Why can’t upgrading your car be as easy as upgrading your phone?

Part of Capgemini’s ‘Agency Sales and Beyond’ series

The automotive industry has long battled with driving customer loyalty – held back by complex purchasing journeys, high competition, limited customer data, evolving customer expectations, and the influence of third parties diluting brand control over customer experience.

When I recently upgraded my phone in a smooth, efficient process that lasted no more than 24 hours from the point of purchase to the return of my old device, it got me thinking about how car makers could benefit from adopting similar practices to the mobile phone industry.
For years, this industry has led the way in seamless customer renewals. Comprehensive CRM processes, excellent use of customer data, and seamless user interfaces make it all too easy for customers to upgrade their devices and ultimately extend their relationship with their phone provider.

There are a few things they get right: 

• Proactive & compelling upgrade options: Data-driven offers served to the right customer at the right time. 

• Customer finance visibility: Complete transparency of a customer’s existing finance position. This includes the ability to buy out a current plan and replace it with a new one.  

• Seamless part exchange: Capability to quickly get a part exchange offer for a current device and use it as downpayment for the next. 

• Effortless online sales journey: The integration of all the above into a simple and easy to use sales journey, hosted within a customer portal or mobile app. Phone providers have made the process of upgrade possible in as little as 10 taps of your thumb.

Of course, there is the fair argument that the automotive value chain is far more complex than that of a mobile phone. However, when you break it down, the buying process and customer demands are remarkably similar. For example, the concept of financing a car and a mobile phone is very much the same; value also remains in both a car and a phone at end of contract creating similar part-exchange processes, and customers are looking to switch at roughly the same time intervals (every three years).

So…why can’t upgrading your car be as easy as upgrading your phone?

The answer is: it can.

Realising customer loyalty and achieving repeat purchase has long been a core priority of many OEMs. So much so that huge investments have been made to nurture and manage relationships throughout the customer ownership cycle from point of purchase through to hopeful renewal. Carmakers are completely right to be focusing here, as ultimately a loyal and repeat customer base is crucial to success. The statistics validate their efforts too, as it’s proven that:

• The cost of sale acquiring a new customer is 5x as high as retaining an existing one.

• Repeat customers are far more likely to successfully refer a brand to a friend.

• Companies who focus on achieving automotive renewals are 2.5x more likely to be market share leaders.

Despite this, driving loyalty has been a significant challenge of late due to the emergence of new external pressures and legacy internal factors:

However, a new playing field has been created and broken down many of the barriers to driving repeat purchase and customer loyalty.

Carefully integrating the new components and environments created by the direct sales impact unlocks an opportunity to create digital renewals capabilities that have not been possible before. Such capabilities will enable automotive OEMs to provide seamless customer experiences, develop compelling offers, and execute customer loyalty in a way that they have only been able to dream of in the past.

Where are the opportunities in digital renewals?

Many opportunities have become available to car brands that could enable them to design and deliver a hugely powerful digital renewals capability. But how could that look in practice?

1. Predictive targets: Using artificial intelligence (AI), current digital activity, and past buying behaviours, OEMs could identify which customers are most likely to be thinking about renewals and target them directly with intelligent renewals offers. 

2. Intelligent renewals offers: Aggregating multiple data sources including current finance position, residual valuations of existing vehicle, and customer profiling, companies could create compelling offers that generate great value for customers and ensure tactical spend efficiency.  

3. Smart stock matching: Predicting customer preferences and matching these to available stock, OEMs could provide immediate, hassle-free opportunities to make the switch immediately. 

4. Digital upgrade: Seamlessly enabling the upgrade through integrating the existing direct sales journey. Enable the e-2-e finance, part-exchange, and vehicle purchase through the existing commerce platform, to create an omnichannel experience that suits customer preferences.

What are the key elements to get right?

As I touched on above, direct sales models have created new components that can be leveraged to drive customer loyalty and repeat purchase. The key to success will be how they all come to work together. The answer lies in the integration of multiple data sources, existing platforms, and organisation departments which ultimately collaborate to create a digital renewals engine. To achieve this, there are several vital considerations that OEMs will need to get right:

• Systems integration: Data from multiple sources will be augmented, requiring robust systems infrastructure. Integration to existing CRM & Commerce platforms will be required to enable the end-to-end benefits.
• Effective data management: Well-structured data management is a core prerequisite. Ensuring a single view of the customer and unique customer ID will enable many of the CRM capabilities required to execute the digital renewals process.
• Cross-organisational collaboration: Many stakeholders from various functions within the traditional OEM structure must collaborate to work together. This includes the capability to work closely with associated automotive financial services companies.
• Legal frameworks: Considerations with regards to data sharing and adhering to existing finance & GDPR regulation will be required. These may take time to navigate and should not be underestimated.
• Outstanding customer experience: Seamless digital touchpoints and excellent user experience must be realised to capitalise on the opportunities of digital renewals. Making the process effortless, combined with compelling commercial propositions, will be where the success of digital renewals is won or lost.

How can Capgemini help?

With more than 30 years of leadership in digital engineering and experience design, Capgemini helps automotive clients solidify their place in a data and software-driven industry. Across the globe we have supported many OEMs in transforming their sales models, as well as their traditional engineering, operations, and manufacturing processes, through cloud, data, analytics, and AI.

Get in touch to find out how Capgemini can help you seize the opportunity of digital renewals.

Plus, keep an eye out for the next instalment in our ‘Agency Sales and Beyond’ series, in which we’ll explore what considerations could be made in the direct-to-consumer sales transformation phase that will impact the next phase of Software-Defined vehicle transformation.
In case you missed it, read the first blog here