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Connected Customer Automotive - Bearing Pot

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  • 1. Commercial Services | Automotive The automotive ‘Connected Customer’ Customers are taking control of the sales process – how can you make the trend work for you?
  • 2. 1. Introduction At BearingPoint we believe the arrival of Web 2.0 has enabled a paradigm shift in the way automotive consumers behave. It is of huge significance to the industry, and it is not yet complete. ‘Web 2.0’ is a phrase which has become the preserve of digital marketeers and technology companies. As a result the Web 2.0 debate often has been focused on the ‘art of the possible’ from a creative and technical standpoint. Yet the real issue for the automotive industry is what impact this next generation of the Internet is having on consumer behaviour, and how car manufacturers and their dealers should adapt their well established Customer Relationship Management (CRM) models to reflect these significant changes in the traditional car buying process. The changes we identify in this report are ongoing, and growing. They manifest themselves in the way customers are using Web 2.0 to take control of their own buying process, removing control from manufacturers and dealers In simple terms, the information which people use to decide whether to buy a car no longer comes solely from the industry – it now also comes from other buyers and owners. BearingPoint calls the newly-empowered consumer the ‘Connected Customer’. It’s an area we have become the leading experts in, across multiple industry sectors. Instinctively, not least as consumers, we all recognise this is happening to some degree – but if the automotive industry is to meet this challenge and exploit it, there needs to be reliable data to base decisions upon. Until now, this data did not exist. We set out to bridge this gap. This report gives an overview of detailed, quantitative and qualitative research carried out in this area specifically for the automotive industry, allowing manufacturers and dealers to make strategic business decisions based on real data. The findings reveal the scale of the challenge for manufacturers and dealers, making clear that they need to readdress the way they interact with existing and potential customers. We hope they provoke debate within the industry, and we believe they show that BearingPoint continues to demonstrate leadership in the automotive sector in providing counsel, solutions and advice to our clients. I’m confident that what you will find in the pages ahead will give you pause for thought about our industry. James Rodger Vice President, Global Automotive Leader BearingPoint
  • 3. Commercial Services | Automotive The automotive ‘Connected Customer’ Contents 1. Introduction 2. Executive Summary 2 3. Key Findings 5 4. The ‘Connected Customer’: responses, suggestions and the challenges and opportunities for manufacturers and dealers. 7 5. In conclusion 10 6. Methodology 11 7. Detailed findings 13 7.1 Car buyers instinctively turn to the Internet to research their purchase 13 7.2 Online sources form a powerful alternative to traditional methods of researching a car purchase 14 7.3 Customers trust manufacturers on the empirical details... 16 7.4 ...but they turn to consumer review sites when it comes to the experience 16 7.5 Trust in dealers is low 17 7.6 Independence of opinion is key for future customers 18 7.7 Customers are actively engaged in providing content for websites 18 7.8 A wide range of people are using online communities... 20 7.9 ...and a shared sense of community is the most mentioned reason for using them 21 7.10 Interaction and experience are high on customers’ priorities for online communities… 22 7.11 ...and manufacturers are going to have to be smarter about the features of their websites 22 7.12 Actually buying a car online is still a step too far 23 7.13 Manufacturers can be flexible in combining the online and the physical experience 24 Automotive Report | 1
  • 4. Commercial Services | Automotive The automotive ‘Connected Customer’ 2. Executive Summary The ‘Connected Customer’ – how car buyers have taken control of the sales process. The research that we will examine in this report shows that a watershed moment is upon the automotive industry. To understand the scale of this change it’s important to think about how comparatively quickly it has occurred. In a century the industry has gone from Henry Ford rolling out the first mass-produced car, the Model-T, to selling family cars which can park themselves and cruise on an autobahn at 140 mph using their own radar. Yet the way customers buy these vehicles, probably the second most expensive item they purchase after their home, had barely changed at all. The line of purchase, from advertising, through car magazines reviewing the product to the customer testing the car at a dealership and then purchasing would be as familiar to the Model-T buyer as it is to the owner of the latest generation Mercedes S-Class. Amazon starts trading First car dealers go online Block exemption 1900 1950 2000 Model T BBC KwikFit Ford launched Internet FaceBook introduced Radio created launched AA First radio First TV Radio Caroline Top Gear Top Gear Mini founded advert advert starts BBC2 magazine owners in USA in USA broadcasting lounge RAC GMNext founded AutoTrader social ITV online community launched WhatCar online 2 | Automotive Report
