Digitalisation is something we, as consumers, are innately hardwired by. “Googling”, “Hey Siri” and “Alexa” are phrases we use to find information, reviews and offers on the products or services we’re interested in.
Amazon and other online marketplaces allow us to find almost anything within the click of a mouse at the best possible price, before giving the kind of highly transparent tracking we now expect from any purchase we make.
In a climate where cars aren’t even the big-ticket items they used to be before the exponential growth of leasing and financing, the industry has been slow to catch up with the hyper-digitalised customer of 2020.
OEMs and dealers have started to explore the world of online selling to varying degrees of success. While it’s unrealistic to expect overnight change with such high costs involved in changing decades-old processes, there are some relatively “quick wins” that both OEMs and dealers can exploit.
Ensure online proposition addresses what a digitalised customer is looking for
Capgemini recent research suggests that only 32% of customers are ready for a full end to end journey, but we do know that customers want to minimise their contact with dealers, especially in a post-COVID world where hygiene factors are front of mind. The “mass market” model in the short to medium-term will likely offer flexibility for the customer to complete parts of the journey online and parts at the dealership (a test drive, for example), before returning home to complete the journey online, with an option for home delivery or collect back at the dealership.
It’s no surprise that demand for immediate availability is increasing. Other than buying a house, we are used to very short purchase timelines, so for many, a three or six month lead time is a major pain point. Stock locators have been commonplace in the used car market over the last few years, but they now form a vital part of the new car customer journey.
Making it easy for customers to learn about the model they’re interested in and see that there is stock available will increase their engagement with a brand. If they can then go on to search stock before reserving or starting an e-commerce process within the same journey, it not only keeps them in control, but it reduces the interventions required at OEM or dealer level. With fewer touchpoints for customers to drop off, the conversion will be higher, especially if media spend is optimised towards communicating that cars are in stock.
Leverage partnerships with disruptors, rather than overspending to compete
New and agile disruptors such as Auto Trader and carwow have partnered with dealers to take hold of the new car market by delivering on two of main consumer demands; price transparency and readily available stock. Auto Trader research shows that dealing with a salesman and negotiating on the price of a car is a major pain point for most demographic groups. By showing the dealer discount and stock availability up front, these platforms provide customers with the information they need to make a purchase before even speaking to a salesman.
It’s easy to see new disruptive entrants to the market as a threat that needs to be combated, but you only need to look at the web traffic stats to realise that the size of the captive, “in-market” audiences on the websites of these brands far surpasses that of individual OEMs or dealers. It would take the average UK OEM website 8 years to match the traffic achieved in one month by the leading disruptor. For a dealer, the argument that profit margins are lower is a valid one, but the reality is that a big proportion of customers are shopping in marketplaces, so not being present may be more harmful in the long run.
As the automotive industry moves forward, partnerships between traditional OEMs and new entrants will become commonplace as brands leverage each other’s strengths to remain sustainable and profitable, and the online marketplace phenomenon is no different. Partnering with disruptors give OEMs and dealers access to a market they may not otherwise be speaking to, whilst the disruptors in turn gain greater exposure and buy-in, allowing them to diversify and invest in new propositions that will benefit their automotive industry partners. The benefits of partnership far outweigh the benefits of trying to stick to the traditional OEM-dealer model.
Sourced from Capgemini - written by Joe Jennings