Entice customers to a local dealership, discuss the car and its options, show a display model, propose a test drive, discuss finance and service preferences; and close the sale. This is the traditional car sales model, familiar to most and unchallenged since the dawn of the automotive industry. However, it's hold on the sector is drawing to a close, thanks to modern consumers. Today's car buyers are now more informed than ever when they arrive in store, if they even go to the store, having done a comprehensive amount of research online. Research conducted by AutoTrader in 2014, later reported by AnalogueFolk, shows three-quarters of the customer journey taking place online, with two-thirds of customers arriving at a showroom knowing exactly which vehicle they wanted to buy. This means they are already aware of the product, options, prices and promotions available, which in turn lowers the effectiveness of traditional in-dealership touch points designed to deliver such messages.
The combination of consumers wanting to limit interaction with salespeople and the availability of information on demand is causing an overall decline in visits to dealerships, increasing questions around their future role. The number of US visits has fallen from an average of 5 to 1.6 per customer over a 10-year period according to 2014 statistics from McKinsey. Such behaviour isn't exclusive to the US, with the UK seeing an overall total of 15 million fewer visits in 2015 as compared to 2010, according to AutoTrader.
Whilst some tout this means the death of the dealership, it's actually a tremendous opportunity for them. Customers still value dealerships, but are signalling a fundamental change in their purpose and position within the customer journey. The role of automotive retail has shifted from one of discovery to one of validation, where the customer verifies what they've researched before potentially taking a test drive, finalizing finance and making a purchase. Therefore, in dealership touch points need to move away from pre-defined, non-influential messages to compelling experiences that involve the customer, driving influence at the point of sale. The change to a holistic approach whilst facilitating consumer preference through experience over selling pre-determined products, is customer-centric retail.
Retail outlets are perfectly positioned to drive consumer engagement by offering a range of accessible brand experiences led by 'product experts' who 'facilitate' rather than 'sell'. Such outlets are responding to the need to be in high footfall areas, making them accessible to time poor customers. The deployment of such customer-centric experiences is becoming prominent throughout the B2C sector, with the automotive industry at the forefront of implementation.
Personalization within the customer journey removes all potential barriers relating to taste and preference, allowing customers to play a part in the creation process and build 'their' car. According to Deloitte (2015), more than 50% of UK consumers in some categories declare an interest in purchasing customised products. Many are even willing to pay more to do so, with 1 in 5 consumers who expressed an interest in personalised products and services willing to pay a 20% premium. With that in mind, it makes business sense to implement measures that facilitate customer preference.
In practice, retail stores operate as extensions of dealerships, adopting less floor space. To manage display capacity in such deployments and respond to the need for engaging propositions, brands are introducing high-quality digital solutions, such as 4k configurators and virtual reality experiences.
The result is a much more compelling and immersive experience for customers. They can experiment with every upgrade available, from alloy wheels to alternative colours and see the impact on their chosen vehicle. This gives the customer creative control, involving them in the process so they create 'their car'. This sense of ownership reinforces affinity, increasing purchase potential and higher specification sales. At the same time, the lower floor space and lack of need for fixed assets means a more cost effective approach for stores. Personalisation can therefore differentiate the proposition to an extent that can command a price premium, whilst driving efficiencies.
ZeroLight are pioneers in providing customer-centric experiential retail solutions. As strategic visualisation partners with Audi AG, their visualisation technology powers Audi City stores worldwide and the critically-acclaimed Audi Walking VR Experience. These experiences are now also moving online. ZeroLight and Audi have deployed a new cloud-powered car configurator, delivering real-time visualisation online. As a result of a 100-day pilot, Audi saw a 66% increase in consumer engagement vs the traditional online configurator it replaced, with significant upsell potential delivering an increased basket value and improved satisfaction ratings across a number of significant KPI's.
It's a compelling example not just of the changing face of the modern car buyer, but also of the huge potential of the new automotive retail model. A customer-led, experience-driven paradigm that is commercially proven, driving sales for car manufacturers by allowing them to adapt to contemporary consumer trends.