The Death of Traditional Automotive Retailing – What’s next?

Analytics

How Big Data and Con­nec­tiv­i­ty Can Save the Auto­mo­tive Indus­try.

With dig­i­tal­i­sa­tion comes a new breed of cus­tomer. Through the inter­net, cus­tomers are now more informed, con­nect­ed, and empow­ered in their pur­chas­ing expe­ri­ence. With­in auto­mo­tive retail­ing, cus­tomer pur­chas­ing pat­terns are chang­ing, too. While the trend is mov­ing towards short­er own­er­ship peri­ods, brand loy­al­ty is becom­ing a much stronger fac­tor for con­sumers.

In 2014, 44% of con­sumers were will­ing to pur­chase a car online, and the aver­age num­ber of vis­its to car deal­ers has plum­met­ed from 7 to 1.5 per pur­chase, with many cus­tomers spend­ing more time research­ing online, uti­liz­ing social media and car com­par­i­son web­sites. When the stakes are this high for deal­ers and man­u­fac­tur­ers alike, the per­fect cus­tomer expe­ri­ence should be intu­itive, high­ly per­son­alised, and has­sle-free. That is, in an ide­al world.

When a Mar­ket­ing Strate­gist Meets a Car Deal­er 

My own pur­chase expe­ri­ence was…well, com­plete­ly dif­fer­ent. Over the last cou­ple of months, I was in the process of pick­ing a new vehi­cle. The usu­al sto­ry. I had whit­tled my options down to a few mod­els, and began my jour­ney on my cho­sen manufacturer’s web­site. This part of the process was great; I could cus­tomise my pur­chase online, vis­it­ed com­par­i­son sites, and research com­peti­tors. Feel­ing informed, I booked a test dri­ve via the manufacturer’s web­site, which sent me to the near­est local deal­er. This is when things start­ed to go down­hill.

While the deal­er knew my name and the mod­el I was inter­est­ed in, this was the lim­its of his knowl­edge. Not only were my per­son­alised spec­i­fi­ca­tions unavail­able to him, the QR-scannable codes on my print­ed out spec sheets were nei­ther used nor asked for. After two test dri­ves, the pur­chase process involved tedious­ly re-enter­ing the very same spec­i­fi­ca­tions, print­ing it as a PDF file, and hand-writ­ing the final cost. I lat­er received an unbrand­ed email from the car deal­er con­firm­ing my order. When asked, he told me that he had input the very same spec­i­fi­ca­tions to an entire­ly dif­fer­ent sys­tem. The time it took him? 45 min­utes.

It came with no sur­prise that I received no post-pur­chase com­mu­ni­ca­tion. No product/service upsells, no ‘wel­come on-board’ mes­sages, not even a ‘thank you’ for part­ing with a con­sid­er­able sum of cash. The only thing to remind me of my pur­chase was a tar­get­ed ad of the very car I had pur­chased, which fol­lowed me redun­dant­ly on var­i­ous pages I browsed on the inter­net. The wast­ed mar­ket­ing bud­get on that, alone, made me wince.

Over­all, the expe­ri­ence was a has­sle and, like many cus­tomers, I could’ve eas­i­ly dropped out of the sales process because of this. While my over­all expe­ri­ence was incon­ve­nient, it helped to high­light an impor­tant issue that is ham­string­ing the auto­mo­tive retail­ing indus­try – the dis­con­nect between man­u­fac­tur­er and deal­er.

The dig­i­tal world has brought with it an era of inter­con­nect­ed­ness that can’t be ignored. There’s a per­sis­tence of the tra­di­tion­al mod­el in the auto­mo­tive indus­try – of man­u­fac­tur­er and deal­er as sep­a­rate enti­ties that offer sep­a­rate, dis­con­nect­ed ser­vices. In cur­rent climes, this per­sis­tence is death. For the man­u­fac­tur­er-deal­er­ship rela­tion­ship to sur­vive, an indus­try-wide rev­o­lu­tion is need­ed, and ‘big data’, and the con­nec­tiv­i­ty of said data, lies behind that rev­o­lu­tion.

Deal­er­ships: per­son­alised brand ambas­sadors, or incon­ve­nient mid­dle-men?

