10 minute read
A NEW DEAL
It’s time to shift focus from selling cars to servicing drivers, writes Matthias Von Alte, VP Strategy Lead at Publicis Conseil in Paris, France
Let’s start a conversation. The nature of the car industry has changed dramatically. Drivers are demanding far greater levels of flexibility and convenience. The brand and the vehicle itself are becoming less important, and OEM customer loyalty is won or lost in every interaction. In fact, today’s consumers are unforgiving when it comes to poor customer experience: 72 percent saying that they are likely to switch companies after just one bad experience.
Some OEMs are evolving their offering from selling new or used cars to mobility services, perhaps also partnering with third party platforms. At the same time, new players such as the tech giants Google, Amazon and Baidu, are quickly entering the value chain. For example, Honda is rolling out vehicles with Google’s embedded Android Automotive OS, which includes Google’s voice-activated Assistant, Google Maps, and other automotive-approved Android apps.
The 2022 Consumer Electronics Showcase (CES) conference highlighted the buzz around mobility innovation. Japanese electronics giant Sony offered attendees a glimpse of its second concept car, the Vision S EV, strongly hinting at creating and selling vehicles after forming its Sony Mobility subsidiary. The Bosch Group, known for its power tools and home appliances, invests three billion euros every year in the development of new codes for the automotive sector. The company highlighted its software development activities at the conference, many of which already equip the on-board control units supplied to vehicle manufacturers.
New ways of interacting with customers are coming up and it is not only about selling the car but a lifetime of services, too. OEMs must recognize that driver experience isn’t only about car ownership, but also about the interactions drivers have with the brand.
These interactions range from the physical to the digital and the emerging blending of both throughout the customer journey. Car brands are represented at the dealership, in the call center, during pre-sales, sales and post sales. On the digital side, interactions go
72%
of surveyed consumers are likely to switch companies after just one bad customer experience
beyond the OEM website and e-commerce platform; customers are interacting with the brand via live chat, email, live video, or web page. Social media is also influential in the way customers perceive interactions with an OEM product or service. This perception of the customer amplifies their brand sentiment across the web, whether good or bad.
To keep a positive brand sentiment, OEMs need to address rapidly evolving customer expectations stepping away from just pre-sales and sales to harnessing customer lifetime value – the entire end-toend ownership period of the customer across all channels, both in-person and digital.
Other industries are far ahead of the automotive sector when it comes to facilitating lifetime customer value. For example, Amazon’s customer retention is through the roof year over year. Amazon Prime members in the U.S. have a 93 percent retention rate after the first year and 98 percent after two years. How did Amazon achieve this dream? There are many aspects to Amazon’s interface, customer experience and marketing that can serve to boost and improve customer retention in the automotive industry. From creating a sense of urgency and fear of missing out to offering free shipping, returns and perks for loyal customers, Amazon has managed to tap sensitive touchpoints with customers that drive a successful and high retention rate.
Examples such as Amazon are driving a need for change in automotive because customers who enjoy positive experiences in other industries with other products, are expecting a similar offering from the auto sector. Some OEMs are reimagining the future: Hyundai is creating a new vision of a car as simply a utilitarian structure that gets people from A to B. Instead, the content of a car can be useful to the way people live their lives. For Hyundai, the future electric vehicle is about unlocking the potential of travel time, enabling drivers to do more than sit behind the wheel – and to sightsee or shop. The brand is using technology and smart modular design so that passing places of interest, such as monuments or restaurants, appear tagged with information to drivers and passengers.
Services as opportunity for interactions
Automotive market growth has slowed. OEMs are competing for customers by investing in solutions such as customer data platforms, CRM systems, websites, apps, data lakes and machine learning. But what will set one OEM apart from the other in the future?
Services are a great opportunity for interactions. Today, the definition of services in the automotive sector revolves around after sales services. This kind of service will be enhanced by mobility service (mostly payment), connected devices and payment and non-payment services.
But in future, OEMs must shape services along the entire value chain (pre-sales, sales, post sales, usage period of services, ownership period), as well as paid and non-paid services. To achieve this, companies need an extended omnichannel integrated service perspective to continually create value.
Investing in quality value-added services will help manufacturers build lifetime bonds, generate more revenue
opportunities and capture customer data.
When it comes to interactions, dealerships once had the most valuable touchpoint with customers. In fact, in the Automotive Customer Report 2021, 67 percent of survey respondents cited the traditional dealership as their preferred place to purchase. Maintenance and repair services provide dealers with an additional, pivotal role. But this point of automotive purchase is no longer guaranteed. Car buyers are increasingly comfortable buying through digital channels or directly from the manufacturer. That all-important test drive is losing some importance to virtual test drives, or in many cases, no test drive at all.
Providing value-added services remains an opportunity for dealerships. Despite growing demand for online services and greater interaction directly with the manufacturer, at present dealerships still maintain an invaluable ability to offer “face time”, bridging both online and offline worlds, which enables dealerships to grow their understanding of their customer base, while at the same time build loyalty by sharing expertise of emerging mobility technologies.
What are the steps towards building a loyal customer base?
