What will direct OEM to consumer relationships mean for the automotive industry?
The trend towards direct agency sales models brings significant change to the automotive retail industry and the topic is high on many agendas. We recently hosted a webinar on Thursday, 22 September for brands and manufacturers to understand the scope and the impact of these new sales models. During the session, we looked under the hood (as it were) of the agency model, discussing the main drivers in its adoption and why we believe it has achieved so much traction this time around.
Facilitated by Charlotte Morgan, Senior Product Marketing Manager at Keyloop, three industry experts shared their insights.
These people were:
Market Research and Insight Director
Dr Andrew Tongue
Global OEM Director
Now available on demand, you can watch the full webinar recording by registering here – but we’ve also summarised the main take-aways below.
What is the agency model?
There are multiple variants of the agency model, but dealing directly with OEM’s or brands is the consistent theme across each. Frequently dealers are moving to an ‘agent’ role, representing the brand in facilitating the sale by providing an ‘experience centre’, adding value through sales consultation, test driving, handover and more, and taking commission for deals closed. This differs to the traditional merchant model where dealerships own the stock, set prices and handle all billing and payment.
Nick King highlighted the importance of being transparent with customers on what the agency model offers, by providing greater levels of accuracy around stock, pricing and model information.
“Accurate vehicle descriptions, data and availability greatly improve the customer experience by giving them one version of the truth.” – Nick King.
What is driving the change towards the new agency model?
Omnichannel buying journeys and the new opportunities that connectivity provides OEM’s for more direct contact with the customer were identified by Dr Andrew Tongue as two key drivers for change. Enabling brands to sell directly to end customers through all available channels emphasises the importance of connection, consistency, and channel control throughout the process.
Jacqui Barker added that these trends are leading to new considerations for brands and the need to “be aware of customer expectations”. Other retailing experiences have conditioned the customer to believe that any buying journey will be a seamless process - whether purchasing groceries or a car.
Brands and retailers need to deliver on this expectation no matter the “behind the scenes” complexity, and Keyloop is especially well placed to flex its technology and connect the dots, by delivering a streamlined and consistent approach across vehicle retailing.
What does it mean for customers?
Customers see one brand; moving between online and offline, OEM and retailer, no care is given to how the journey is delivered; only that it meets their needs and expectations. Jacqui also talked to a common frustration of both the customer and retailer where journeys are littered with “dead ends”. Rather than stopping the purchase, brands and retailers need to align their respective views of shared customer digital footprints to build a customer-focused, streamlined journey. Using standard measures such as click-throughs and dwell time, brands can accentuate different stages of the journey with key interests of the individual.
Data points throughout the journey can also be used to reduce bottlenecks or drop-offs by providing
guidance or support at the exact point a customer is in need. For example, using aggregated data insights, manufacturers can advise of alternative stock or specification options that more closely align to a customer’s anticipated lead time or use of a vehicle. However, generating these insights requires seamless data flows and integrations between systems and infrastructure. There is no single solution, OEMs need to review the suitability of systems both in-house and across their network to decide whether integration or investment is the best course of action. Yet, regardless of route forward or sales model, brands can be sure that optimising journeys and experiences will pay dividends in both the attraction and retention of customers.
What are the challenges and opportunities?
Throughout the webinar, attendees were polled on a number of topics, including the top challenges they are currently looking to overcome. Unsurprisingly, data fragmentation was the biggest and most complex challenge manufacturers are currently facing. Understanding the roles and handovers in multi-party processes needs to be clearly defined before specifics such as handling of customer consent and data, or the system integrations needed can be clearly defined.
Almost all challenges are further exacerbated by the fact we are operating in a rapidly evolving landscape with no tested structure or guidepost in place. Dr Tongue referenced this in relation to OEMs adopting a direct-to-consumer sales model. New model roll outs are subject to recent geopolitical events and resource shortages, and as such have not been tested in an environment of excess supply. Although, models may well be put through rigorous testing before economic conditions suggest a reduction in demand, and therefore lead to a likely surplus of cars on the market.
The key to turning these challenges into opportunities lies in how manufacturers look to approach the change. Those adopting a holistic approach, working with their retailers and focusing on consistent customer centricity across all brand touchpoints, are expected to achieve considerable efficiencies and more streamlined processes. Not only enhancing the customer experiences but enabling greater leveraging of assets throughout the vehicle lifecycle.
The agency model presents an incredible opportunity to transform the way the automotive industry engages with its customers. Providing buyers and drivers with a smoother, more consistent buying journey, dealers will lessen their commercial risk, and OEMs will benefit from a heightened awareness of customer needs.
We’d like to thank everyone who tuned in, along with the panelists and moderators who took part in the conversation and created an engaging and insightful discussion for all to learn from. For anyone wanting to discuss the feedback in more detail or looking to understand more about the product initiatives Keyloop has underway, please contact Charlotte Morgan directly or speak to your Account Manager for more details.