The automotive industry has witnessed an impressive transformation in recent years. Negotiations and transactions, traditionally completed in showrooms, can be done online. Vehicles connect to the internet, and with autonomous technology, can drive themselves. Under increasing pressure to invest in electric vehicles and prioritize sustainability, entire business models are being redesigned.
Yet, as an industry built on face-to-face interactions transitions to digital-first, the combination of sky-high prices, low inventory, and new customer demands poses numerous risks and opportunities as companies plan for a profitable future.
The technology in the industry is speeding ahead, but the digital customer experience is falling behind.
According to Salesforce’s Trends in Automotive survey of 500 industry decision makers including Original Equipment Manufacturers (OEMs), auto finance subsidiaries, and dealers worldwide, there are number of ways ensure a smoother, successful transition.
Cut customer journey congestion
When it comes to digital journeys, companies aren’t as far along as they might believe. 73% of companies surveyed believe they are over-performing when it comes to digital transformation. Yet, just 26% of OEMs and 23% of dealers believe they have adapted well to selling online.
A complicated path-to-purchase has consequences for customers and the industry alike. For many customers, buying a car starts with figuring out what they can afford. Yet only 24% of respondents said website prices consistently match what customers end up paying for their vehicle.
Selling well begins with trust. According to Salesforce State of the Connected Customer research, 74% of consumers say communicating honestly and transparently is more important now than before the pandemic. Customers want price transparency and streamlined lending, but companies aren’t delivering.
When it comes to making purchases, digital experiences within the automotive sector considerably lags behind others. Less than one in five industry experts believe their digital storefronts are engaging, mobile-friendly, and show accurate inventory data.The benefits of cutting customer journey congestion is clear not just for improving sales, but also wider industry growth.
To drive better customer experiences, get the data strategy right
Digital transformation entails everything from connecting with and serving customers, to building the right data architecture, to embedding an open data culture throughout the organisation. In many cases it is not technology that is holding companies back, but the ways in which companies have set up their systems to handle data.
Currently, 95% of automotive companies buy customer data from third-party sources to support marketing initiatives, however changing internet privacy regulations mean they must gather information directly from customers themselves.
Whilst a burden in the short term, first-party data collection strategies serve companies’ long-term interests. Having a complete view of the customer enables organizations to tailor communications to their specific needs and interests which will drive incremental sales and margins.
Although 73% of customers already expect personalized experiences, 78% of automotive companies surveyed report they cannot customize communications based on specific accounts or even customer complaints.
Given that first-party customer data is already being used in connected vehicles to improve road safety, improving customer service should be a natural next step for automotive retailers.
For 46% of respondents, however, fragmented information infrastructures mean that customers’ profile data, transaction history, and customer service cases are siloed, limiting companies’ ability to analyze data effectively.
As the automotive industry continues to change, the power of weaving data into the fabric of businesses cannot be underestimated.
Look to artificial intelligence (AI) to power the future of the industry
The race to develop reliable, safe, and affordable electric vehicles (EVs) is not without risks to the industry’s profits over the coming years. Take for instance the cost of research investments, transitioning to EVs, adapting to new environmental regulations and increasing customer demand.
Yet new opportunities to boost competitiveness are emerging. More companies are turning to subscriptions and partnerships as revenue generators, for example. Almost half (44%) of surveyed companies are already heavily investing in subscription models for connected vehicles and 41% are exploring personalized finance bundles for commercial offerings.
Emerging technologies are also improving profitability. 40% of respondents strongly agree that digitizing operations and using AI can help identify bottlenecks and areas of redundancy throughout the operation. In addition, 38% strongly agreed they could drive incremental sales and margin with better targeting, attention, and marketing.
From connected to electric vehicles, the future of the automotive industry will be driven by data and digital experiences. Investing in the right platforms to unlock this data, creating new revenue streams and matching customers’ expectations for efficiency and personalization will be key to success.