Car deal­er­ships are a manufacturer’s phys­i­cal sales rep­re­sen­ta­tive. They’re the func­tion­al, every­day inter­face between man­u­fac­tur­er and cus­tomer. The argu­ment over the neces­si­ty of inde­pen­dent car deal­er­ships is already heat­ed, with the likes of Tes­la push­ing for auton­o­my over the sales process in recent years.

While deal­er­ships offer a valu­able ser­vice to both man­u­fac­tur­er and cus­tomer, in order to pre­serve their sur­vival, they need to – at the very least – ensure that their clients expe­ri­ence a seam­less tran­si­tion from manufacturer’s web­site to car show­room.

There are a few ways that this can be achieved, and big data lies behind these. ‘Big data’, as a con­cept, is sim­ply the appli­ca­tion of vast quan­ti­ties of infor­ma­tion to use­ful means. In the case of the auto­mo­tive indus­try, by using cus­tomer infor­ma­tion from the manufacturer’s end such as pref­er­ences, per­son­al details, and oth­er infor­ma­tion, deal­ers can make the customer’s expe­ri­ence has­sle-free and high­ly per­son­alised.

Sys­tems need to be devel­oped where infor­ma­tion is gath­ered from mul­ti-chan­nel sources. Deal­er­ships still offer a valu­able ser­vice; one-to-one inter­ac­tion in per­son, and the abil­i­ty to test dri­ve your vehi­cle of choice. With the help of big data and the appro­pri­ate tools, deal­ers can play to their strengths of one-to-one ser­vice in a dig­i­tal­is­ing world.

There’s no doubt that incon­ve­nience and inef­fi­cien­cy sends cus­tomers run­ning to the hills, and that is what the cur­rent man­u­fac­tur­er-deal­er­ship mod­el fos­ters. For exam­ple, if a deal­er either takes too long to respond or responds poor­ly to a cus­tomer enquiry, 80% of prospec­tive cus­tomers will leave, either look­ing for anoth­er deal­er (48%), look for anoth­er car brand (14%), or look for both anoth­er deal­er and car brand (18%)(Source: Capgemini cars online 2014).

Man­u­fac­tur­ers: inno­va­tors and trend­set­ters

It is clear that the reper­cus­sions of a poor cus­tomer expe­ri­ence pun­ish both man­u­fac­tur­er and deal­er. How­ev­er, indi­vid­ual deal­er­ships lack the resources to put the appro­pri­ate sys­tems in place. With the insights that data can pro­vide along with the ben­e­fits of mod­ern tech­nol­o­gy, man­u­fac­tur­ers need to become the pow­er­hous­es behind imple­ment­ing a uni­ver­sal sys­tem that per­son­alis­es, mod­ernises and makes more effi­cient the car pur­chase expe­ri­ence.

When a cus­tomer enters a deal­er­ship, staff should be able to search their names on an up-to-date, intu­itive sys­tem, where all of their details and pref­er­ences are avail­able. This allows the tran­si­tion from man­u­fac­tur­er to deal­er­ship to become a seam­less, has­sle-free process. Being able to antic­i­pate a customer’s indi­vid­ual needs makes them feel spe­cial, shift­ing their posi­tion from anony­mous com­mod­i­ty to val­ued, well-known client. Man­u­fac­tur­ers can pro­vide these sys­tems.

Such sys­tems need to be two-way, how­ev­er, with data being passed back from the deal­er to the man­u­fac­tur­er. In the past, deal­ers viewed man­u­fac­tur­ers as direct com­pe­ti­tion, fear­ing a direct-sales mod­el such as the one Tes­la has adopt­ed. While the right data plat­form is impor­tant, a co-oper­a­tive rela­tion­ship is vital for the sur­vival of both deal­er and man­u­fac­tur­er.

Man­u­fac­tur­ers, now with insights into indi­vid­ual customer’s jour­neys, can then pick up the man­tle to ensure brand adver­tis­ing is rel­e­vant to where the cus­tomer is in their jour­ney, and mar­ket­ing spent is not wast­ed on either lost cus­tomers, or cus­tomers who have already pur­chased.

