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When we think about the evolution of the automotive landscape, the undeniable turn of events has been – and continues to be – an increasing focus on the customer. Customer behavior now stands at the center of the transportation and mobility web influencing everything from design, engineering and innovation to relationships between original equipment manufacturers (OEMs), national sales companies (NSCs) and dealers. The race is on as players across the automotive industry are striving (in some cases, scrambling) to incite long-term customer loyalty and value via more accessible, convenient, personalized and rich experiences.
While it is the obvious path, affecting a shift towards customer-centricity is anything but simple. Generations of brand- and relationship-building, automotive incentive programs and agreements around data-sharing stand at the foundation of today’s automotive environment – making alterations difficult to execute. Many business leaders, while adamant and open to change, are finding themselves unable to answer the most important questions: How do we go about arranging the best future for our business without faltering in the present? How do we amplify the customer voice into processes already well-ingrained in our culture and systems? How do we reimagine the transportation and mobility model tuned to new market and customer dynamics?
Direct sales and alternative ownership models add new complexity to an already non-linear traditional journey.
The number of organizational leaders finding themselves in this predicament is magnified with each technology, market trend and new entrant emerging on the scene, combined with shifting customer expectations and needs. After having strategic conversations with key automotive players across the globe, one good thing becomes clear – the opportunity to define a new model for customer experience, loyalty and value for OEMs and NSCs is there and it is achievable. But they need to start now...
Many of an OEM’s or NSC’s traditional practices are now in a state of flux. New ownership models are already in their pilot phases, market dynamics are driving new ways of partnering, complex autonomous driving solutions are being developed for long-term impact and significant investments are being made into e-mobility. This dynamic environment has given rise to four distinct phenotypes across the transportation and mobility sector:
Each of these phenotypes depicts an effective future-state automotive model for the industry, and several OEMs/NSCs (both old and new) are already piloting these kinds of initiatives. For example, the recently launched Nissan City Hub in Paris, France, connects the traditional dealership with the digital behaviors of today’s customers. Its 88-square-meter space in the middle of a famous shopping corridor mimics the pre-purchase experience that potential buyers have at home, but with the added availability of test drive scheduling and one-on-one time with a Nissan Intelligent Mobility Ambassador. The best part? Should visitors choose to buy a vehicle then and there, they have the option of taking delivery of the car at the location, at another dealership of their choice or even at home. The entire pilot program is built around the e-commerce options that online retailers such as Amazon have conditioned buyers to expect across any and all purchases. With this, Nissan exemplifies the Connected Traditionalist mentality by openly probing new sales models that merge conventional and contemporary elements.
"Nissan City Hub will put people at the heart of our vision for tomorrow’s retail... all while they’re going about their normal shopping."
Leon Dorssers , VP of Global Sales and Retail at Nissan Motor Co.
There are also several interesting new players to watch that do not have a heritage foundation to stand on when it comes to customer loyalty and are, therefore, dependent on defining a new experience as a way of creating value. Digital Multichannelists like BYTON are successfully building from scratch the norms for a more customer- and service-centric sales approach. Meanwhile, alternative mobility providers such as Fair (a definite Ecosystem Orchestrator) are completely disrupting ownership and automotive retail models across the globe by offering end-to-end digital solutions for driving what you want, when you want it.
OEMs and NSCs have the critical task of envisioning their retail options, yet remain unsure of how to balance and tackle the pressures they feel from multiple directions. To paint a clear and actionable picture, several core decisions must first be made across four key dimensions in order to identify where an OEM or NSC wants to place its bets (see Figure 1).
Sales Channels: On the one hand, sales channels must be evaluated for their feasibility and profitability. Options include a more traditional business-to-business-to-customer model like today’s dealer network (perhaps with a few updates), a hybrid solution combining selling directly to customers online and via dealers offline, and a multichannel ecosystem built upon third-party partners.
Offering: The next step involves an OEM’s or NSC’s chosen combination of product and service offerings. New and used car sales can remain the base, or modifications can be made to accommodate aftersales, ownership services and even product-as-a-service options.
