure that they own across the United States and other countries. How is that a platform? It’s a platform because it connects the producers of power to the users of power. And those users of power are the very people that drive their cars and that is part of their platform business.
Is there a platform business in their cars? Yes, because with autonomous cars coming in the future and the way in which Tesla is building the future of their cars or their business, there is going to be a user or a potential customer inside that car. And the other side of that platform with the “internet of things” is going to be all of our businesses that want to sell something to that user.
So, the car is actually a platform as much as it is a car. Is Tesla social? Yes. Do you know who the CEO of Tesla is? if you don’t, I’m worried. Are they customer or employee-centric? Yes, they are. And on that note, it is very difficult to work for businesses like these, because the expectation of the result is incredibly high, but when you produce those results, it’s an incredibly good place to work. Do they leverage data and tech? I would argue, yes.
Finally, I’d like to leave you with a couple of questions:
- Are you keeping up?
- What role are you going to play in shortening the digital transformation or innovation curve in your business?
3 things that you can do today:
- Leverage existing platforms and build a brand. That’s what you can do tomorrow. They are existing platforms, use them to your business’s advantage.
- Build a platform with network effects. Find the place that connects users, your customers, creating a network. Between each other is an important way to build network effects.
- Don’t hide your customers from each other and take advantage of the shortening of this innovation curve.
And if you can do those three, I don’t see why you can’t be successful.