  • 5. Commercial Services | Automotive The automotive ‘Connected Customer’ As in so many areas it is the Internet and communication technologies which have driven the changes Initially, in the 1990s, Web 1.0 gave consumers informational choice on a scale they could never had imagined, but the information they were using was essentially unchanged – it was provided by suppliers of goods and services in the same way it always was, just on a greater scale and via a new medium. The acceleration of change in the last five years, with the advent of Web 2.0, has been phenomenal. This second-generation Internet is hugely more interactive – it has become a tool rather than simply a funnel for carrying information – and its direction and development is increasingly driven by everyday users, rather than businesses and organisations. At BearingPoint our interest, across multiple industries, has not been in the technology which makes this possible, but in the effect it has on customer behaviour and its consequences for businesses. In the automotive sector this is starker than in many industries, thanks to the linear nature of the way people have bought cars for decades. What manufacturers and dealers should be thinking about today is not only how far behind this curve they may be, but where they will need to be in five years’ time. The staggering pace of the changes which have taken place since the turn of the century will only increase. To act, businesses need quality data, and until now this has been thin on the ground. The primary research that we review in this report raises the bar – by providing solid evidence of what has changed and why. This provides automotive industry decision- makers with real data and tools on which to build strategies that will help to meet and exploit these changes in the marketplace. BearingPoint calls this new buyer the ‘Connected Customer’, a new breed of informed, confident and networked consumer who seeks out the information he needs to make a buying decision himself (and often ignores that offered to him by suppliers of goods and services). Crucially, he often does this as part of an online community, trusting the information he shares with like-minded consumers. In many cases, then, he has made a decision about whether or not to purchase before he interacts with the car manufacturer or its dealer network at all. How can the industry face up to this challenge? Automotive Report | 3
  • 6. Commercial Services | Automotive The automotive ‘Connected Customer’ We see it as positive, not negative. The key word which underpins our findings is ‘opportunity’. We do not, for example, suggest that the dealer model is out-dated. On the contrary we found that the point of purchase is unlikely to change in the near and medium-term – but our research does show how customers are making their decisions about which car to buy long before they arrive on the forecourt. Moreover, the customer who arrives at the dealership today is vastly better informed about the models on offer, the options available, the financial realities of the deal he can achieve and, finally, is able to check what he’s offered in real-time against what is available from the entire market regardless of geography. What does this mean for dealers and manufacturers? More than anything it means the dealers’ role must change if they want to sell cars to the new ‘Connected Customer’, whilst manufacturers need a new CRM model if they are not to lose further influence over potential customers. In summary, this report shows that there is no revolution in car buying, but there is fast-paced and constant evolution which, if not understood and acted upon by the industry, could have dramatic effects on sales and market share. It finds many positives along with the potential threats and we at BearingPoint have solutions formed from our long experience and from this new data which can help manufacturers and their dealer networks exploit them. 4 | Automotive Report
  • 7. Commercial Services | Automotive The automotive ‘Connected Customer’ 3. Key Findings 3.1 What’s changed? In simple terms, customers now see themselves as in control of the sales process, and our research and analysis suggests they are right. Historically, customers decided whether or not to buy a car in the showroom – today they are increasingly making that decision in their living room. The Internet is now the primary source of information for car buyers – and more powerfully still, the areas of the Internet customers go to for trusted information have changed too. We found that whilst respondents still trust manufacturers’ data on the facts (mpg, top speed etc.), it was increasingly other buyers, forums and independent websites they listened to when it came to qualitative and experiential information (reliability, comfort, cost of ownership, etc.). The challenge for manufacturers and dealers is to recognise these changes, address this growing loss of influence on the buying decision, and adapt from the old command-and- control CRM model. 