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Transportation & Mobility

Why OEMs Must Interact with Customers

It’s time to shift focus from selling cars to servicing drivers

Matthias von Alten
Matthias von Alten

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 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-to-end 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.

 

Invest in customer lifetime value.

Customer lifetime value is the metric that indicates the total revenue a business may reasonably expect from a customer account throughout the business relationship. Amazon does this through segmenting its customers, managing cost per acquisition and cross-selling. In fact, Amazon credits up to 35 percent of its revenue to cross-selling, both through its “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” features.

Invest in building ecosystems around customers.

A connected ecosystem is becoming a key differentiator for vehicle manufacturers. Cars have become connected devices just like phones or tablets. OEMs are moving down the path of deepening and increasing interactions with customers to strengthen relationships and increase loyalty to their brand. 

Ensure easy and convenient customer journeys and moments across all channels.

Linear customer journeys are being replaced by always-on targeting solutions. These tailor new user experience, personalizing return customer experience, creating a simple and easy checkout process, and reaching out to users and updating them off the main website are a few effective ways to ensure a smooth experience.

Learn about customers based on customer insights to shape best individual offerings proactively.

Listening empowers OEMs to learn from and talk to their customers to create ever-improving experiences. To be able to shape individual offerings, some core ingredients are essential: good quality data, a dedicated analytics team, consumer research and database and segment marketing.

Conclusion

The automotive industry is facing pressure from other industries and needs to catch up when it comes to facilitating lifetime value around customer experience, trust and loyalty. To do that, OEMs need to address rapidly evolving customer expectations surrounding the entire end-to-end customer ownership journey. They must build an understanding of the new loyalty of customers, focus on interactions rather than stopping at presales and sales, and offer value-added services. These are essential ways in which OEMs can achieve future profitable growth.

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Matthias von Alten
Matthias von Alten
Transportation & Mobility Global Strategy Lead

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