Multi-channel engagement: Managing the customer in a new retail environment

Customer engagement methods are likely to change, as many steps in the automotive retail chain move online. Digital acceleration in the new reality has altered customers’ expectations in terms of the speed, transparency, and seamlessness of service they’ve come to expect as they move between online and offline ‘brick-and-mortar’ retail.

A steady rise in mainstream electric vehicles (EVs) has made a once-impenetrable industry easily accessible. New players are challenging traditional distribution models by focusing on a more direct approach, and OEMs are transitioning away from franchise dealer network distribution models, allowing them to implement consistent pricing and more tailored retail activity fulfilment, while significantly reducing operational and distribution costs.

This is a major shift for the industry, away from a supply-driven, ‘push’ model to a demand-driven, ‘pull’ supply-chain strategy. But as OEMs adopt the role of retailer, they must develop the required competences and capabilities to adequately manage sales forecasts, inventory, and customer expectations.

The customer and the manufacturer relationship

Consumers have come to expect price consistency and transparency from other industries. In a recent survey, ICDP found around one third of car buyers expect that in 10 years, new cars will be sold at a fixed price, either as a one-off or a monthly payment. Some brands are already making this a reality, which will be a huge advantage of transitioning to a pure agency model.

As dealers become intermediary agents between the customer and the manufacturer, they’ll earn a percentage of sales and minimize financial risk to their businesses. Distribution costs in the traditional retail model can represent around 20-25% of the final vehicle price. OEMs see the opportunity to increase efficiency by centralizing sales and consolidating retail processes. This, along with its newfound ability to take primary control of the customer relationship, enables the OEM to meet customers’ expectations throughout the lifecycle of the product ownership.

Most manufacturers are currently introducing direct sales and agency models to support the sale of their EV lines only, while ICE products continue to be channeled through traditional franchise dealer networks. Changing the entire distribution model at once has significant operational and financial implications, and so this is seen as a stepping-stone for OEMs in their progression towards a fully direct sales model in future.

However, managing a hybrid-style distribution model has its own operational challenges. Brands must establish a clear commercial differentiation between franchise dealers servicing traditional ICE vehicles, and agents who will typically maintain EVs. But, from the customer’s perspective, the dealer represents the brand, so it makes little difference whether they’re buying the vehicle from the manufacturer, an agent, or the franchise retailer, as long as the service they receive is in line with expectations of convenience, transparency and consistency. OEMs can ensure a seamless online-to-offline journey and a connected brand experience by collecting the data generated at every online and offline touchpoint. Using this, they can build an accurate view of where the customer is along the purchase or product ownership journey, establish a customer profile and target business activities or promotions based on their habits and behaviors.

Centrally connecting with the customer

The success of an agency model relies on a brand’s ability to establish a direct commercial relationship with its customers. OEMs need to develop platforms and channels to directly interact with them and proactively manage the brand experience during the vehicle purchase process and throughout the ownership cycle. This centralized customer management will be handled through a business development center (BDC) which plays a critical role in overseeing and managing the customer relationship. The BDC offers centralized services and support to the customer, and can manage the bookings of test drives, appointments and services, handle the purchasing of accessories, respond to technical issues, help maximize revenue for the OEM by proactively up-selling new services and products throughout the customer lifecycle, and improve customer loyalty and retention.

Unlike a traditional customer relationship center (CRC), the BDC anticipates customer needs and issues and addresses them with very little need for customer input. The multi-channel approach enables the OEM to connect with customers via apps on their phones, through their vehicles, via email, SMS, or any other channel available. This low-effort engagement is now seen by OEMs as a strategic pillar in the new retail model and is pivotal to ensuring customer satisfaction, offering OEMs the ability to interact with individuals in a proactive way, and not just in response to a service event or recall.

By replacing the fragmented nature of localized CRCs, which normally focus on addressing customer issues though inbound calls, the BDC offers a consolidated approach to delivering low-effort customer engagement efficiently, applying data and technology that maximize the customer brand experience and loyalty.

Expanding centralized services throughout the brand

Eventually, the agency model will need to be adopted across an entire brand to service all customers. But some brands are not ready to transform their business from that of manufacturer and wholesaler of vehicles to that of a direct retailer. Only some OEMs are ready to test this model across certain markets. They understand the gap they need to bridge, and they’re making huge investments to make it work.

With the agency model currently being implemented across vehicle sales only, aftersales services continue to operate in the traditional way. However, the digitalization of the entire automotive industry has forced OEMs to consider moving key services online. Many businesses now offer the ability for customers to book a service, test drive or courtesy car online.

Changes for the customer will be less evident in the short term. But as the EV parc increases and additional pressure is placed on parts and services businesses, it will be critical for the OEM and the dealer network to not only develop a robust aftersales proposition for EVs, but also to maximize customer loyalty to the franchise dealer networks for all EV and ICE vehicle owners.

Managing success in this ever-changing industry

The success of centralized customer management will depend on the OEM’s ability to transform its organization and offer a personal connection with its customers. The success of the retail environment depends on agility, quick response times and accuracy, which are not the main areas of focus in the manufacturer’s current operational structure.

It is critical that OEMs can improve customer satisfaction and retention which relies on their ability to structure themselves as retailers. With this transformation, customers will expect greater transparency across the entire process, so it’s vital the OEM gets it right.

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