The rocky road to a frictionless online car-buying experience.
[This is a short excerpt from Candyspace’s Automotive White Paper, which will be published later in October.]
“We’re determined to make buying a car as easy as ordering a pizza”, stated Vroom – the USA-based automotive eCommerce business – back in 2016.
It’s a noble ambition, but even Vroom – who sold over 18,000 vehicles in the second quarter of 2021, up 172 per cent year on year – would admit that their customer experience is not yet as frictionless as getting in a Sloppy Giuseppe with extra mozzarella.
And probably never will be: buying a car is a complex business with multiple considerations and dependencies. But what is the case is that potential customers are now demanding a far more frictionless, seamless experience when purchasing a vehicle – indeed, research by Capgemini shows that 64 per cent of car buyers would prefer to conduct the entire transaction online – up from 39 per cent pre-Covid.
But if a disruptor like Vroom is still a way from delivering a frictionless customer experience, what does that mean for longer-standing automotive businesses such as the OEMs (Original Equipment Manufacturers) and dealers?
Digital customer experience has rapidly moved up the agenda in automotive boardrooms, but with swelling model ranges and increasing personalisation, customers are finding it harder to differentiate between brands when behind the wheel. Therefore, using digital to understand, improve, and measure customer experience to create a point of difference for manufacturers has never been more important.
The use of digital tools
There are a number of digital tools which have been introduced more quickly as a result of the global pandemic and have impacted the way in which customers can interact with OEMs and dealers, and help towards the goal of a seamless customer experience.
“Simple things like making reservations, down payments or even things like video live chat and a virtual walk around of the car. We are doing it and the retailers also are having to take a more omnichannel approach for customers.” – Christian Loeer, Marketing Director, JLR Germany
Hyundai introduced live chat last year and have been using it to bring customers into showrooms virtually through conversations, work through configurations, and even carry out live walk-arounds.
Rolls-Royce have taken things a step further by organising personalised Zoom calls with members of the senior management team for key customers as part of their bespoke offering.
AR and VR are both helping to enhance the experience – and perhaps start to remove some of the need for real-world interaction – on the path to purchase. Mazda, for example, employed AR and VR to enhance the launch of their CX-30. Ford, meanwhile, have introduced VR car configuration, and Skoda’s AR app allows you to see your potential new car in situ.
Nissan are offering a VR experience to get under the skin of the X-Trail, and Volvo have even introduced mixed reality technology to create the experience of, for example, a deer jumping out in front of you on a country road, which could really up the experience of a test drive.
Connecting the data
Data is the lifeblood of the automotive industry, both in terms of customer data and car data.
“Data is the new oil, it’s essential to our electric future and enables this always-on relationship with our customers.” – Alex Perdy, Ford’s head of Business Operations and Connectivity
Automotive customer data presents a real headache for OEMs and many struggle to know exactly who their customers are, which is a massive barrier to being able to communicate with them effectively, and deliver a better experience. The data is fragmented, has multiple owners, and is being managed using a variety of platforms on both OEM and dealer side
Nearly all parties are accepting data in different formats, using different tools and even between different OEM departments data isn’t shared. And with dealers owning the final sale, it adds even more complexity.
If you can connect the three layers (the OEM leads, the dealer leads, and the dealer enquiries), then that would be a huge step. Leads would be joined up; they would be worked and followed up in the right way; progress would be tracked; then customer experience optimisation can begin.
And turning these three tiers into one ecosystem in order to create a fuller picture would enable a more joined up experience with other partners who are delivering parts of those journeys.
Selling direct to consumers
Automotive eCommerce is the topic currently driving digital strategy for most OEMs. Some provide it already and most are working towards it, but there are clear barriers, not least: price point; selecting finance; incorporating test drives; delivery; part exchange.
But the most important consideration in the ambition of selling direct to customers is the role dealers play. Dealers are at the heart of the automotive industry and currently provide the essential link with the customer within the car buying process.
Dealers still want the sale and in some cases need to be involved for handover. Therefore, they have to figure out what part they will play, and they will need help to do that.
One potential route for OEMs to sell direct to customers is the agency sales model. In this construct, instead of dealers taking responsibility for the sale of the vehicles on their forecourts, they become “agents” who act on behalf of the OEMs – and take commission for doing so.
That means the OEMs can create a more consistent pricing strategy across sales channels (no more haggling!), and own the whole relationship with the customer. The dealer’s role becomes more akin to an expert consultant and fulfilment partner – adding value through their knowledge, facilitating test drives, and vehicle handovers.
It is perhaps this, more than anything, that can clear the road to a seamless, car-buying experience, where the dealers are part of a set of interconnected touchpoints that the customer can choose to activate at their convenience.
There is no question that the rapid acceleration of digital tools, systems, and processes is enabling OEMs and dealers to enhance the experience of buying vehicles for their customers. That will only continue, with more and more friction being removed through the smart use of technology.
But over and above that it requires imagination: a change in long-held norms for how the automotive sector operates. A mindset shift from a culture of “one and done” sales to relationships based on continuous customer interactions. And rather than an obsession with whether a customer has bought a vehicle or not, a focus on customer lifecycle value.
That, of course, requires a relentless focus on the evolving demands of customers – and finding the sweet spot where that aligns with the needs of the OEM and dealers’ businesses. Or, to go back to our pizza, that perfect combination of crust and topping…