Network Formats: Then, there are alternatives outside of an OEM’s or NSC’s walls that need to be weighed and selected. Revamped network structures and formats are popping up left and right, swaying from centralized superstores all the way to decentralized pop-up events or a lack of brick and mortar all together.
Dealer Network Management: The OEM/NSC has choices in how to include (or not include) the dealer in its future business model. Will the relationship continue to be based on sales volume and auto incentives, will it be more about agents available only for customer support or will the dealership become unnecessary?
Any combination of these options can fuel an OEM’s/NSC’s business moving forward (see Figure 2). This is especially true when the business model is coupled with a strong data and analytics platform that allows for shared customer management across partners. Of course, that comes down to leadership and culture – both internal and across networks – and the relationships that stand to make or break a future-state model. Identifying where they want their business to be in several years is one thing, but an OEM’s/NSC’s C-suite must then stand up the organizational pillars necessary to drive that change.
Transformation does not necessarily mean one big overhaul or an immediate flip of business models. Sometimes it necessitates strong shifts, while other times change can (and should) be taken in waves. Regardless of approach, automotive businesses need – now more than ever – a clear vision of their company’s end-goal combined with a malleable approach to adapt their strategies and processes if they wish to survive and thrive. The aforementioned future-state models, for example, are extremely viable options for established OEMs and NSCs to increase customer value in today’s evolving automotive retail environment. Adopting any of the models, however, starts with a strategic evaluation of the customers, operations, culture and employees that make up the organization.
Where does retail create the most customer and business impact?
Established sales strategies should be evaluated for their efficacy in today’s transportation and mobility market. It might very well be that an OEM’s, NSC’s, or even dealer’s focus lies in the wrong place – while substantial competitive advantage can be gained in other retail environments.
Where can the organization start small and scale fast?
There is nothing wrong with testing the waters first to see where change can make the most impact. In fact, pilot programs are proven forms of maintaining an open and agile approach to digital business transformation, offering the learning and data necessary to make each next move more effectively.
How can business leaders drive human-centric transformation, both internally and externally?
Technology is not the sole driver of transformation. In fact, it should only exist to empower and enable those that are: one’s employees and customers. The understanding of these two cohorts is where every initiative should begin, thereby ensuring that whatever is designed and built is done with employees in mind and in customer-centric ways.
Where can closer interaction between differing industry players move the needle on customer experience?
The disconnect between OEMs, NSCs and dealers is very much being felt by the end customer. For those looking to accurately serve existing and new customers in the future (especially younger generations of them), something has to change. Better connections must be made for data to positively impact innovation and customer satisfaction across the board.
A mindset that combines these four pillars stands to evolve today’s challenges into tomorrow’s opportunities. The decrease in retail closing sales becomes the chance to inform, engage and wow the customer of the future instead. The loosely connected online and offline touchpoints that hinder today’s customer journey stand to transform into the seamless, consistent and multi-channel experiences that future generations of customers cannot live without. And, one-size-fits-all interactions are giving way to more personalized and relevant ones than ever before.
Younger generations are looking for new solutions and will cover approximately 40% of new vehicle sales in the following years.⁴
To succeed, automotive leaders must first shine a critical eye on their sales channels and offerings, followed by their network structure and dealer integration. The potential of each component for providing emerging services and new ownership models must be laid out honestly in relation to current, underserved needs. This can be done by applying a layer of thinking guided by the aforementioned pillars. The result will be a clear depiction of how customer journeys, agility, people and collaboration can combine – in various, unique ways – to execute on that potential. From there, analyzing the feasibility of each high-impact move becomes a strategic game of organizational culture, sales data, network relationships and trends in customer expectations.
The most important decision factor, however, remains the fit. Selecting the approaches, tools and technologies that not only combine with existing systems seamlessly, but also transcend the various departments to deliver a cohesive, enhanced customer experience, is what ultimately drives value. A relentless focus on the customer, rather than a traditional product and technology orientation, will allow today's transportation and mobility players to activate the internal processes necessary and thrive in a world of continuous evolution. Only then will the pre-sales and sales orientation that has long dictated the market draw closer to what OEMs and NSCs have always dreamed of: new aftersales and ownership touchpoints across a customer’s entire lifetime.
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