The automotive industry must embrace a digital-first customer experience strategy

There is arguably no industry that has been more disrupted in the last decade than automotive. Electric cars, automotive driving, emissions control, shared economy, digital-only auto sellers, changing consumer needs -- are just some of the disruptions the industry has had to respond to in the last few years. 

The automotive industry is undergoing massive digital transformation. By 2030, cars will be more connected, autonomous, shared, and electric. The car of the future is connected, autonomous, shared, and electric. Automotive industry experts believe that by 2030:

• 96% of new vehicles shipped globally with built-in connectivity (2X increase since 2020)
• 79% of new vehicles shipped globally with Level-2 autonomy or higher (vs 45% in 2020)
• 26% of mobility profits derived from new sources - e.g. on-demand mobility (vs 1% in 2020)
• 24% of new cars sold that are electric vehicles EVs (vs 3% in 2020)

In November 2020, the Experiences Per Mile Advisory Council -- a collaboration between 34 stakeholders from 23 global automotive and technology companies aimed at solving the complex issues facing the mobility industry both today and tomorrow -- published a new report to discuss the approach for developing a new metric in the automotive industry. I am a member of the advisory council. The report titled, "Experiences Per Mile: Charting an Ambitious Course to Measure the Mobility Experience for the First Time," highlights the industry change taking place and why it is creating a need for a new metric. 

The report notes: 

"There's a rapid shift underway in the way consumers think about automotive technology and in their expectations related to the automotive and mobility journey throughout their day, the year and the entire ownership period. With new enablers such as cloud computing, Artificial Intelligence (AI), Over-The-Air (OTA) updates and 5G Telematics at the forefront of automotive development, along with the CASE movement (Connected, Autonomous, Shared Mobility and Electrification), these recent advancements will drive the way consumers think about the automobile and interact with services while driving as we enter the next chapter of automotive innovation. And, it's happening now." 

The customer experience is as important as the product and services that your company provides. But what about the buying experience? A world of decentralization and digital-first engagements means that the automotive industry must re-invent the customer engagement model in the new normal. To learn more about how the automotive industry can improve the stakeholder experience using digital technologies, I connected with automotive industry and commerce technology experts; Eron Sunando, vice president of Commerce Cloud at Salesforce, Natalija Pavic, senior digital commerce solutions engineer at Salesforce, and Matthew Baker, director of Industry Go To Market Automotive at Salesforce.

The rapid success and growth of digital-first companies such as Tesla and Carvana also pose massive challenges to traditional automotive players who have invested historically in the OEM > dealerships > consumers B2B2C selling model. One of the many challenges plaguing the industry is also the fact that there isn't a truly scalable platform that marries the customer buying journey with the back-end financing and fulfillment dealer management systems. Systems residing within the OEM and dealer channels have historically been single-purpose monolithic platforms that do not scale or horizontally extend in an API-driven digital economy.
All this with the backdrop of COVID-19 pandemic that is unlikely to subside anytime soon. . .

Whilst the challenges seem almost overwhelming, the opportunities to transform abound. Challenges and opportunities are two sides of the same coin. Here are some of the areas automotive players (OEMs, Dealers, Captive Finance, Leasing Companies, etc.,) can subscribe to 1. Put the customer at the center, not the product; 2. Engage the dealers and distribution early in the digital strategy; and 3. Learn from Retail experiences.

Digital transformation starts and ends with the customer 

Digitization of the purchasing experience has permeated the automotive industry, from vehicles to aftermarket parts and service. Embracing this new way of shopping is critical for the future success and resilience of the automotive industry. 

The traditional automotive retail model is undergoing a rapid transformation. Customer expectations have been changing over the last several years and have accelerated tremendously with the current Pandemic. Customers are expecting to be able to interact with the retail channel digitally as part of their car-buying journey.  As part of the ever-evolving customer buying journey, 80% of customers now do the majority of their shopping for a new vehicle digitally. OEM's and Dealers must join the digital transformation. 

It is estimated by 2025 that over 25% of global auto sales will be conducted online. However, offline is still critical to the car-buying journey. Test-Drives are the number-one factor influencing customer purchases. OEM's and Dealers need to continue to work on the seamless transition between themselves to ensure digital customer leads are acted upon in a clear and concise.

The traditional car-buying experience, transforming changes in the digital shopping experience is happening across the auto ecosystem. Captive finance has doubled down on its digital shopping experience. This could be anything from selling extended warranties, gap insurance products to in-vehicle subscription services such as extended range for EV's to XM Satellite radio. 

A second area seeing online growth in is parts and accessories. This is mainly focused on the dealers purchasing aftermarket parts and accessories for resale. This year has certainly shown how quickly the customer buying journey can change. Meeting customers where they are and embracing the new way of shopping is a must for the automotive industry. If OEM's, Captives and Dealers don't keep up with customer buying habits, they risk falling behind. And one of the ways they can do this is to learn from their peers in the retail industry.

The Challenge of B2B2C: how do you engage your dealer networks for digital transformation?