3.2 The role of dealers is changing Our research shows that consumers trust manufacturers for empirical data, and other buyers/reviewers for comparative data, but we found that trust in dealers was comparatively low across the board. Adding the ‘Connected Customer’ to the equation creates a problem for dealers – if the customer doesn’t trust the information he gets from dealers, and he can now get information he does trust from elsewhere, what role does he see the dealer taking in his potential transaction? The answer is a very functional role – the ‘Connected Customer’ sees the dealer as the point of test-drive, purchase and support. Of more concern, though, is the fact that many ‘Connected Customers’ have rejected a particular model before test-drive, so the dealer never has a chance to influence the buyer at all. One customer, who purchased a new Land Rover in 2008, told us: “I read the Top Gear review, amongst others, but what mattered most to me was speaking to, at least electronically, perhaps ten or fifteen people who had already bought the car, and reading what twice that number of people thought on the ‘What Car?’ website. By the time I came to make a buying decision I was aware of the pitfalls and the advantages and had rejected models from Porsche, Audi and BMW on the strength of owner reports and forums, together with the deals available. “I didn’t visit a dealer until I’d identified the exact car, never mind model, I wanted and negotiated a price. That was the only dealer I saw, a long way from home. I agreed a deal, subject to test drive, and ultimately bought the car. “My buying process took about two months, but I spent about two hours at a dealer in all that time – to pay and drive it away basically.” Automotive Report | 5
  • 8. Commercial Services | Automotive The automotive ‘Connected Customer’ 3.3 Online – but only so far What quickly became clear to us was that whilst the Internet was the most significant tool in deciding which car to buy, it was not seen as a means of actually making a purchase. People felt strongly that they wanted to ‘see and feel’ the model they might buy. They also didn’t trust online pictures as a guide to condition, and wanted to deal ‘face to face’ with a dealer. Fewer than one in five would even consider buying a car online. At BearingPoint we see this as a major opportunity for dealers. We have seen that the role of the dealer is changing, but the data makes clear that the dealer will have a clear role in future – in providing test drives and being the final point of purchase and support. Dealers must quickly understand what their role is in this new environment, and execute efficiently and professionally. Yet combining this trend with the point at which the ‘Connected Customer’ makes his buying decision also presents a major challenge – dealers may well only get one chance to influence these new customers; the ‘Connected Customer’ will arrive later in the car buying process, be better informed, and will be more confident. 3.4. Opinions are increasingly being shared Online communities are growing, and individuals amongst them increasingly understand the impact of their views on a given car, and are more and more keen to share them with other potential customers. This twin growth (in those seeking the information, and those willing to provide it) indicates that the market impact of online communities will continue to grow – three quarters of respondents indicated that they already had contributed, or would be willing in future to contribute, their purchase and ownership experiences. However, in the automotive sector the trend is still relatively immature compared to other sectors such as travel and consumer electronics. The question for manufacturers is how long will it be before a more mature online buying guide for the automotive industry which mirrors travel sites such as ‘Trip Advisor’ emerges? Already, major automotive consumer publications such as ‘What Car?’ and ‘Motorcycle News’ host well-used forums and customer review pages, but there is not yet a ‘one stop shop’ such as ‘Trip Advisor’. We believe this is a question of when, not if, though. How will manufacturers first embrace and then influence this? How will they assess and respond to information, and ensure customers with good experiences take part (our survey showed that almost as many people would be willing to contribute after a positive experience than a negative one), and stay one step ahead as sites change and grow? 6 | Automotive Report
  • 9. Commercial Services | Automotive The automotive ‘Connected Customer’ 4. The ‘Connected Customer’: responses, suggestions and the challenges and opportunities for manufacturers and dealers. Telephone The Corporate or ‘Transactional’ Realm Call Center Level 2 Ph Mobile Call Center ysi t Marketing Level 1 rne cal Inte txt Net Point of @ Sales work Mobile SMS IVR Terminals Email www. Self-help Corporate Kiosks Website Dealers Customer Tailored Collaborative Lean Lean Collaborative Tailored Experience Participating Listening Influencing Monitoring Testing Developing The Connected & Measuring Advocacy Community Customer or Facilitating Customer Monitoring/ ‘Relationship’ Realm Influencing dialogue Co-creating Offerings Testing Marketing Concepts With the arrival of Web 2.0, customer communications can be divided into two distinct realms – traditional, functional and transactional interactions on the one hand, and the new subjective and experiential data shared between customers on the other. At BearingPoint we call these the ‘Corporate’, or transactional realm and the ‘Connected Customer’, or relationship realm. The Corporate realm – future strategies for manufacturers and dealers The Corporate realm (shown in the upper half of the diagram) will remain the domain of manufacturers and their dealers. The interactions in this realm will be largely transactional, and therefore future strategies here need to focus on increasing automation and efficiency and making it as easy as possible for customers to interact and do business with them. Manufacturer CRM models should reflect this and, as we have already seen, dealers in the new marketplace fit wholly into this role. To deliver upon the expectations of the ‘Connected Customer’, manufacturers must understand consumers ‘empirical’ information requirements and make it easy for customers to access the information they want (and taking advantage of cost-out opportunities by not wasting money on digital gimmicks that customers don’t actually value). Automotive Report | 7
