The automotive market is moving from a product-driven approach to a customer-centric approach to drive customer loyalty and to adapt to changing customer behavior and expectations. There are a lot of factors that make automakers and automotive retailers to rethink their current business model—the rise of new mobility concepts, shifting mobility preferences such as private and business-car sharing, uprise of electric vehicles, and an increasing use of used cars and fleet. Customers are well-informed with unlimited access to media and information. Marketing strategies should be planned with focus in and around this fact.
What are the drivers of this paradigm shift?
There are multiple drivers that show that automotive retail is undergoing a substantial change.
- Changes in customer behavior: rise of social media and mobile technologies has altered the way customers interact and communicate.
- Digitization has brought a revolutionary change in the sales and service process, including the need for customization and new mobility preferences.
- Innovative products pressurize upgradation of sales and service processes: with technology taking an upper hand in creating more complex cars, the sales and service staff is expected to reach higher levels of technological know-how.
- Current business model challenged: traditional dealership models in correspondence to financial sustainability are in question. This is because consolidated network model has led to significant increase in competition.
- Stricter regulations: Emission standards, safety standards, and sales & repair legislations are strictly considered. Hence auto retailers are increasingly planning their marketing strategies that revolve around these regulations.
How does the retail system plan the change?
There are marked changes in the automotive retail ecosystem and operating environment that are forcing automakers and dealers to make changes in the retail model:
- Managing trust and complexity through a customer life cycle
- Creating an engaging digital experience
- Redesigning shifting networks
- Crafting a multi-channel brand management strategy
What does the future hold?
Brands need to invest in retail strategies that are into multichannel retailing because that is where the future of this industry lies. Also there is increasing usage of big data and analytics in this field. While a Frost & Sullivan report suggests that 50-60% of sales leads are expected to come through digital means by 2016, about 5% of all cars will be sold online by 2020. Some car companies are already selling cars online via car dealership app. New store formats such as online and boutique stores, flagship stores or experience stores let buyers experience buying cars similar to a coffee shop experience. They also allow original equipment manufacturers to reach out to consumers and generate sales. In totality in the near future buying a car would be as easy as shopping for apparel, gadgets and food.
This warrants companies investing to create an engaging digital experience spanning the web and mobile media. More so, they need to give customers the confidence through an engaging digital experience. Therefore they need to chalk out exclusive digital strategies. Businesses also need to leverage customer analytics so that they proactively address opportunities and mitigate risks. Large amounts of data generated from customer interactions will be analyzed to impact all facets of the retail organization, ranging from identifying relevant customer touch points to marketing campaigns and sales forecasting.