Overcoming e-commerce skepticism in the industry is rooted in the central tenet of human relationships. Customers love to buy from people they trust. Dealers provide a friendly face and facilitate customer transactions. Increasingly the new generation favors socializing digitally. Gen Z is in fact not antisocial, they are social digital-first. Using a complete B2B2C (business-to-business-to-consumer) commerce experience we can facilitate easy transactions to help dealers close more deals, while also keeping the next generation engaged long enough to close from order to delivery. The average e-commerce buying experience is personalized, targeted, intuitive, and puts the control of the shopping experience at the hands of the consumer. The in-store buying experience can be the same. The automotive industry must bring the e-commerce experience into the store. 

The importance of adopting a digital-first go-to-market strategy in the automotive industry cannot be understated. Creating a commerce experience where a sales rep has input means creating a shared cart, a shared session, and visibility across the entire purchasing cycle. Today, in automotive customers start as leads, but when they are ready to buy the process is painful. 

By automating the paper cycle for dealers, businesses can facilitate a digital-centric experience where sales reps can experience an all in one guided approach using a customer relationship management (CRM) platform, while also obtaining input and insight from the customer's interactions with the brand's digital assets. This capability allows the customer to shop, and gives them the option to complete the sale from a representative. This is an evolution of the industry, not a complete overhaul. This is not doing away with the sales rep, instead, it is empowering them with the right tools. This model does not minimize the importance of having dealerships but rather repositioning the physical stores to an experience hub and product fulfillment centers. This model encompasses the following transformational approach: 

• Develop a digital engagement model based on lessons learned from the retail industry 
• Enhancing a B2B2C model with investments in automation, intelligence, and personalization at scale
• Develop a platform versus product strategy and set of capabilities - ecosystem scaling and value creation 

Do you remember when internet banking first came out in the early 90s and analysts were predicting the end of branch banking or ATMs? Whilst there has certainly been an impact on traditional branch banking, the need remains today. The positioning and role branch banking provides has changed along with the digital age. And bookstores -- Amazon who disrupted traditional retail bookselling have now invested in 500+ physical Amazon stores to serve the omnichannel needs of customers.

Retail Revolution: Lessons Learned from Consumer-Oriented Transformation

The retail industry has certainly not been spared its fair share of disruptions over the years. But being that they are consumer-facing, the retail industry players have historically been forced to pivot much faster than other industries. Think about the adoption of e-commerce, mobile, social, payments in the last few years and add onto that most recent technologies such as BOPIS (buy online, pick up in-store), BOPAC (buy online pickup at curbside), BOBO (buy on behalf of), Live Shopping, Live Clienteling that have really accelerated due to the pandemic as brands and stores have had to pivot quickly to survive. Consider additional data such as:

• 130 million Instagram tap on a shopping post to learn more about products every month
• 46% of people are watching streaming videos more than before the pandemic
• 70% of buyers turn to social media such as Facebook's Instagram for product discovery

Effectively, it's not just about being online but being online pretty much everywhere! No longer omnichannel, think "quantum channel" - being in all channels at once and engaging your customer where they are. 

We've also seen a massive shift in how inventories are managed. Traditional retail used to distribute inventories to the stores to ensure they do not lose potential customers by not having stock. But with the availability of store opening at risk in many parts of the world due to uncertainties, centralized stock management and the ability to distribute and fulfill in a flexible way has been a new competitive edge. This doesn't seem to be too different from the challenges many dealers have with assets sitting on the lots with little to zero foot traffic coming in due to the lockdowns. The key is to connect the online to the offline - which many in retail has succeeded in addressing.   

The role of the sales associates has also changed. There are examples in the market such as Trunk Club and Boggi that have enabled new technologies for sales associates in physical stores to help online buyers with their purchases in real-time. Many stores in China are hosting hourly or weekly shows put on by their store associates to promote products -- imagine walking into a department store and watching a video shoot happening. Store associates are turning into digital advocates and influencers at the same time using live video shopping technologies such as LiveScale or Bambuser.

The other key lesson here is that customers who have adapted to online shopping and buying are not likely to abandon this behavior even after the pandemic. A recent McKinsey article published in October showed an average increase of 13% in the use of digital channels for car buying in Europe with 70% of respondents in a particular region planning to continue to engage online even after the pandemic. The new normal will be the next normal. And as cited in the article, "having an online presence may be a game-changer." 

But what is important here is not the individual technology products. Automotive industry members would know well the hazards of building out monolithic, single-purpose systems for online marketing or dealer management. What is important here is the platform -- a scalable, continuously innovating, and flexible platform for growth. Think Platform, not Product. Think digital first and most importantly remember this: all digital transformation, regardless of industry, must begin and end with the customer in mind. In the new normal, the experience is as important as your company's products and services. 

This article was co-authored by Eron Sunando, vice president of Commerce Cloud at Salesforce, Natalija Pavic, senior solutions engineer for commerce, Salesforce, and Matthew Baker, director of Industry Go To Market Automotive at Salesforce

Innovation

Apple Vision Pro review: Fascinating, flawed, and needs to fix 5 things

I tried the Samsung Galaxy Ring and it beats the Oura in 2 meaningful ways

ChatGPT vs ChatGPT Plus: Is it worth the subscription fee?

The best AI image generators to try right now

• Apple Vision Pro review: Fascinating, flawed, and needs to fix 5 things
• I tried the Samsung Galaxy Ring and it beats the Oura in 2 meaningful ways
• ChatGPT vs ChatGPT Plus: Is it worth the subscription fee?
• The best AI image generators to try right now