Back in 2010, I joined an automotive sector that I thought was on the cusp of a digital revolution. Here was an industry that produced truly incredible products but lagged behind almost all other retail sectors in terms of the digital service and choice that it offered to its customers. It really felt to me, that there was a gap. I believed the way we researched, considered, purchased, and then looked after our vehicles was about to change – for the better.
Fast forward ten years and that automotive digital revolution is still taking baby steps, almost at odds with everything else we do online today. Compared to the way we buy airline tickets, try and buy clothes or tech at home, do our weekly shop, and even buy houses, the process of buying a car remains almost identical in most cases to the way it was 50 years ago. Why?
Now, as the automotive industry (like all other industries) faces one of its biggest ever challenges, that lack of change and modernisation puts it on the cusp of true transformation. It means that much has to accomplished within hugely diminished timelines, as we look to get back to serving customers and selling vehicles and services in whatever the ‘new normal’ may look like.
However, that isn’t to say that nothing has been accomplished in that time. Much of the digital innovation that has happened in the sector has come from disruptors (Carwow and Heycar for example), and also from within the retail networks, some of whom are now selling used vehicles entirely online. It’s the manufacturers, so innovative in design and production, but digitally nervous, who have, in many ways, been lagging behind. To their credit, some have launched online propositions over the last couple of years, but the vast majority of those are ultimately lead generation tools, designed to push the customer back into the existing physical buying process (when perhaps the reason they were online in the first place was because they didn’t want to transact in the traditional way).
So why is this a problem? Well, if ever there has been a time when customers need choice, value, convenience and transparency, it’s now. Never has the value of a digital experience been so potentially high, as this recent article from leading digital agency Analog Folk, brilliantly articulates.
We’re not talking about digital sales here; we’re talking digital service. And that’s why we believe that the future of the automotive industry revolves around direct omni-channel retailing.
The Right Time For Choice
In our opinion, it’s the right time, for customers, manufacturers and Retailers.
For customers, this model provides the choice and convenience that some have craved, but now in these difficult times, many will likely now demand. But we are not just talking about physically buying a car online (you can do that already if you try hard enough). Providing the same service, price, experience and choice, no matter where a customer might be in the country, or whether they’re on or offline, is going to be expected. Having a web-based lead-generation tool and a physical store, isn’t the same as being omni-channel. Omni-channel is about having the consistency of experience, price, product and service across those channels, whether I’m researching or buying online or in store. It’s an opportunity for the customer to take ownership of the purchase process, to take the best that physical retail stores have to offer, and combining that with the comfort and convenience of home delivery (or not) as they see fit.
This isn’t just our opinion. We know from many of the recent consumer studies, that there is a real demand out there for this exact service from UK consumers, and why wouldn’t there be? It’s how we shop for nearly everything else after all. And now, we believe this choice will go from being attractive to almost mandatory for most customers.
But why is it the right time for manufacturers and Retailers? As my colleague, Simon Knocker, says in this video, if we are honest, we know within the industry, that the existing franchise model as it stands, is under huge strain. Margins are being constantly eroded for Retailers, NSCs and the factories.
For manufacturers, this is an opportunity to have far more tools at their disposal to take ownership of the sales experience, by delivering an outstanding omni-channel customer journey; ultimately helping them to drive their sales volumes more proactively whilst gaining new and retaining more customers. The opportunity to have productive conversations with customers as they use their vehicles (partly thanks to the product innovation we are seeing inside cars now), goes through the roof. The in-life CRM opportunities grow exponentially, as many of the leading online Retailers of today have found (ask the supermarkets who sell online versus those that don’t).
Likewise, in the retail networks, this could be an opportunity to earn more as agents facilitating the processing of sales and handover of vehicles, while still retaining after sales and service opportunities with the same customers. There is such a massive role for the retail networks in all of this; just not, perhaps, the same role as today.
Not for one minute do we think that this is a simple and straightforward change, either for manufacturers or retailers. There are decades of legacy to deal with, not to mention legal and organisational challenges, skills gaps, training, communications and clearly, investment. Not to mention a potential repurposing of physical sites in some cases. But it is possible.
We know it’s possible because some manufacturers have already moved part of the way there for fleet sales. In fact, I’d argue that those who already sell fleet vehicles in a direct sales model are in a prime position to quickly move to direct omni-channel sales (both for fleet and retail), because whilst the digital work to do this is significant, it is dwarfed by the organisational and business transformation challenges that underpin direct selling. And in these cases where manufacturers have made that move already, much of that has been completed.
We also know it’s possible, because many other brands and industries (some just as, or even more, complex) have totally re-invented the way they sell and serve customers. If they hadn’t, they would have ceased to exist.
Other Industry Transformations
If I go back twenty years, I can remember working with the digital team at Argos, building the UK’s first Click and Collect proposition. Before it was developed, was not a universally liked strategy within the company. Some people within the organisation, from Store Managers to some Head Office Senior Managers, didn’t think that customers would buy that way; essentially reserving an item and then jumping in the car or on the bus and going to pick it up. “Why wouldn’t someone just have it delivered”, was a common refrain! But the decision makers at Argos had a strong vision, founded on what they knew their customers wanted (they wanted to avoid the frustration of turning up in store to find their items out of stock). And whilst Argos may have been first, it’s now industry standard today – in fact it’s almost unthinkable for brands today not to do it! It was an extremely complex business transformation which far outweighed the digital challenge. It was very different to what anyone else was doing at the time and it was a huge cultural challenge (both at Head Office and in stores). But we knew from talking to customers, that there was significant demand for it And it was, quite literally, an overnight success.
Best Of Both Worlds
As we circle back to today and the challenge our industry faces, it’s important to remember that this isn’t about online selling versus traditional retail sales. It’s about combining the best of both worlds to deliver a truly outstanding omni-channel customer proposition. It’s what many customers have wanted, and what we believe many will now demand. And it absolutely can be done.