In recent years, digital giants such as Amazon and Netflix fundamentally altered brick-and-mortar concepts and set new standards for retail experiences. Across industries, disruptive business models have yielded seamless and convenient omnichannel customer experiences. Where automotive incumbents used to compete in product capabilities and brand identity, customer experience has become the new battleground.
Tesla pioneered the online customer journey in the automotive industry by adopting a direct-to-consumer model. Since then, new entrants and traditional OEMs have been experimenting with agency models. In essence, the agency model alters party responsibilities along the customer journey and offers OEM’s the opportunity to interact directly with customers. The dealer acts as an agent, often responsible for touchpoints that require physical interaction (such as test drives and vehicle demonstrations), whereby OEMs integrate sales transactions through digital channels. This allows car manufacturers to establish a 360° customer view and leverage -what used to be dealer assets.
Within the agency model, the OEMs clearly champion the ‘cui bono’-question. Direct contact with the customer increases the probability of up- and cross-selling as well as the mark-up, significantly improving revenues whilst concurrently reducing retail costs (in terms of fixed assets, inventory, and distribution). Moreover, the agency model offers OEMs data ownership and control over the on- and offline channels. In our contemporary customer-centric era, the straightforward benefits for enterprises raise an equally important question: what’s in it for the customer?
We, at ngage consulting, have identified 5 major benefits of the agency model for automotive customers:
FLEXIBILITY – Although millennials and GEN Z have embraced online retail, other customer segments prefer physical touchpoints when it concerns capital-intensive products, including vehicle purchases. The agency model organically accommodates the ability to combine both online and offline touchpoints. This does not necessarily equate to an omnichannel customer journey in its entirety, but rather the option for customers to conveniently switch between [on or offline] channels, based on customer preferences. The ability to configure your car at home through your tablet [perhaps even supported by AR/VR] and finalize your interior selection with an agent in an urban flagship store, is enabled by a centralized and coherent strategic governance on multi-channel touchpoints. By consolidating customer journeys on national levels, the agency model overcomes the heterogeneity of national dealerships and their channels, providing customers with an integrated experience.
TRANSPARENCY – It is fair to assume that not every customer enjoys driving a hard bargain. The fragmentation of the traditional dealership landscape fosters intra-brand competition, seeing as customers often negotiate prices between dealerships to find the best offer. Through the agency model, uniformization of pricing enables agents to focus on the experience. Furthermore, the current industry-wide supply chain difficulties and inconsistent multi-party communication often lead to unsatisfactory experiences and incoherent information on car deliveries, maintenance, etc. AI-driven technologies [such as chatbots and mobile apps] and the definition of strategic interactions on an HQ level, can create real-time transparency.
CUSTOMIZATION – The cornerstone of customization is data-driven analytics. Siloed customer data and technologies, prevent highly personalized end-to-end experiences. To construct omnichannel experiences in agency models, OEMs identify each customer and personalize interactions along the customer journey through a single data storage system and customer relationship management. In turn, the centralized data ecosystem produces customer insights that assist artificial intelligence to scale customization. This means that predictive analytics & AI can remove cumbersome tasks in and outside the sales process: such as scheduling maintenance, choosing options, commuting to work, or even finding parking. The accurate use of aggregated and individual customer data can allow for a personalized experience throughout the entire product life cycle.
CONVENIENCE – Megatrends such; as increasing urbanization, demand for access, and mobility-as-a-service are challenging current-day business models. To accurately respond to these customer needs, OEMs in agency models have taken control of sales channels. Although car ownership will most likely never disappear, automakers are transgressing one-off purchases by transforming products into services. Customers today enjoy a one-stop-shopping solution, including leasing, rental, insurance, and maintenance subscriptions. Other brands even offer over-the-air upselling of extra horsepower, autonomous driving, or seat-heating during cold winter months. Examples like these demonstrate the convenience that is enabled by tailored-made services over a vehicle’s life span.
EXPERIENCE – In the traditional dealership, wow moments are mostly created around the physical product. In response, the automotive and gaming industry are combining the best of both worlds. Immersive reality technologies, holographic configurations, and interactive augmented reality have assisted dealers in convincing customers of look & feel by creating phygital experiences. Moreover, using gaming technologies to create an ultimate driving simulator, allows the customer to experience the product, without it being physically present. Going further, car manufacturers are already present in the metaverse to optimize their production lines. It could be adopted in the near future to enhance the driver experience.
Considering the continuous evolution of customer expectations, the agency model offers the ability to create future-proof customer experiences. Nonetheless, the success of the agency model and its beneficial impact on the customer relies on the ability of incumbents to develop agile and holistic strategies that cover, technology, people, and processes. The automotive industry will need to capitalize on tech-like capabilities, build CX-centered technology stacks and personalize customer experiences at each touchpoint. To continue diversifying additional services, unconventional partnerships will need to be established. On an organizational and cultural level, automakers will need to re-think the responsibilities and remuneration of dealerships, accompanied by consistent communication, and change management. Hurdles and challenges aside, inspiring success stories from other industries such as the banking and wider retail industry, have demonstrated the ability to evolve from franchised, to future-proof business models.