  • 10. Commercial Services | Automotive The automotive ‘Connected Customer’ In support of this, dealers must understand the functional requirements of ‘Connected Customers’ regarding test drives, financial transactions, and ongoing support. They need to execute these processes as efficiently as possible, recognising that ‘Connected Customers’ will contact them later in the car buying process and thus giving them potentially only one opportunity to get this right. Equally, dealers need to be empowered with the same access to information as the ‘Connected Customers’ they are seeking to sell to. Manufacturers need to ensure their knowledge management systems support the provision of this information. Interacting in the ‘Connected Customer’ realm – monitor, listen and influence The relationships which used to exist between customers, manufacturers and dealers largely have moved to the ‘Connected Customer’ realm. Crucially, this is also where the new relationships between customers exist. Manufacturers cannot control this second realm but they can influence it, sometimes significantly. They must develop strategies to deal with the new breed of ‘Connected Customers’ that occupy it. Strategies in this realm will focus on monitoring, listening and influencing – including the sponsorship or set-up of affinity communities as well as developing brand advocates who will influence other ‘Connected Customers’. BearingPoint believes that this must be a priority in 2009 for manufacturers, even amid the economic difficulties of the wider market. Manufacturers must understand that their ‘old’ command-and-control approach to marketing communications is inappropriate for the Web 2.0 environment. ‘Connected Customers’ make up their own minds as to whom to consult, and have a myriad options available to them. It will be important to maintain integrity in the Web 2.0 environment; any attempts at manipulation by manufacturers and dealers will be obvious and damaging (the ‘Connected Customer’ will recognise anonymous posts from suppliers: contributors to ‘Trip Advisor’ and ‘Amazon’ occasionally point out the dubious sources of comments). However, pro-active, transparent interventions need not be manipulative and could be welcomed if presented appropriately. 8 | Automotive Report
  • 11. Commercial Services | Automotive The automotive ‘Connected Customer’ For example, by identifying ‘Connected Customers’ who are openly supportive of a certain brand, manufacturers can cultivate and nurture brand advocates and use their support to attract other potential buyers. Another opportunity is the sponsorship of a community which has an affinity to either a brand (for example an owners’ club) or the values of that brand (high performance, excellence in design etc.). By embracing those Web 2.0 forums that are opinion-forming, manufacturers and dealers may participate directly in the exchange of information with ‘Connected Customers’. For example, manufacturers and dealers could provide links on their own websites to independent review websites (as for example already happens in the travel industry). This not only makes it easier for the customer to search for independent information, it also shows an open and honest approach, and a high level of confidence in the vehicles and services being offered. Given that ‘Connected Customer’ communications are so impactful on other customers’ decisions, it is important that manufacturers and dealers are aware of what is being said about them. Companies should determine how to monitor 3rd-party web activities such as review sites and blogs, and respond to them appropriately. Not only is this a chance to influence individual buying decisions with timely and appropriate interventions, it is also an opportunity to identify customers at risk of defection from the brand and take individual corrective action. It also provides a cost-effective source of marketing intelligence by enabling understanding of what consumers like and dislike about products, and offers an opportunity to take this into account for future product development and marketing campaigns. Additionally, it can be an early-warning system for product defects and other corporate issues. To make this work effectively, companies must assign accountability within the organisation for this activity (whether marketing, CRM, corporate communications, etc.); determine how to make effective interventions when appropriate (with an appropriate code of conduct – open, transparent, honest, etc.); and ensure a system for internal feedback to exploit early warning of problems (such as those which might not be picked up by warranty). Automotive Report | 9
