The nature of the automotive industry has changed dramatically. Drivers today demand a much higher level of flexibility and comfort than they used to. The brand and the vehicle itself are becoming less and less critical because customer loyalty is won or lost through every interaction. Consumers are unforgiving when it comes to bad customer experiences. According to a study , 72 percent stated that they would most likely switch providers after one bad experience.
New Players Increase The Pressure
The market is becoming increasingly complex. Today, the range offered by automobile manufacturers includes the sale of new or used vehicles and various mobility services, for which partnerships with third-party platforms are often entered into. At the same time, new players such as the tech giants Google, Amazon, or Baidu are entering the value chain. Honda, for example, Google’s embedded operating system uses Android Automotive OS, which includes the voice-controlled assistant, Google Maps, and other Android apps approved for vehicles. This year’s tech trade fair, CES 2022, also showed numerous innovations in mobility. The Japanese electronics giant Sony presented its second concept car, the Vision S EV, indicating that it would like to develop and sell vehicles itself with its subsidiary Sony Mobility in the future. The Bosch Group, known for its power tools and household appliances, invests three billion euros every year to develop new codes for the automotive sector. The company presented its latest software developments at the conference, which many vehicle manufacturers use for onboard control units.
Focus On Interaction Management
Interactions with consumers are of fundamental importance for differentiation from the competition and customer loyalty. This applies not only to vehicle sales but to the entire service ecosystem relating to mobility. Therefore, automobile manufacturers must not only focus on the driver experience but all contact points and customer experiences with their brand. These include the physical and digital levels of the customer journey, be it in the dealership, call center, before, during, or after the vehicle sale. In the digital realm, channels such as the website and e-commerce platform and interactions via live chat, email, or live video are crucial. Social media also significantly impacts how customers perceive interactions with a product or service.
Customer Lifetime Value As A Decision Parameter
Car manufacturers must meet rapidly changing customer expectations to ensure a positive brand feeling. It is essential to move away from the focus on the pure pre-sales and sales phase and to focus on customer lifetime value – i.e., the entire customer ownership across all channels, both in person and digitally.
Other industries are way ahead of the automotive sector when focusing on customer lifetime value. For example, customer loyalty at Amazon is exceptionally high. Prime members in the US have a retention rate of 93 percent after the first year and 98 percent after two years. How did Amazon achieve this?
There are many aspects of Amazon’s interface, customer experience, and marketing that car manufacturers can use as a guide to increase and sustainably improve customer loyalty. Amazon makes consumers feel like they’re missing out (e.g., Prime Day) and offers free shipping and perks for loyal customers. Along the way, the e-commerce giant has managed to leverage sensitive touchpoints that favor high customer retention rates. Best practices like Amazon increase the pressure to change in the automotive industry. Customers expect a similarly convenient offer, services, and experiences from car manufacturers as they are used to from other areas.
OEMs (Original Equipment Manufacturers) have to rethink the future of mobility: Hyundai , for example, is designing a customer experience vision for electric vehicles that should be more than just a means to an end to get people from A to B. The company is about unlocking the full potential of drive time and allowing travelers to do more than get behind the wheel – like exploring the area or shopping. The latest technologies and intelligent modular design are used to provide drivers and passengers with relevant information when driving past sights or restaurants.
Services As Opportunities For Interaction That Add Value
The growth of the automotive market has slowed, and competition for customers is becoming fiercer. Manufacturers invest heavily in advanced solutions such as customer data platforms, CRM systems, websites, apps, data lakes, and machine learning. But how can a brand stand out from the competition in the future?
Services require interactions and thus hold great opportunities to promote customer loyalty. While in the past, services mainly were only about the after-sales area, mobility services, payment, and non-payment services, and connected devices will play an essential role in the future. OEMs must design services along the entire value chain, both before, during, and after purchase or use, for a fee or free of charge. It requires an integrated omnichannel service perspective to create value continuously. Investing in quality, value-added services can help manufacturers build lasting relationships, generate new revenue opportunities, and capture critical customer data.
Car dealerships have so far been the most valuable customer contact points. According to the Automotive Customer Report 2021, two-thirds of those surveyed still prefer to buy from a dealer. Maintenance and repair services give the trade an additional, central role. But that is changing. Buying via digital channels or directly from the manufacturer is rising. Virtual test drives have the potential to replace real ones. One in three would even be willing to buy a car without first testing it.
The range of value-adding services also offers car dealerships a unique opportunity. On the one hand, the demand for online services and direct interactions with manufacturers is growing. On the other hand, merchants still have the invaluable ability to “face-to-face” and connect the online and offline worlds. You can develop a deep understanding of customers and thus create close bonds.
Steps To Building A Loyal Customer Base
As the number of interactions increases, keeping customers in the brand ecosystem becomes increasingly essential. Because customers are likely to turn away when they experience more convenient, faster, and better interactions with another brand, OEMs must continually innovate and respond to provide products and services that meet their customers’ needs.
- The focus is on customer lifetime value. The customer lifetime value is a crucial figure  that indicates the total turnover that a company can expect during the holistic business relationship. This is precisely where OEMs have to start and invest. Amazon  drives customer lifetime value through customer segmentation, cost-per-acquisition management, and cross-selling. Amazon attributes up to 35 percent of its sales to cross-selling through its “frequently bought together” and “customers who bought this item also bought” features.
- Building an ecosystem around the customer. A networked ecosystem can be an essential differentiator for vehicle manufacturers because today, cars are connected devices like smartphones or tablets. OEMs urgently need to deepen and expand customer interactions to strengthen relationships and increase loyalty to their brand.
- Ensuring a comfortable customer journey across all channels. Once linear customer journeys can now be replaced by always-on targeting solutions. OEMs have numerous options to guarantee a smooth customer experience: personalization of the user experience on a website, individualized addressing of returning customers, a simple and uncomplicated checkout process, or relevant contact off the platform.
- The use of data for the bold design of individual customer offers. By actively “listening,” OEMs can continuously learn from their customers and create better customer experiences. However, to design customized offers, a few key elements are essential: good quality data, a dedicated analytical team, consumer research, and database and segment marketing.
The automotive industry is under massive pressure and has to catch up when fostering customer experiences, trust, and loyalty. OEMs need to keep an eye on rapidly changing customer expectations across the entire customer ownership journey. To continue to achieve profitable growth in the future, interaction management must be continuously optimized and customer loyalty strengthened. The focus on the preliminary and sales phase is no longer sufficient. Vehicle manufacturers have to think about ecosystems and offer value-added services and smooth interactions over the entire customer lifecycle.