Currently, 95 per cent of automotive companies buy customer data from third-party sources to support marketing initiatives; however, changing internet privacy regulations means they must gather information directly from customers.
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 can drive themselves with autonomous technology. Under increasing pressure to invest in electric vehicles and prioritise 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 a number of ways to 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. Seventy-three per cent of companies surveyed believe they are over-performing when it comes to digital transformation. Yet, just 26 per cent of OEMs and 23 per cent 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 per cent 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 per cent 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 making purchases, digital experiences within the automotive sector considerably lag 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 are clear for improving sales and wider industry growth.
Get the data strategy right
Digital transformation entails connecting with and serving customers, building the right data architecture, and 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 per cent of automotive companies buy customer data from third-party sources to support marketing initiatives; however, changing internet privacy regulations means they must gather information directly from customers.
Whilst a burden in the short term, first-party data collection strategies serve companies’ long-term interests. A complete view of the customer enables organisations to tailor communications to their specific needs and interests, driving incremental sales and margins.
Although 73 per cent of customers already expect personalised experiences, 78 per cent of automotive companies surveyed report they cannot customise 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 per cent of respondents, however, fragmented information infrastructures mean that customers’ profile data, transaction history, and customer service cases are siloed, limiting companies’ ability to analyse 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. 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. For example, more companies are turning to subscriptions and partnerships as revenue generators. Almost half (44 per cent) of surveyed companies are already heavily investing in subscription models for connected vehicles and 41 per cent are exploring personalised finance bundles for commercial offerings.
Emerging technologies are also improving profitability. Forty per cent of respondents strongly agree that digitising operations and using AI can help identify bottlenecks and areas of redundancy throughout the operation. In addition, 38 per cent 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 personalisation will be key to success.