  • 12. Commercial Services | Automotive The automotive ‘Connected Customer’ 5. In Conclusion The key factor in all these findings is that they represent a great opportunity for manufacturers and dealers to take advantage of what is happening. There is no bad news – yet. It will only become so if nothing is done. What is clear is that this is a trend set to continue, to grow and to become more and more significant. The question for manufacturers and dealers is not whether to engage with it, but how to. BearingPoint has developed the answers to many of these questions. Our experienced global automotive team would be happy to discuss these issues further with you, and details of some of the key team members can be found at the end of this report, together with their contact details and areas of expertise. We think you’ll be surprised at just how much we can help, and at the effect we can have on how your business can take advantage, today and in the long-term, of these exciting changes in the way people buy cars. 10 | Automotive Report
  • 13. Commercial Services | Automotive The automotive ‘Connected Customer’ 6. Methodology We surveyed 1,002 people across the UK who had chosen a car as a retail customer or a fleet user-chooser in the preceding twelve months, or intended to in the next twelve months. So that we could be certain our respondents were comparing like with like, quotas were set to ensure that we mainly spoke to those who were buying new or nearly new cars. In order to retain a balance within the sample, soft quotas were put in place to obtain a good spread of age and gender, and to allow us to analyse the relevant sub groups in detail. The fieldwork comprised of an online questionnaire sent to a random sample of panellists. Figure 1: The demographic make-up of our respondents Demographic % of respondents that % of respondents Total % had bought a car in intending to buy a car the last 12 months in the next 12 months Male 49 53 52 Female 51 47 48 18-24 9 5 7 25-34 11 15 13 35-44 20 23 22 45-54 24 22 22 55-54 19 24 22 65+ 17 12 14 Source: FreshMinds Research / BearingPoint survey Automotive Report | 11
  • 14. Commercial Services | Automotive The automotive ‘Connected Customer’ Figure 2: Age of the car for our respondents 50 40 Percentage 30 20 10 0 New Less than 1 year old 1-2 years old 3-4 years old 5 years old+ Have bought in the last 12 months Will buy in the next 12 months Total Source: FreshMinds Research / BearingPoint survey Figure 3: Vendor of the car 60 50 40 Percentage 30 20 10 0 A franchised A non-franchised A private sale A car auction Don’t know/other dealer garage Have bought in the last 12 months Will buy in the next 12 months Total Source: FreshMinds Research / BearingPoint survey 12 | Automotive Report
  • 15. Commercial Services | Automotive The automotive ‘Connected Customer’ 7. Detailed findings 7.1 Car buyers instinctively turn to the Internet to research their purchase When we asked where the ‘first port of call’ was for researching the purchase of a car, ‘the Internet’ was the most mentioned response. Even though television and magazine advertising represent the greatest expenditure by car companies in attracting customers, buyers do not see these as primary sources of information. Figure 4: Where did you / will you look for information before buying your car? 80 70 60 50 Percentage 40 30 20 10 0 Internet Car Dealers Newspaper Friends Car TV Own Don’t Other magazines & family brochure opinion know Have bought in the last 12 months Will buy in the next 12 months Total Source: FreshMinds Research / BearingPoint survey Digging deeper, when we prompted respondents with a series of options, it became obvious that the manufacturer’s website is the first place that buyers go to research their purchase – although, as we shall see later, only certain information is sought and trusted. This represents an enormous opportunity for car manufacturers to mould the initial conversation with their customers, and begin to drive online brand advocacy. Figure 5: Which of these sources did you / will you consult? 80 70 60 50 Percentage 40 30 20 10 0 website Manufacturer’s Catalogue A franchised dealer magazines Printed consumer magazines Online consumer website Consumer review Friends & relatives car retailers Independent TV motoring shows Current owners organisations Motoring Social networks Other None of these Have bought in the last 12 months Will buy in the next 12 months Source: FreshMinds Research / BearingPoint survey Automotive Report | 13
  • 16. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.2 Online sources form a powerful alternative to traditional methods of researching a car purchase Figure 6: To what extent to you agree or disagree with the following statements? 100 80 Percentage 60 40 20 0 I use online I value I rely on information Car salesmen resources to research independent opinions provided by the can provide me with all a majority of my from online consumer manufacturer the information I need major purchases review sites when buying a car when buying a car Strongly agree Slightly agree Neither agree nor disagree Slightly disagree Strongly disagree Source: FreshMinds Research / BearingPoint survey Attitudes towards online sources, compared with more traditional sources of information, are revealing. As the chart above shows, when asking customers directly about their attitudes and behaviours, online sources are relied upon heavily. There is also evident respect for the information provided by manufacturers (so long as it is factual information). Manufacturers should capitalise on this trend. They are increasingly the first port of call, but they are failing to secure a further ‘conversation’ with the potential customer. So where do these customers go? The value of consumer review sites is sometimes brought into question – after all, the content of these sites is unregulated and provided by anonymous sources – but it seems customers trust them. 70% in our survey agreed or strongly agreed with the statement ‘I value independent opinions from online consumer review sites’. We probed further into the experience of consumers when consulting car salespeople. We wanted to understand whether the perception of the car salesperson as being a less comprehensive source of information matched the reality. By comparing the responses of those that had bought cars with those that were going to, we discovered that the actual experience is very similar to the reality. As the public face of the brand, car salespeople are still not able to provide potential customers with all of the information that they need, and a flight to more independent sources is inevitable. 14 | Automotive Report
