HOW THE AUTOMOTIVE INDUSTRY IS REINVENTING ITSELF FROM A FASCINATION WITH CHROME, TO A FASCINATION WITH PEOPLE If you ask a realtor what the three most important things are as far as a property is concerned, he’ll say: First, location. Second, location. And third, location. Until recently, if you had asked a senior manager at a car manufacturer the same question, he probably would have answered: First, the product. Second, the product. And third, the product. A focus on location might still work for that realtor, but the car manufacturer has shifted his perspective. Cars are an integral part of the German engineering tradition. They are Germany’s favorite export success, and in some respects, its biggest fetish. And so again, for the next 10 days at the Geneva Motor Show, cars, chrome, new models and new prototypes will be in the glittering spotlight. But we can’t let ourselves be blinded by the glitz and glam and ignore the fact that the automotive industry is reinventing itself before our eyes. Existing business models, which in the past always involved the mantra faster, higher, further are visibly being questioned. The same can be said for complete focus on the product itself and the selling of it. This is because any communications expert who has experience in the auto industry knows who calls the shots in Wolfsburg, Ingolstadt, Munich and Stuttgart as far as brand management and marketing is concerned – research & development and sales. In the past, car manufacturers were sales-orientated corporations. This is particularly evident in the U.S., where new cars are not produced for individual customers but rather to be stockpiled in parking lots, and car salesmen find themselves to be perceived not too distantly from the classic image of the vacuum cleaner salesman.
MODIFIED FRAMEWORK CONDITIONS REQUIRE NEW BUSINESS MODELS This mindset is increasingly becoming a thing of the past. We have to acknowledge that the automotive industry has recognized the sign of the times in time, and is trying to avoid mistakes that have been made in other sectors. For example, let’s take a look at the telecommunications industry. It has been completely demystified in recent years as part of the digital revolution, even though it was originally in the driver’s seat of development.
We can remember when a cell phone was a real status symbol in the early nineties. Major providers dominated the market, were broadly visible and determined the customer experience. Today, consumers are taking photos, sharing information via social media and gaining knowledge on the Web in a variety of ways. Soon, more people will spend more time on the Internet via mobile devices than on their laptops or desktop computers. But Telekom, Vodaphone and O2 are no longer a part of the experience. They have been reduced to playing the role of an infrastructure provider that only exists in the customers experience as a small icon in the top left of their smart phones screens. Completely marginalized, and forgotten. By comparison, the auto industry is acting much more wisely. It has recognized that it has to offer more when it comes to individual mobility for Generation Y – the millennials – than for their parents or even grandparents. In the past, the first 1000 German Marks you earned were invested with great confidence in your first car. But now, the option to buy a used car is competing with the option of buying laptops and smart phones. The future of the automotive industry thus perhaps doesn’t lie in the possession of a car, but in its use. BMW’s journey from the Ultimate Driving Machine (horsepower) to Efficient Dynamics (sustainability) and Drive Now (shared economy) is a perfect example of this. What appears today as a test to be utilized by urban hipsters in congested centers might possibly be the business model of the future?
SHIFT FOCUS FROM THE PRODUCT TO THE CUSTOMER Revolution in the car industry is not only taking place in new business models, but also in marketing and sales. There is a massive shift in purchasing behavior of the younger target groups. The days of spending your Saturday at the dealership, taking a few models out for a test drive and driving home in a brand new, shiny car are officially over. The same applies to the traditional sales and marketing model of the auto industry, where sales funnels were attempted at the outset in order to fuel desire through emotional advertising and the actual sales process began in the minds of the managers when the potential buyer arrived at the dealership. And lets not forget the famous postcard where we indicate when we are thinking about buying our next car, in order to leave a note in the customer database or in the CRM system. All anachronisms. Other industries set the benchmarks in customer relationship management, and thus also change our expectations in the auto industry. The manufacturer’s task is to close the gap between desire (advertising) and experience (test drive) in the sales process through targeted relationship management.
AWAY FROM THE DEALERSHIP, AND INTO THE CITY CENTER! The auto industry has recognized that it needs to build relationships with their customers beyond the average four-year upgrade cycle to the latest model, and that they cannot leave this to the dealership. Customer experience and customer relationship management become a crucial factor in succeeding here.
This necessitates reinventing the whole sales process and customer relationship management. It affects both the establishment of new formats such as brand stores, pop-up stores or experience centers – or in other words, experiences outside of the dealership. In addition, this also includes new digital channels and new points of contact, such as BMW’s product genius, a new type of sales adviser modeled after Apple’s “geniuses.” Strategically, the result is a new map of interaction formats that are significantly different from auto experiences of the past. Here, customer relationship management involves not only to the single historic format, but it also applies to networking all new experience points (the micro vs. macro journey).
NEW EXPERIENCES FOR OLD BRANDS AND NEW TARGET GROUPS At the same time, new customer experiences must also suit each brand. If we take the three premium manufacturers of Audi, BMW and Mercedes-Benz, it is clear that various approaches were followed here. In Audis Audi City format, digital technology dominates and desire is fueled using spectacular digital experiences. This fits exceptionally well with Audis motto of Fortschritt durch Technique, but it could fizzle out quickly. For just as digital technologies were underestimated ten years ago in many places, they are now overestimated by many. In addition to its commitments in the areas of art, music and fashion, Mercedes-Benz also ventures into building a new format under the title of Mercedes-Benz 2020 – Best Customer Experience. It is accelerating both online trade, the construction of so-called city stores, as well as temporary and mobile experience formats. BMW seems to have gone the furthest here, and is in fact working on an integrated approach that combines all possible external and internal urban formats in terms of a consistent customer experience at micro and macro levels with its Future Retail program. They’re approaching the challenge differently, but all of the major manufacturers seem to have realized that the way we buy cars is fundamentally changing. They’ve recognized that they need to think outside the box and look to other industries to learn customer experience and customer relationship management lessons. I can imagine that those who suggested the Car2Go model at Daimler or the “Drive Now” initiative at BMW were laughed out of the conference room…at first. But maybe we’ll look back in 100 years and see that it was exactly these visionaries who guaranteed the survival of these brands.