Car manufacturers are in a race to woo the online buyer, but are they focused in the wrong place?
Every week a new manufacturer seems to announce that they now support buying a car online. In the last few months we have seen advertising campaigns from Hyundai, BMW and Peugeot, all featuring online purchase as a selling point.
But few manufacturers have re-engineered the shopping journey to address the main pain points customers find when making a decision on their next car. The issue isn’t the fulfilment, it’s in the decision itself, and most consumers don’t feel sufficiently in control of the choices and options confronting them in this process.
Buying and owning a car is about to change dramatically
The automotive industry is on the brink of the most dramatic revolutionary change since Henry Ford made the first steps into mass-production of motor cars in the early 1920s. One hundred years on and we’re expecting the first self-driving cars to arrive on the forecourt, and a dramatic shift in consumer behaviour when it comes to shopping for, and owning, the cars we drive.
We’re entering an era where a growing majority of car buyers will come from the millennial generation, bringing with them a heightened expectation of digital experiences, a preference for rented rather than owned, and high demands for tailored personalised service.
In last year’s JD Power survey, millennials accounted for over a quarter of new cars bought in 2015, and this number is set to rise dramatically over the coming years.
The motor industry has been slow to embrace digital channels
The automotive industry has been dragging its heels somewhat when it comes to digitising the car buying journey, despite just 1% of consumers saying they are happy with the current way in which it works. Whilst a small handful of retailers are disrupting the established buying process by selling cars to customers online - without them ever having set foot in a showroom - most car retailers still treat their websites a little more than an extension of their sales brochures.
With the next generation of car buyers being digital natives, comfortable conducting much of the legwork associated with buying a car online, and happy to share cars and rides, car retailers need to take more definite steps to better understand the role of digital.
Research tells us that shopping online and visiting a dealer is not a binary choice for most customers, and they expect to do a bit of both in their decision making process. Many look forward to a trip to the dealer, and enjoy seeing the cars in the flesh before making a final choice.
But for most manufacturers, the current shopping journey between online and offline is disjointed with too much responsibility on the customer to bridge the gap between a website and the dealer.
Customers want control, and in the channel of their choosing
Customers want to feel in control of the car buying process and this means helping them to do their research online so they can feel more confident when negotiating with a salesperson. Whilst manufacture’s websites play a role in this, we’ve found that customer perception of these websites is that they purely exist to showcase the brand. Even the most engaged users ultimately have low expectations of car buying websites. According to a 2015 report from AutoTrader, 54% of consumers would buy from a dealership that offered their preferred experience, even if they weren’t offering the lowest price.
This sends a clear message to the automotive industry that they need to raise their game when it comes to digitising the car buying journey. In the last few years, some brands like BMW and Hyundai have been testing ‘experience showrooms’ and ‘click and buy’, online only sales. Some commentators have even suggested that this is the end of the traditional car salesman. But our research indicates that online plays an important role in helping customers make initial decisions about the car they want to buy - before entering into a sales discussion with a dealer. Car retailers need to focus on getting the basics right online and facilitating a smooth transition between online and the dealer.
Suzuki have recently re-launched their website to improve the experience customers have with the brand online and in the transition to the dealership. They understood that customers needed an online buying experience that would help them make better decisions about the car that they wanted to buy, before reaching out to a dealer.
The website needed to support the needs of three different groups of customers:
Dealer Focused: “There’s no point in looking at a couple of pictures of the car online, I have to actually see and touch the car and talk to someone about it.”
Online Focused: “The internet gives me access to information that keeps me in control of the decision-making process rather than the dealer.”
Multi Focused: “I like to hear what dealers have to say just as much as reading up on independent sources to help form my opinion.”
Make better decisions faster
The new Suzuki site facilitates better decision-making through a variety of design features. One of these features helps customers overcome one of the more common challenges online; distinguishing how big a vehicle is in relation to another vehicle. By using images that could be easily compared to other models, with additional information such as the number of doors and price, we found that customers could much more quickly narrow down their choices and find the car that was right for their needs.
During research, customers told us that when online they found it difficult to understand the value of buying a more expensive version of their chosen car. Most car websites provide this information over multiple pages, or long feature lists, which makes it difficult to make comparisons easily. Suzuki implemented the ability to make comparisons side-by-side that visually differentiate which key features became available as the price increases.
Helping customers go to dealers better prepared makes for more productive conversations
Overly-complicated car configurators are commonplace in the automotive industry but simplifying this was just the first part of the design challenge. For most car websites, this is where the journey stops and customers have to pick up the slack by noting down their chosen car and its features and taking it into a dealership.
Suzuki’s ‘Send to Dealer’ button means customers can easily send their choices to a local dealer and book a meeting or a test drive. Not only does this button bridge the gap between customer and dealer but it has also improved one of the more arduous tasks in buying a car – booking the test drive. AutoTrader’s study suggests test-drives will continue to play an important role in the car buying process: “88% of consumers said they would not purchase a car without test-driving it first, yet 81% of consumers prefer a different test-drive experience than the traditional accompanied test-drive model that predominantly exists today.”
In the future, we expect booking a test drive to be as easy as making a restaurant reservation. Customers will be able to book a test drive through their chosen dealer – selecting date, time and model from a diary available online.
The future of ownership
Automated scheduling and booking of test drives is one development that will hugely benefit dealers by reducing the amount of time it takes to make booking arrangements with customers. Instead, customers can take the lead and select a date that they know works for them and feel confident that the car they want to test drive will be available.
This is just the first step on the road to the car retailing industry becoming more customer-focused and improving the way in which they use digital platforms to communicate with customers. But the industry is facing an even greater shake-up with growing demand from drivers for a subscription model approach to car ownership.
Car clubs are one example of this trend, and appeal to people who do not need to drive regularly and don’t want to hassle and cost associated with ownership, because they remove the need to pay maintenance, insurance or tax costs.
Of course, many existing car “owners” don’t actually own their car. It’s estimated the two thirds of new vehicles bought privately are done via Personal Contract Purchase (PCP) agreements, where the owner doesn’t actually own the car until the end of the contract term. Most people trade up or buy a new car before the end of the contract, so we are already becoming used to the idea of buying cars on a monthly payment basis.
We expect car manufacturers to respond by developing more subscription model, including charging a monthly fee to have access to specific cars that customers can book in advance. The car subscription model will be designed to allow customers to change their vehicle to match their lifestyle. Date night on Friday? Book the two-door sports model. Carpool to soccer practice every other Wednesday? Book the spacious minivan. Going to be taking country roads? Book the SUV.
We see subscriptions developing into different price ranges as users want more features. Higher priced subscriptions may have access to newer models, self-parking software, or exclusive opportunities to test drive next year’s model. This shift towards subscription based selling will change the way motor manufacturers make money and will be about delivering a brand experience to users.
And who will succeed in such a market?
The companies that can provide this service via a frictionless, elegant and truly engaging digital experience will be the winners in this new market . As customer’s preference for digital continues to dominate they will expect to be able to book and manage their subscriptions easily online. Like Suzuki’s new website a customer centric approach will determine the winners in this space.
Kate Palmer, Suzuki Digital Manager, Automobile Division said: “Never have I had so many positive comments about how fantastic our new website looks and works! The end product is beyond our expectations and offers our consumers the ultimate website experience thanks to the continual test and learn approach throughout the design process and collaborative working approach.”