  • 17. Commercial Services | Automotive The automotive ‘Connected Customer’ Figure 7: How much would you agree with the statement ‘car salesmen can provide me with all of the information I need when buying a car’ 35 30 25 Percentage 20 15 10 5 0 Strongly agree Slightly agree Neither agree Slightly disagree Strongly disagree nor disagree Have bought in the last 12 months Will buy in the next 12 months Total Source: FreshMinds Research / BearingPoint survey Figure 8: How much would you agree with the statement ‘I research the majority of my major purchases online’? 80 70 60 50 Percentage 40 30 20 10 0 Strongly agree Slightly agree Neither agree Slightly disagree Strongly disagree nor disagree Have bought a car online Total Source: FreshMinds Research / BearingPoint survey Automotive Report | 15
  • 18. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.3 Customers trust manufacturers on the empirical details... Consumer review sites are most popular for the type of data which comes from use and experience. These are the types of information that another consumer would be best placed to provide. In simple terms, manufacturers are trusted to provide the hard facts and figures around the vehicle, but not its comparative merits when set against the competition. Figure 9: How much would you trust a manufacturer to give you reliable information on the following factors? 80 70 60 50 Percentage 40 30 20 10 0 Vehicle specs. CO2 emmissions Tax disc band Fuel consumption Safety Performance Practicality Insurance group Brand image Running costs Driving appeal Second hand value Reliability Manufacturers ranked in top three Source: FreshMinds Research / BearingPoint survey 7.4 ...but they turn to consumer review sites when it comes to the experience The chart above is almost perfectly reversed when we asked the same questions of consumer review sites. The top three are the areas where consumers trust manufacturers least – reliability, second hand value and driving appeal. 16 | Automotive Report
  • 19. Commercial Services | Automotive The automotive ‘Connected Customer’ Figure 10: How much would you trust a consumer review site to give you reliable information on the following factors? 80 70 60 50 Percentage 40 30 20 10 0 Reliability Vehicle specs. CO2 emmissions Tax disc band Fuel consumption Safety Performance Practicality Brand image Running costs Insurance group Driving appeal Second hand value Manufacturers ranked in top three Consumer review sites ranked in top three Source: FreshMinds Research / BearingPoint survey 7.5 Trust in dealers is low Where trust falls away is when the dealer becomes involved. Customers did not even trust dealers to be honest about hard facts – mpg, top speed etc. This represents a double challenge for dealers: firstly our survey has shown that they need to find a way of engaging with customers earlier in the purchase process; secondly they need to recognise that their role is largely functional as a point of test drive, purchase transaction and ongoing support. Figure 11: How much would you trust a car dealer to give you reliable information on the following factors? 80 70 60 50 Percentage 40 30 20 10 0 Vehicle specs. CO2 emmissions Tax disc band Fuel consumption Safety Performance Practicality Insurance group Brand image Running costs Driving appeal Second hand value Reliability Manufacturers ranked in top three Consumer review sites ranked in top three Car dealers ranked in top three Source: FreshMinds Research / BearingPoint survey Automotive Report | 17
  • 20. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.6 Independence of opinion is key for future customers Independent sources were the most mentioned as being places to go for future research. It was clear that buyers do not regard the dealer as a source of information about anything other than purchase options – neither the dealer nor the manufacturer were trusted sources for comparative information. In other words – the decision about which car to buy is being made before significant contact with dealers. Moreover, friends and family, online consumer review sites, and car magazines were the sources that customers could see themselves using more in the future. Figure 12: How far do you think you will rely on the following sources in the future when buying a car? 100 80 Percentage 60 40 20 0 Franchised dealer organisations Motoring website Consumer review magazines Online consumer magazines Printed consumer Friends & relatives TV motoring shows Car retailers Social networks Current owners Catalogue website Manufacturers Will be more reliant Will be reliant about the same Will rely on less Will not rely at all Source: FreshMinds Research / BearingPoint survey 7.7 Customers are actively engaged in providing content for websites Understanding how customers are using online communities is one thing, but who is actually adding content to them? We found that 26% of our respondents had already written an online review, and that 45% would consider writing one. Although our sample is already Internet-savvy, these numbers show how widespread contribution to online communities is. 18 | Automotive Report
