We are seeing a significant and likely permanent shift in customer behaviour in automotive retailing, especially in the way customers are interacting with dealers. With such a material shift, it is critical the industry reacts and in the right way. So are they doing the right thing?
The challenge is many in the sector are trying to salvage the old ways of doing things, trying to dictate an approach to customers and force their behaviour. Attempting to hang on to their traditional business and sales approaches and processes. This is simply not going to work.
Significant change has happened across nearly all developed markets over the past year, Covid-19 has seen to that. Historically, it used to be local brand marketing that drove customers to a dealership to buy a car, creators used to push content and marketing materials to consumers to shape their purchasing decision. So what has changed?
Those that are venturing into the forecourt or showroom are spending far less time there, but they are coming in far more prepared – doing their homework in advance. Gone are the days when dealers have the transactional upper hand. The customer is now empowered.
In a recent study by Mckinsey on the Future of Automotive Retailing, they characterised car buyers into four core categories based on influences on their buying processes. The first category named “The dealer-trusting traditionalist” comprised around 20% of buyers, and was mainly made up of an older population, these were the only group to extensively rely on the dealer as both their key source of information and as a partner through-out the car buying process. The three other categories of buyers: “The hybrid customer”; “The online-savvy modernist” and “The online-focused information seeker” who made up the remaining 80% of customers. All had one main thing in common, the influencer of the dealer was far less. This is the reality of new world dealers find now themselves in. Amongst these groups the share of online touchpoints versus offline in each case was extremely high, ranging 53% and up to 73%. Each used multiple sources to gather information all before then reaching out to a dealer.
The influence of online has risen dramatically in the purchase decision for the majority. Customers are now driving their own unique purchase journeys across a range of channels. Content is pulled by customers, the push principle has largely died a death. To engage and support a customer through the purchase funnel steps requires a totally different approach.
The understanding dealers had about their customers is being replaced with more and more questions about what really drives customers’ purchase decisions. The sales landscape has changed. So what can dealers do?
React now by reviewing the way they and their customers do business. Customer data lives across different layers and silos, when brands start to connect and interact with their data, they can now rely on machine learning to identify patterns and trends and help predict intent. Dealers need to use this insight and knowledge to support the creation of more helpful, seamless customer experiences that deliver to the new categories of customers.
Omnichannel has become the primary way consumers begin shopping for vehicles. The majority of customers each use multiple sources to gather information before then reaching out to a dealer. Much of the decision process has largely been completed before dealership contact is made.
For “The hybrid customer”, gathering information online and the actual purchase process, they prefer the OEM itself over dealerships or third parties; hybrid customers do not heavily rely on traditional dealers. The majority of “The online-savvy modernist” typically have already decided on a model before their dealership visit and are largely using the dealer to close the deal. “The online-focused information seeker”, like hybrid customers, prefer having the OEM itself as their online partner for information as well as during the buying process.
This shows the need for communication and co-ordination across the value chain, from: OEM; NSC through to dealership. And to also recognise the changed role required of the dealership, for the majority of customers.
An omnichannel strategy combined with the ability to adapt and deliver a multifaceted customer experience and sales process should be part of the serious thinking and focus for all throughout the value chain, and not just the dealers and dealership groups.
Martin acts as a Senior Consultant of Digital at Centro Consulting: A world class Automotive consulting company. Centro Consulting