Why customer-centricity is the missing link for auto brands

An influx of new players in the automotive market operating with the agility of tech start-ups are turning consumers’ heads. So, how do you turn them back? Here’s all you need to know…

With the rise of tech, new market entrants and increasingly savvy consumers, brand loyalty is no longer a given in the automotive world.

Even ownership is starting to be questioned, with fluid subscription-based options enabling consumers to pick different cars for different occasions.

And who can blame the consumer demanding change, being tied to a brand or provider feels restrictive in a world where 5.8m UK households changed their energy supplier in 2018, and two-thirds changed their car insurance in the past two years. And although these dynamics didn’t originate in the automotive sector, consumer expectations and behaviours from other categories are impacting on the automotive market.

Price sensitivity and flexibility are not the only drivers at play. Technological advances have turned heads away from the well-established ‘household names’ in market, as new entrants disrupt the norm. More manufacturers and models than ever before make the choice dizzying, as different marques refresh, update and relaunch their models at regular intervals.

This means that car owners have never been more aware of their options – to change models in the same brand, switch to another brand, or simply to try something new. Perhaps importantly, there is almost always a ‘new’ model being promoted from different manufacturers, so the pull and temptation to switch is stronger.

 

Shift in ownership

More than 80% of new cars today are ‘bought’ using finance, most commonly Personal Contract Purchase (PCP) agreements. The growth in PCP plans over the last decade has made new car ownership more accessible to more people with lower monthly payments. Being tied into ownership is proving less attractive as subscription models and more fluid access of cars is on the rise. In fact Håkan Samuelsson, chief executive of Volvo has stated that the firm anticipates it will have 50% of its models bought on a subscription basis by 2025.

 

Customers are increasingly self-serving

According to Google, barely half of all new car buyers visit a manufacturer’s website, and the number of dealership visits and test drives has fallen steadily in recent years. More research is done online, more quickly and remotely from the brands being considered. Prospective customers whittle down their consideration lists to a very short list quickly, and when they do visit a dealership, they are often distrustful of sales tactics. They may well have a very specific model in mind and they are aware of the negotiation ‘game’ that they can play to get the best deal they can.

 

The car is part of the household budget

As more people rely on PCP agreements to afford a car, these payments become strong anchors when car owners want to renew a finance plan for a new car. Their own individual monthly payment becomes a powerful framing device – it can trump other factors, including dealership service, car specification or even satisfaction with the current car. If they perceive there is little or no difference in the new model, they will often reject a higher monthly payment, and it may take some compelling persuasion to convince them to pay more for new technologies. If their monthly budget is tight, they may not be able to afford a new upgraded specification, or be unwilling to pay the extra.

These dynamics have considerable implications for loyalty and customer relationships.

 

Build a holistic customer view

In our experience there are clear indicators throughout the car ownership cycle about what a customer might do when their PCP agreement comes to an end.

Some of these are evident from the moment they sign the original contract, which suggests that tailored content and messaging could be used to improve customer engagement throughout their ownership as well as closer to the point of renewal.

The brand-dealership relationship is important to enable joined-up, consistent communications with the customer. Being able to pass information and details of interactions from dealership back to the brand and vice versa can be crucial, especially in responding to purchasing signals or behaviours.

 

Be customer-centric

It’s very easy to slip into classifying customers by which car they drive, when in fact for most mainstream brands, each model has a very broad church of owners, and very similar demographics will drive a range of different cars.

To truly connect with and be relevant for customers, it’s essential to have a variety of models and insight tools to help understand who they are, their drivers and motivations, and to respond to different behaviours (or lack of behaviours).

 

Think customer experience, not siloed channel campaigns

Increasingly, it’s important to consider the way the brand communicates across multiple channels. Customers’ research and consideration period can still cover weeks, if not months, and their path to purchase is unlikely to be linear or simple. There are countless possible touchpoints to consider during this time period.

Having a consistent approach to messaging and storytelling across channels, and ideally tailored to the individual customer, is key to being salient and front-of-mind when they do want to make a decision.

The automotive purchase and renewal process can be complex, but it doesn’t need be complicated. At Indicia, we have in place a multi discipline programme that impacts each stage of the marketing cycle to optimise performance.

Our experience in automotive spans the full remit of marketing – from CRM to brand guardianship. So, if you want to get closer to your customers for more rewarding relationships, please get in touch.

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