  • 21. Commercial Services | Automotive The automotive ‘Connected Customer’ Figure 13: Have you ever written an online review? 50 40 Percentage 30 20 10 0 Yes No, but would consider No and I would not writing one consider writing one Source: FreshMinds Research / BearingPoint survey Comments included: “I was impressed with the product and was prepared to endorse it by writing a factual review to assist others in choosing the right item for them.” “Because I use websites to get others reviews when making a decision about certain products and therefore I feel that I should also contribute my good or bad experiences.” “Asked by the seller to review products and service.” “Telling or sharing with others of a very bad service I encountered with a ‘supposedly’ reputable company... I was not alone in my views as it happened.” Some of the comments above highlight a typical criticism of online reviews – that they tend to focus on the very good, or very bad experiences. The generally-received wisdom is that contributors must have something that they really want to say in order to express an opinion. We found otherwise. 23% of people wrote to share a bad experience, 22% to share a good experience. Most interestingly of all, 20% just wrote reviews to share the experience of the purchase. Figure 14: What first prompted you to write a review? 25 20 Percentage 15 10 5 0 Bad Good Sharing Asked to Community From Debate Can’t experience experience experience spirit reading other remember reviews Source: FreshMinds Research / BearingPoint survey Automotive Report | 19
  • 22. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.8 A wide range of people are using online communities... Understanding the types of people that are using communities is important in highlighting whether there is a wider trend towards these kinds of sites, or whether the trend is located amongst a group typically considered more Internet-savvy (such as young men in their early twenties). When we asked how likely people might be to use an online community for a make of car, we found a wide-range of people showed an interest. There was an even split between men and women, and although there was an inevitable drop-off with age, between the ages of 18 and 54, there is an even spread of people that would consider using this type of community. One of the factors here is that many of the forums and consumer test pages used have associations with established media brands trusted already by older people (‘What Car?’ and ‘Motorcycle News’ for example). Figure 15: How likely would you be to use an online community for a make of car? Differences by gender 100 80 60 Percentage 40 20 0 Male Female Differences by age 100 80 60 Percentage 40 20 0 18-24 25-34 35-44 45-54 55-64 65+ Very likely Quite likely Neither likely or unlikely Quite unlikely Very unlikely Source: FreshMinds Research / BearingPoint survey 20 | Automotive Report
  • 23. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.9 ...and a shared sense of community is the most mentioned reason for using them Communities are considered to be a useful source of information, but one of the main reasons for using them is the ‘shared experience’ that using a community engenders. In other words, it’s useful but it’s also pleasurable. Dominant barriers for people using a community as a source of information were a disinterest and a lack of trust in the information provided. By looking at the figures on the kinds of information which people seek from manufacturers, and the kinds of information sought from consumer review sites, there is a clear opportunity for manufacturers to provide potential customers with a combination of the empirical facts, whilst also working on the ‘shared experience’ that communities provide. The difficulty for those companies who are being discussed on these forums and communities is, therefore, how to engage without appearing to be an unwelcome guest at a party. It can be done, and BearingPoint has some exceptional examples of businesses and organisations which have been bold enough to do it, and have seen a huge drop-off in inaccurate negativity online as a result. Figure 16: Why do you say this about an online community? (Answers for people that say they’d be likely to use one, or those that say they would be unlikely). Motivations to use 80 70 60 50 Percentage 40 30 20 10 0 Shared Source of Unbiased Ease Curiousity Not sure experience useful information Motivations not to use 60 50 40 Percentage 30 20 10 0 Not Don’t trust Unreliable Prefer other Like to make Biased interested (or don’t like) sources decisions myself using these kind of sites Source: FreshMinds Research / BearingPoint survey Automotive Report | 21
