Retail Transformation in Auto Industry
Sreelakshmy G
Managing Director | Digital Innovation | Cloud, Data & AI | Board Advisor | Lean-Agile Leader | Tech Sales | CHIEF Member | Doctoral Scholar
The year 2017 marked approximately 130 years of automobile evolution. It is very interesting to read the history about how automobiles became vehicles of social and economic impact around the world. It is even more interesting to think about how automobile users evolved over this period. Mobility is a hygiene factor now; convenience, connectivity and customization are the differentiating factors.
The automotive industry is going through a transformation journey to meet the ever-changing customer demands. A paradigm shift from being product-centric to human-centric is the imperative to make this transformation successful. New ownership models, decreasing returns on capital, and third party competitors are disrupting traditional business models. Retail transformation comes first in the overall digital transformation journey as it opens the door to collect customer data and enables firms to adapt to changing customer behavior and market expectations.
What is Retail Transformation?
Boston Consulting Group (BCG) defines Retail transformation as a continuous adaptation to customer needs by staying relevant, developing new offerings, categories, formats, and channels; or expanding into new markets and territories. Technology is redefining customer expectations across industries forcing firms to redefine their retail business models, and automobile industry is not different.
Why Retail Transformation is important in Auto Industry?
Recently, I came across this interesting article about auto-shopping trends in 2017-18. Today’s customers want to minimize dealer visits and they expect to receive authentic information at their fingertips. ThinkwithGoogle reports a car-buying process where the customer is making around 900+digital transactions prior to purchase decision. Automakers have already started transforming the way they engage with their customers to assist throughout the “journey of association”. This journey starts from the moment when the customer starts thinking about an auto purchase, through ownership and aftersales.
Human Touchpoints in Retail Transformation
The success of any transformation journey depends on how effectively we can blend human needs and strategic foresight to create business value. In auto industry, the important human touch points to consider are Customers, Dealerships and OEMs (Original Equipment Manufacturers/Automakers)
- Customer Connect:
Automakers have started to realize that they need to connect directly with their end-customers, and not just through dealership. Digital Commerce is enabling automakers to get direct access to customer data. Though online auto sales may take many more years to become reality for many players, low hanging fruits like parts and accessories sales are giving them the head-start. Many automakers are getting ready to offer aftersales services online. Customers benefit from easy and convenient access to genuine accessories and faster turnaround times, in turn strengthening brand loyalty. More innovative ‘direct to customer’ business models can be built around ecommerce channels, bringing convenience to customers at their fingertips. Netflix for cars is already here, and expect more as automakers get to know their customers more!
- Enabling Dealerships
Dealership is the face of automaker to the customer. Dealers are equipped with various apps and devices to enable better experience for new shoppers, and aftersales service for existing customers. But, it is time to go beyond that. Are dealers able to retrieve details about shopper preferences and persona to assist them better? When a customer approaches dealership for service, is he/she seen by their VIN number or as a person? Personalized services and transparent assistance at dealerships are possible only when dealers are equipped with relevant customer data. Dealers are no more treated as just information providers; they should be able to deliver experiences to connect with customers. Dealerships need to be redesigned keeping customer experience in mind. Audi virtual showroom is a trendsetter.
- OEMs (Original Equipment Manufacturers)/Automakers
Enterprise level change management exercises play a very large role in the success of retail transformation journey. As automakers shift focus to become more customer centric, all internal departments need to align their priorities accordingly.
Process Vs Agility: Automakers are known for their obsession for quality and process. This often results in multiple levels of approvals and delay in outcomes. In today’s fast changing digital world, the right blend of process and agility is the key. Choosing the right technology partner and nurturing agile culture will help enterprises to realize value from technological innovation.
Who steers the ship – CMO or CIO? As we move towards a more customer centric agenda, firms need to make sure that the right leaders are involved in the process. Traditionally, CMOs have been spearheading customer facing initiatives and acting as the brand guardians. CIOs have been mostly internally focused, and contributing towards company success. The retail transformation journey needs to be driven by a strong partnership between CMO and CIO organization. This needs to be handled carefully to maintain the right balance of ownership.
Have you experienced the relevance of these human touch points in your transformation journey? What other factors are impacting the success of retail transformation? How unique is the impact in auto industry? Please do share your thoughts.