Digitization and The Data Driven Market
Originally designed for national defense, the Eisenhower Interstate System aided the development of our country’s interior and solidified our preference for travel by automobile, though left a devastated railroad industry in its wake. Big leaps forward often have a catalyst, whether changing sentiments, war, or catastrophe. Innovation is driven by challenge, and today’s pandemic is no different; COVID-19 has exposed the inherent weaknesses of current business strategies. Nowhere has its impact reverberated more so than dealerships and automotive manufacturers coming off five years of record sales. While digital-only car retailers have gained market share in the past decade in parallel with increased mobile integration, the current crisis promises to sharpen their edge.
Following two months of negligible footfall and sales, OEMs and dealerships must now expand from B2B to B2C models, and our increasingly connected vehicles make the perfect delivery method. The time has come for these businesses to leverage their hard-earned community trust and brand identity to redefine how they interact with each other by safely connecting to customers on their terms while providing a seamless physical and digital experience. Within the successful dealership of tomorrow, customer service will transform from a firm handshake to a digital signature.
The World Economic Forum anticipates that “around $90 billion worth of operating profits will migrate from traditional to digital channels open for competition among OEMs, dealers and third-party online platforms. This migration will also drive advertising and lead generation revenue streams for car comparison websites and third-party online retailers, potentially adding an estimated $28 billion to their bottom line.” There’s only one problem. As it stands, vehicle ownership, registration, connected vehicle data, repairs, inspections, and parts replacement information is fragmented. Following a car purchase, an invoice is signed, title registered with the DMV, insurance coverage secured, and occasionally an extended warranty is purchased from either the manufacturer or a third-party provider. After the keys are handed over, tracking of vehicle ownership, services, and records is mostly done with paper receipts. The process of title transfers from one owner to the next involves visits to the local offices and may involve notaries for certification. Because of the difficulty in identifying the driver or the owner during accidents and emergency, insurance claim processing can also be challenging. Furthermore, the fair market value of a car is often difficult to evaluate as records are spread across disparate systems. The result is a lack of transparency and trust. There is currently no good model to entice, engage, and incentivize customers and no fully automated dealership documentation solution. For an industry where convenience and choice reign supreme, digitization is the logical progression.
As the apogee of modern customer experience, connected dealership solutions augmented with artificial intelligence deliver personalized and learned interaction with minimal staffing. For an industry currently shaken to its core, these tools are fast becoming the primary drivers for the entire automotive sales cycle. Bypassing traditional marketing channels, OEMs and their dealership peers can leverage digitization to drive sales, awareness and traffic. By leveraging connected solutions that communicate directly with vehicles in motion, businesses across the automotive spectrum can finally make use of the data they’ve been so diligently collecting – by marketing to drivers whenever their vehicles malfunction, need repairs or break down. Call it predictive maintenance. As “one of the most data generation-intensive industries in the world – second only behind utilities,” the Automotive industry has the raw material necessary to drive radical innovation in our data-driven economy.
However, “to fully realize the commercial and social benefits of the data that is generated across the industry, industry participants need a secure and robust data market where they can come together to trade data. This will allow organizations to be more targeted and efficient in their data collection processes, both to support their own business objectives, and to transact in the data marketplace.” Whether relaying real-time sales analytics, telematics-based service demands, or leveraging AI for deep insight, platforms like those offered by SHIFTMobility help those wary of bleeding-edge technology easily adapt to changing customer needs and vehicle features. With a connected platform, OEMs and dealerships can not only suggest necessary services or pinpoint sales opportunities, but predict them based on driving habits and individual preferences.
Digitization will also usher in unparalleled supply chain transparency. According to McKinsey, “OEMs could gain market power through their firsthand access to car-generated driving and diagnostic data, which will be of even greater importance as the market shifts to favor more optimized customer experiences.” As successful leaders know, timing is everything. For the automotive industry, connected platforms can evaluate supply-demand at any point in the network so that services can be effectively planned and delivered, component failures pinpointed, and class action recall lawsuits avoided. By leveraging the enhanced traceability provided by comprehensive ecosystem connectivity, from detailed service history and components replaced down to the makeup of OEM versus aftermarket parts in any individual vehicle, businesses can more accurately plan operations, speed up recalls, and lower costs.
The COVID-19 crisis did not usurp traditional industry models, it only accelerated the coming disruptive digitization. As market trends indicate, the utilization of real-time data from connected ecosystems coupled with enhanced digital experiences will drive the next phase of growth within the value chain. Change is hard, but the time is now. Interested to see how this all looks in implementation? Contact us.