As interactions grow, it’s becoming increasingly important to keep the customer in the brand’s ecosystem. Customers are more likely to jump ship in the future if they experience more convenient, faster and better interactions with a different brand. OEMs must therefore continually develop and be reactive to customer needs, offering products and services that are useful to them.
FUTURE FAILURE: FIVE PREDICTIONS THAT WERE WAY OFF THE MOBILITY MARK
1825 - THE SPEED OF LIGHT (CARRIAGES)
“What can be more palpably absurd than the prospect held out of locomotives traveling twice as fast as stagecoaches” - The Quarterly Review, March, 1825
1904 – YOUR BRAIN WON’T KEEP UP
“It remains to be proved how fast the brain is capable of traveling” - Physician as quoted in The New York Times, 1904
1909 - CARS REACH THEIR SPEED LIMIT
“That the automobile has practically reached the limit of its development is suggested by the fact that during the past year no improvements of a radical nature have been introduced” - Scientific American, January, 1909
1920 – NO SPACE FOR SPACE
“A rocket will never be able to leave the Earth’s atmosphere,” wrote a New York Times columnist in 1920…. Decades later the newspaper published a correction after Neil Armstrong set foot on the moon.
1989 – GREAT SCOT! FLYING DELOREANS IN 2015
“Most of the traffic seemed to have relocated itself overhead. Cars, some of which looked old enough to come from 1985, or even before, briskly flew back and forth across the air lanes” - Back to the Future Part II by Craig Shaw Gardner
SHARED MOBILITY 2022: 5 TRENDS SHAPING THE INDUSTRY
The oncoming wave of new technology will change vehicle ownership and will drive the market for shared mobility, says Invers
1. VEHICLE DATA GAINS RELEVANCE
Data generated by vehicles is being used to enable autonomous driving, control infotainment and car comfort features, plan maintenance and analyse trips. This is not new; applications such as car sharing have been accessing vehicle data for some time. However, since this data can be easily stored and pulled from the cloud, questions around its use and ownership are increasingly attracting public interest. Current initiatives such as the EU’s Data Governance Act aim to regulate data sharing by private actors. At the same time, innovative solutions show how mobility can be improved through intelligent data use. For example, trip analyses can be used to reward environmentally friendly driving. Sharing applications enable mobility service providers to get greater use out of their fleets. Efficient vehicle life-cycle management based on specific usage data can further optimize resource utilisation.
2. CAR SUBSCRIPTIONS ATTRACT ADDITIONAL MARKET PLAYERS
Car subscriptions in particular offer a convenient alternative to car ownership. Market players from various segments have discovered their potential for themselves. These include vehicle manufacturers such as VW; the ID.3 has been available on a subscription basis in Germany since September 2021. In addition, traditional rental providers are also entering the business. Europcar, for example, has announced that it will launch a subscription service in Norway. Also, car subscription startups continue to grow significantly; Munic-based Finn, for example, was able to raise 500 million Euros in December 2021 and continues to expand. The Chinese manufacturer Geely even offers a vehicle model under the Lynk&Co brand that is available exclusively in the subscription model.
3. MICROCARS EXPERIENCE A LITMUS TEST
Twizy, Microlino, City Transformer, Rocks-e – microcars are currently experiencing a revival. Unlike regular cars, they have been developed solely for urban mobility: such as the slower pace of city traffic with a level of comfort comparable to that of a car, while being lighter and less expensive. They combine the parking advantages of a two-wheeler with the transport possibilities of a car. As electric vehicles, they also promise sustainable, inner-city mobility, a plus from the perspective of urban and transportation planners who have set Sustainable Urban Mobility (SUM) as their goal. Lower acquisition costs compared to bigger electric cars also make them attractive to sharing operators. There seems to be a favorable opportunity here The exciting question for 2022 is: will microcars increase their share in the urban mobility mix?
4. CAMPERVAN SHARING GROWS AND GOES DIGITAL
Relaxed vacations in pandemic times? Many travel fans discovered RV vacations for themselves last year. According to a study by the U.S. industry association Go RVing, the number of RV travelers will rise from 56 million in 2021 to 65 million for the coming year. The reason for this is not only the pandemicrelated desire to get away, but also trends spurred by the pandemic toward remote work, traveling in small groups, and vacationing in one’s own country. To facilitate this, rental companies want to offer their customers a convenient and fully digitized booking and takeover process. Therefore, the campervan is going digital; it can be booked online and picked up using a smartphone.
5. CARGO BIKES INSPIRE BIKE SHARING
Cargo bikes relieve the burden on cities, contribute to a change in traffic patterns and are currently developing into a lucrative business model. The market is experiencing a real boom, and the variety and size of the offerings are growing. The current study “European cargo bike industry survey results 2021” by the City Changer Cargo Bike project took a close look at the 38 most important providers in the European market and forecast growth of around 66% for 2021. London started testing cargo bike sharing last year. In addition, logistics firm Stuart Delivery and cargo bike maker Vok Bikes have plans to launch a cargo bike sharing service in the city. According to industry association cargobike. jetzt, there are currently 150 providers of cargo bike sharing in Germany. It’s becoming a very dynamic market that is further spreading the idea of shared mobility.