Where Oth­ers Have Suc­ceed­ed

Gen­er­al Motors (GM), for exam­ple, are mak­ing use of geo­graph­ic infor­ma­tion sys­tems and big data ana­lyt­ics to opti­mise their deal­er­ship per­for­mance. They’ve devel­oped plat­forms to col­lect use­ful, local insights on cus­tomers, which are then imple­ment­ed in var­i­ous deal­er­ships around the world. This allow deal­ers to han­dle cus­tomers in a more per­son­al and rel­e­vant way, ulti­mate­ly boost­ing brand loy­al­ty and there­fore rev­enues.

Not only that, Gen­er­al Motors have rev­o­lu­tionised the cus­tomer expe­ri­ence with their new ‘Shop-Click-Dri­ve’ pro­gram. This allows the major­i­ty of the pur­chas­ing process to be com­plet­ed online, includ­ing home vehi­cle deliv­ery, cut­ting time-con­sum­ing vis­its to the deal­er­ship. How­ev­er, 99% of cus­tomers still deliv­ered to the deal­er, indi­cat­ing that they still val­ued their ser­vices. As GM’s vice pres­i­dent, Kurt McNeil said, Shop-Click-Dri­ve “com­bines the con­ve­nience of online shop­ping with the per­son­al ser­vice of a neigh­bour­hood deal­er­ship”.

How suc­cess­ful have these inno­v­a­tive, future-ori­ent­ed prac­tices real­ly been? GM are cer­tain­ly doing far bet­ter after their bank­rupt­cy in 2009, expe­ri­enc­ing a record-break­ing prof­it in 2011. This IT over­haul has been an impor­tant step towards becom­ing more effi­cient, rel­e­vant, and inevitably prof­itable for the com­pa­ny, and their new­found suc­cess is tes­ta­ment to that.

An increas­ing num­ber of organ­i­sa­tions across a spec­trum of indus­tries already have such sys­tems in place to great effect. For exam­ple, the cor­ner stone of the hotel indus­try is con­nec­tiv­i­ty of this data. It is no secret that most major hotel chains own very few (<1% in some cas­es) of the hotels with­in their group, and instead oper­ate a fran­chise mod­el. Despite this, they can con­nect the var­i­ous book­ing, CRM and online sys­tems across all their hotels to ensure the details of the cus­tomer are always avail­able at the right time to ensure the right, con­sis­tent brand expe­ri­ence. This is regard­less of if the cus­tomer is phys­i­cal­ly in a hotel or on the web­site.

If key play­ers in the hotel indus­try can devel­op seam­less tools and sys­tems, con­nect­ing thou­sands of fran­chised hotels via a sin­gle plat­form, there’s no rea­son the auto­mo­tive retail­ing indus­try can’t share in that suc­cess.

Man­u­fac­tur­ers there­fore need to imple­ment a foun­da­tion­al data lay­er, where­by all nec­es­sary data is passed to and from deal­ers freely and in real time, along with a rich, intu­itive pre­sen­ta­tion lay­er that can be per­son­alised and used by the deal­er to con­tin­ue the online jour­ney in the real world.

In fact, if man­u­fac­tur­ers hope to stay com­pet­i­tive, a shift towards this new mod­el is cru­cial, where data trans­fer between deal­er­ship and man­u­fac­tur­er is valu­able and con­tin­u­ous. It is not the cus­tomers of the future who demand an intu­itive process, seam­less con­nec­tiv­i­ty and per­son­alised ser­vice. Cus­tomers demand that change now, and busi­ness­es – both man­u­fac­tur­ers and deal­er­ships – who adapt quick­ly will be reward­ed with their con­tin­ued loy­al­ty and busi­ness in a rapid­ly chang­ing indus­try.

Join us at the Adobe Sum­mit in Lon­don on the 29th of April, where we’ll be host­ing the first ever Auto­mo­tive Track, dis­cussing the shift­ing chal­lenges that the auto­mo­tive indus­try faces today. More details at: http://summit.adobe.com/emea/sessions/at-a-glance/

Cov­er Image © det-anan sunonethong — Fotolia.com


Analytics
Michael Plimsoll

Posted on 04-01-2015


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