What Auto Players Can Learn From Other Industries: Evolving Consumer PreferencesAugust 31st, 2017 | Posted by in Auto
Imagine being able to complete the entire car-buying cycle – browsing, choosing a car, financing, test driving, and ultimately, buying – without ever setting foot in a dealership. With new, customer-focused home delivery programs, that scenario is quickly becoming a reality.
As the car-buying experience becomes increasingly omnichannel, the role of the dealership is shifting. Many customers still purchase vehicles at dealerships; however, they expect immediacy and customization, and on top of that, they are becoming more open to alternative ways of buying vehicles. In fact, research suggests that about 4% of all new cars could be sold online by 2020. As a result, dealerships are becoming increasingly focused on education and demonstration, offering car buyers the experiential component of the auto purchase cycle that other channels are unlikely to provide.
We have previously addressed how automakers can look to other industries to learn from their responses to similar industry disruption, focusing on changing customer touchpoints and new entrants across the value chain. Similarly, OEMs are not the only organizations grappling with heightened shopper expectations. For instance, retailers continue to face this challenge, and are innovating in response to comparable consumer trends.
These include an increased demand for convenience and immediacy, as well as for a seamless experience across channels – both of which customers now expect as part of the shopping experience. As the retail industry has long been combating this shift, automakers are well-positioned to observe which strategies and approaches to program evaluation they have found most effective. They can then apply these best practices to optimize their own responses to industry changes.
As automakers strive to deliver an enhanced customer experience, drawing inspiration from retailers who have experienced similar disruption, there are several key analytical considerations they must keep in mind – particularly as they seek to enhance their omnichannel strategies and take a long-term view in evaluating new initiatives.
Measuring Programs Across Channels
In the past few years, retailers have implemented strategic programs that span across channels, from fulfillment programs such click-and-collect or ship-from-store to multi-channel marketing and promotional campaigns. However, in order to develop a full-picture view of the performance of such initiatives, organizations must be able to evaluate them with an omnichannel lens. Many retailers are turning to business experimentation to help them attribute business actions to customer purchases across channels – for example, how a customer’s exposure to a mobile ad campaign later drove them to make an in-store purchase, which would be difficult to link without analyzing data from across channels.
Similarly, whether they are considering digital marketing strategies, investments in digital shopping or educational tools, new technologies within dealerships, or another omnichannel strategy, automakers must ensure they have established a rigorous analytical approach to accurately measure the impact of new programs across channels. While there is still one predominant vehicle purchase channel – the dealership – there are many consumer touchpoints leading up to the sale. It is essential to measure their ultimate impact not just on units sold, but also on leading indicators such as website views or dealership visits scheduled.
Developing a Long-Term View
Another area where retailers have innovated in response to consumers’ heightened expectations is in capital expenditure investments, including new store experiences and network strategy. For example, some retailers have introduced new urban store formats, which typically have less inventory on-site. These smaller-format stores frequently offer consumers the option of placing online orders at the store, especially for larger items, such as furniture, which require significant space to keep in stock.
However, it is often difficult to immediately pinpoint the impact of initiatives such as a new store format introduction, and organizations will need to evaluate such programs over time in order to capture the full effect. By first testing a new store format on a small scale and analyzing its performance, organizations can understand its true impact on the bottom line, as well as where it is most successful, and apply these insights to inform future expenditures.
Understanding the impact of new initiatives over time is of particular importance for the auto industry, where the longer sales cycle makes it difficult to quantify the incremental impact of such programs. Returning to the concept of evaluating initiatives across channels, consider a dealer trying to decide whether to pull back or heavy up investments in digital listings, to better understand if they are driving incremental purchases. By conducting analysis to quantify the causal impact of digital listings on sales at the dealership and online, automakers can determine which campaigns actually lead to purchases and will drive profits over time.
As automakers face continued disruption cross the industry, they should turn to past analytic learnings from other industries that have faced similar changes. Measuring the impact of initiatives across channels and taking a long-term view of their performance will help OEMs make data-driven decisions and continue to evolve and remain competitive as they innovate in response to shifting consumer preferences.
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