Why the automotive industry must fix the miserable buying experience

Traditionally, the car buying journey was a linear process: visit a dealership, test drive the car and then make a final decision about the purchase. However, two disruptions entered the picture: the coming of age of a generation raised on smartphones that will not settle for anything less than a seamless experience, and a once-in-a-lifetime pandemic that extended these expectations to the majority of consumers as dealerships closed and sales channels disappeared.

This created a divide in the industry, with some automakers and dealerships making digital investments to ensure they not only survive but thrive. McKinsey validated the importance of digital, identifying a significant difference in buying intent between consumers reliant on the latter versus physical channels. As digital becomes increasingly important in the automotive buying experience, those brands that dive in and create brand affinity through experiences are reaping the benefits.

However, the reality is that the majority of the automotive industry is lagging behind in adapting to these new demands compared to other sectors. This is partly due to the complex sales and service networks of independent dealers, the size of automakers, and fear of cannibalisation. With car ownership on the decline coupled with outdated and inferior customer experience, the industry has reached an inflection point where brands must overhaul how they approach customer experience; otherwise, they will not be able to morph into the mobility providers of tomorrow.

If automotive brands want to seize the digital opportunity, they should focus on the three areas below to refine and digitise the customer experience to keep pace with ever-changing customer expectations.

Get to know your customer well

With loyalty eroded, every interaction with a customer is a must-win battle. Therefore, the more you know about your customer, the more effective personalisation efforts can be. The first step to propelling personalisation is to deploy an integrated technology infrastructure that underpins all digital customer initiatives spanning digital asset management, social platforms, and customer relationship management.

Another critical component of a successful personalisation strategy is to judiciously utilise content assets to maximise impact. This avoids the situation where the internal team is overwhelmed by an insatiable demand for more and more content.

Most automotive manufacturers are still in the early stages of digital maturity and personalisation is in its infancy. Brands should start with foundational tactics that improve the business performance across their primary digital channels. For example, this could involve segregating customers into different profiles and then personalising based on these groups. Another important element is to make personalisation efforts channel-agnostic. By using the same shared data, brands can deliver a consistent level of personalisation irrespective of the online touchpoint.

The perfectly blended dealership experience, spanning digital and physical, is fuelling a plethora of new services that are reimagining the dealership experience around the customer

The ultimate goal of personalisation is to look at it through the lens of the end-to-end customer lifecycle, where every touchpoint is tailored for the individual in real-time. However, due to the complexity of the buying journey, it’s more efficient and effective for automotive brands to start by establishing a solid foundation to evaluate what is working before trying to scale personalisation efforts.

In addition, automotive brands must be cognizant of privacy concerns and the changing regulatory environment. Customer trust and data privacy are interlinked and to secure first-party data, brands need to create trust through experiences. This will help them navigate a privacy-first world without cookies and enable them to scale personalisation.

Supercharging the direct to customer model

Manufacturers that were early adopters of the direct-to-customer (D2C) approach have reaped the benefits. Incorporating a D2C channel reduces the cost of retail and creates data transparency along the sales funnel. As a result of this initial success, D2C will remain an essential channel for carmakers.

As the purchasing experience has shifted from a dealership-centric process to one that incorporates multiple digital and physical touchpoints, brands have the perfect opportunity to build and strengthen customer relationships through a D2C model. In addition, it unlocks a range of new business models, such as automated maintenance programmes and subscription services, that provide even greater convenience for customers. Care by Volvo is an example of an all-inclusive car subscription from Volvo that is changing the way consumers use cars. Customers pay a monthly fee and receive a vehicle without needing to insure, service, or register it, removing all of the friction associated with ownership.

Starting the buying experience online increases the opportunity for automakers to sell direct, making a personalised experience even more important. A successful D2C model must address the needs of both consumers and manufacturers. This requires a platform that can capture, record, and utilise data from interactions to develop individual customer profiles. The next step is to segment the profiles and create a personalised experience for each. Incorporating an e-commerce channel gives the customer the option of buying a car directly from the manufacturer.

Take Acura, where customers can now directly purchase a car from the website. The legacy buying experience was transformed to seamlessly fit a new digital-only world, providing customers with the flexibility and ease of buying a car from the comfort of their homes. Automotive OEMs can’t afford to ignore this burgeoning channel that allows them to grow their business directly, with reduced overheads instead of relying on the efforts of third parties.

Dealerships: in it for the long haul

Online is increasingly important, but the dealership is still the primary channel for vehicle purchases, with 56% of customers preferring walk-in as the chief form of initial contact. This is giving rise to a new challenge for automakers: namely, how to blend content and commerce seamlessly across every touchpoint, both physical and digital. This hybrid approach is complex and puts data firmly in the driver’s seat.

An example of this is Inchcape, one of the UK’s largest car retailers with over 100 dealerships selling various brands, which recognised that with car buying behaviour transformed, it needed to rethink its customer engagement strategy. By taking steps to consolidate all of its digital properties and creating a unique personalised customer experience, it drove up sales.

The perfectly blended dealership experience, spanning digital and physical, is fuelling a plethora of new services that are reimagining the dealership experience around the customer.

Accelerating on the digital highway

With the consumer now firmly in the driver’s seat, the automotive industry must overhaul its approach to customer experience. By focusing efforts on the three areas outlined above, manufacturers can refine and personalise the experience they provide, meeting the expectations of today’s customers.

Given the headwinds the industry faces, unless automotive brands act now and make significant changes, they will not be able to compete with the early adopters that are already reaping the benefits from putting customer experience at the heart of their business.

About the author: Aswin Mannepalli is Global Director for Automotive Strategy at Sitecore