How a data driven customer experience puts automakers in the driver’s seat
A visit to an automotive dealership has traditionally served as the cornerstone of the customer journey and brand relationship for many automotive brands. Almost all marketing funnels are centered around the generation of “named leads” to be passed to dealers for contact.
Yet today, consumers are increasingly open to purchasing a vehicle without interacting with a dealer at all. The number of people open to buying cars online has nearly doubled since the start of 2020, according to a report by CarGurus. Consumers became more comfortable with digital channels during the pandemic and are increasingly purchasing high-priced items online — products retailers previously assumed required seeing in person, such as furniture, jewelry and watches. Also, being honest, many new cars on the market now offer similar driving experiences, making a test drive less valuable, especially when many customers dislike visiting dealerships and want to reduce physical contact with other people due to the pandemic.
Many auto shoppers are now looking for digital-first experiences instead of the traditional high-touch, in-person engagement model. Because of the sophisticated e-commerce experiences consumers have with companies they regularly do business with, such as Apple and Amazon, auto buyers come into the experience with sky-high expectations.
However, other customers still prefer the physical sales journey and continue to visit dealerships to purchase. Some automakers create two separate sales journeys, one new and one traditional, but the leading brands aim to create an omnichannel experience where customers can move seamlessly between online and offline. Regardless of approach, automakers should focus on creating an experience that keeps customers fully informed, empowered, and confident in their buying decisions.
Transforming the entire customer experience to digital-first
Frost & Sullivan predicts that by 2025 automakers will sell 6 million vehicles each year through e-commerce. As automakers design their e-commerce strategies, scalability must be the cornerstone for all decisions, with the goal of e-commerce handling as many, if not more, sales than dealers. Everything involved in the sales process — logistics, marketing, brand promise — should be fundamentally reimagined, both for digital and scalability. And yet, vehicle sales are only half of the story.
Leading automakers are looking to build new relationships with customers by selling additional services, such as charging electric vehicles, or offering premium features like automatic headlight dimming. McKinsey estimates that the market for mobility services could reach $1.5 trillion by 2030. However, most automakers are not currently operating on a fully integrated usership model, where the consumption of such digital services would be a natural and regular driver activity. When designing a commerce strategy, look at all potential customer interactions and revenue streams for opportunities beyond the initial purchase.
Automakers traditionally assume that e-commerce falls under the responsibility of sales and marketing, which leads to using a pre-made sales platform for e-commerce. However, these platforms do not often provide a personalized experience, and there is rarely significant differentiation between brands using the same platform. Instead of assuming the move to digital-first is a sales and marketing concern, you can transform the entire business by seamlessly adding transactions across various touchpoints. By viewing each interaction as a unique opportunity, you can enhance the customer experience and strengthen brand loyalty.
3 steps to a digital-first customer experience
The path toward success — both in the short- and long-term future — requires a concerted, enterprise-level focus on a reimagined customer experience. Automakers cannot expect customers to be impressed by simply releasing an e-commerce site without changing their business model. Because of the power of social media, the way each customer perceives each interaction — as well as every product, service and brand — is the key to amplifying brand sentiment, good or bad, across the web.
With the playing field level in many areas, brands that exceed high customer expectations for a digital experience are the ones that will stand out from their competitors.
The IBM report The future of automotive commerce details three key steps to transforming the automotive buying experience. While automakers have been following these steps for their digital experiences for more than a decade, the key is revisiting these steps with the approach of a completely digital and customer-centric experience.
- Envision the experience. Start with a clear understanding of the customer’s expectations, and then create an experience from their point of view.
- Define the technology. Use the required capabilities to define the architectural vision for the technical ecosystem, and then build the infrastructure needed for a personalized experience.
- Build the organization. If you’ve been ambitious enough, the driver experience you designed will touch all parts of the organization, from marketing and sales to supply chain to finance.
Many organizations mistakenly follow these steps in the reverse order. They start with their existing legacy organization and procure an e-commerce platform. After going live on the e-commerce platform, they then try to figure out how to make it attractive to their customers. This approach may feel like the path of least resistance — but leading automakers know that it is also the path of least reward.
An automotive customer-centric experience in action
In one example, during the launch of a new vehicle, a global automaker began assessing three e-commerce platforms for different business purposes, such as taking preorders, creating marketing materials, and offering a vehicle parts marketplace. In addition to each proposed platform operating separately and not sharing data, the automaker’s teams that were managing each platform were not even aware of the other platforms. If the automaker had moved forward, it would have unknowingly purchased three separate e-commerce licenses, resulting in three disparate processes.
With the help of IBM, the organization took a step back to look holistically at what commerce services it planned to offer over the next few years. The organization determined which offerings and services could be built within a common framework, such as the My Accounts page. This resulted in a single framework for taking deposits for new launches, booking test drives, activating premium features and hosting a B2B parts marketplace. By using this approach, the company was able to identify which future pieces could be built into a singular system, resulting in a platform that solved multiple challenges instead of applying separate, new solutions to each problem.
Using a headless platform to create multiple journeys
Previously, automakers were forced to choose between a basic commerce-led e-commerce site or an expensive, custom content-led platform. However, another option now exists: a headless commerce platform with a data adaptation layer in the middle. Because neither the front-end layer nor the back-end layer depends on the other, you can develop your own experience layer, which makes it possible to quickly create new customer experiences on a common platform. Using this approach, you could even have separate commerce platforms in separate markets, with the front end not noticing or caring.
Most importantly, a headless platform allows you to support multiple journeys, such as digital, in-person, or hybrid. You can add additional journeys, including a subscription service, selling used vehicles, bundling electronic vehicle (EV) charging with new vehicle sales, or even offer in-vehicle payment for road tolls. Additionally, the affordability, sustainability and simplicity of a headless platform allows you to support all needs, journeys and customer types with a single e-commerce implementation.
Several processes involved in car buying, such as paperwork, warranty, insurance and state registration, are more complex and not as easily moved to digital at this time. In the short-term future, automakers can create temporary processes to handle these requirements and eventually move to a fully digital experience as technology advances.
Strategically positioning your automotive brand for the future
By continuing to focus on selling cars instead of creating a digital-first experience, new digital companies and legacy companies that underwent a transformation alike are apt to quickly find themselves losing margins and customers. Creating an exceptional online vehicle-buying experience today strategically supports future digital commerce opportunities. With the right technical architecture and platforms, you can engage your customers with the power of a data-driven personalized experience.