What could a car industry remodelled around the digital customer look like?

Across multiple retail markets, businesses are refocusing operations to combat the disruptive effect of digital newcomers, who have thrived by providing exceptional service, convenience, and value for money.

The automotive industry has yet to fully embrace the digital economy and ‘e-retailing’ but, as customer expectation increasingly demands digitally driven, instant customer service through everything they transact with, the need for the automotive industry to adapt becomes ever more pressing. Whether they’re planning to lease, make a cash purchase, or use flexible financing, the customers current journey toward car ownership usually revolves around a dealership before the transaction is concluded and they get to drive off in their new vehicle.

Unlocking the power of data to improve online processes

The difficulty with this process is that a manufacturer doesn’t really have a clear idea where inefficiencies could lie in that particular part of the customer journey. Brands could be hemorrhaging customers due to a poor customer journey, bad face-to-face interaction and service, poorly located dealerships, or a string of other factors without really knowing it. Brand loyalty is reducing too and customers have a wide range of choices regarding their next vehicle and also how to fund it. Equally, the franchised dealership system makes it more difficult to market effectively to a defined audience – to understand what’s effective, what doesn’t work, and whether or not value for money is being achieved through its campaign activity.

Why? The physical process can’t provide the level of data and analysis on customer behaviour and marketing response that can be produced by an integrated and aligned digital process. So, what if the process of sale wasn’t forced to run through a physical location but via a digital destination instead? As the majority of customers will research a vehicle on line – why not let them extend that further?

It’s a simple question, but one that poses significant issues. It could mean an end-to-end recalibration of motor retailing – with the ‘sales’ activity moved from the dealerships to digital platforms that are run centrally. Sales processes could be streamlined, made quick, easy, consistent, transparent and efficient to maximise conversions and guarantee a consistent level of service. Once a relationship has been established, marketing efforts could then be personalised to individual preferences. The result could mean enhanced brand loyalty. Then, when the time comes for a customer to change vehicle, the existing provider is likely to be at the front of the queue.

Identity checking at the heart of the digital journey

Customers could also be encouraged to upgrade or replace cars more often with personalised, high-quality marketing. Often perceived as a hassle, the, once manual process, can be replaced by technology that has previously already verified the customer’s identity, and where credit and security checks are automated and financing and direct debits already in place. All the customer will need to know is what type of car they want, how much it will cost, can they afford it, and when it will be delivered. This isn’t a new concept to them, it is what they have come to expect already.

Innovation, what lies ahead?

A number of forward-thinking manufacturers are already experimenting with selling certain vehicles exclusively online, but that doesn’t mean transition from a dealership model to a digital one will be easy. Manufacturers have large, established, and complex franchising and commercial agreements in place with their networks – employing thousands of people.

In the future dealerships are likely to play a role, but that’s more likely to be one of showcasing innovation and new products, offering test drives and a personalised point of interaction – which until a new ‘digital’ model is adopted nationally – is still vital. This form of showcasing is also vital in the sales cycle as customers want to physically see the vehicle before they opt to invest. The number of locations could be scaled back in relation to the development of digital channels and as the dealership’s role becomes less focused on sales, and more on the experiential aspect of brand promotion.

If it sounds like an industry on the cusp of significant change, then perhaps that’s not without good reason. But what’s the alternative? With digital start-ups disrupting traditional markets every day, can the automotive industry afford not to innovate around the digital customer?