  • 24. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.10 Interaction and experience are high on customers’ priorities for online communities… Understanding real-life experience, reading road test reports and getting technical help were all valued by customers. Figure 17: How likely would you be to use an online community if it had… 100 90 80 70 Percentage 60 50 40 30 20 10 0 forum Manufacturers Latest news websites Useful forum Owners benefits member Special buyers prospective Q&A for reviews Owner help Technical reports Road test experience Real life Very likely Quite likely Not likely Source: FreshMinds Research / BearingPoint survey 7.11 ...and manufacturers are going to have to be smarter about the features of their websites Items such as computer downloads, ‘design your own car’ functions and information on manufacturing were not considered as relevant. These items, which are often used to draw customers to car manufacturers’ sites all fall into the ‘fun and games’ category, or are likely to result in more of a feeling of being ‘sold to’. Figure 18: How likely would you be to use an online community if it had... 100 90 80 70 Percentage 60 50 40 30 20 10 0 downloads Computer information Financial services list Mailing merchandise Shop for branded process manufacturing Information about own car function Design your related events Information about or videos Owners photos Driving tips engine Dealer search recommendations provider Dealer or service and wanted For sale Must have Nice to have Not necessary Source: FreshMinds Research / BearingPoint survey 22 | Automotive Report
  • 25. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.12 Actually buying a car online is still a step too far Buying online is still considered a risk by most people, and this manifests itself in the amount of money they are prepared to risk. The idea of spending thousands on a car online is seen as a step too far for most respondents. This is good news for dealers and manufacturers – with the evidence showing that when it comes to handing over the money and picking the car up, a dealer is the preferred choice (long-term support is also a factor here). This suggests that it is unlikely that cars will become as ‘digitalised’ as some other items, and that manufacturers can best use online sources to help customers research their purchases. Figure 19: How likely would you be to purchase or commit to purchasing the following item online? 100 80 Percentage 60 40 20 0 Mortgage Car loan Car Washing Laptop Digital Mobile Holiday Insurance Clothing CD or machine camera phone DVD I already have purchased this item on line I would definitely consider purchasing this online I might consider purchasing this online I probably wouldn’t consider purchasing this online I definitely wouldn’t consider purchasing this online Source: FreshMinds Research / BearingPoint survey Automotive Report | 23
  • 26. Commercial Services | Automotive The automotive ‘Connected Customer’ 7.13 Manufacturers can be flexible in combining the online and the physical experience We sought to understand the barriers to online purchasing in more depth. Most of the reasons mentioned for not wanting to buy a car online involved an aspect of the physical experience, such as inspecting the car, test driving the car or discussing the purchase with a dealer. Figure 20: Why do you say that you would not consider purchasing a car online? 35 30 25 Percentage 20 15 10 5 0 I would I would I prefer to Too much Too Other Pictures may Don’t want to want to deal face risk/ expensive be false know see/inspect see AND to face untrust- the car test the car with dealer worthy Source: FreshMinds Research / BearingPoint survey These opinions were further displayed in the comments that customers made about committing to a large purchase such as a car online: “I’d want to see it in detail first to examine every part of it, especially if second-hand. I’d also like a chance to take a test drive before committing to it.” “I like the experience of going into the showroom and getting personal service. I feel more confident in the purchase, particularly if there is any recourse.” “There’s no way of completely knowing the website’s “trustability” and you can’t really see what state the car’s in.” “It’s not something I would consider as it’s such a big expensive item.” But does this trend really represent much of a barrier to automotive firms? It is clear that one of the key lessons manufacturers need to draw from our survey is the need to move themselves and their dealers further up the information line a potential customer travels down before making a decision. Could it be the case that people may feel more willing to commit to a car online if they still had the dealer experience at the end, and a chance to change their mind at that point? There may be other options for manufacturers to explore. In many cases, the buying experience gives an impression of the ownership experience. Delivering cars to the buyer for test drives, or providing online booking options for customers to find a time to try out their intended purchase, represent opportunities to engage the customer with the physical product as well as the online experience. 24 | Automotive Report
  • 27. About the BearingPoint Automotive Practice BearingPoint is a global management and technology consulting company known for applying deep industry experience to deliver consistently impressive results for our clients. More than 17,000 management and technology consultants collaborate with clients in 60 countries to help them solve their most pressing challenges from strategy through to execution. In the automotive industry, we help companies gain efficiencies and performance improvement across the full value chain. We work with most of the world’s major car manufacturers and some of the leading first-tier suppliers, supporting our clients in the roles of both management and technology consultants. Our capabilities span the entire automotive value chain. BearingPoint consultants have helped automotive companies improve their production and supply chain operations, reduce warranty costs through the development and implementation of innovative diagnostic-driven early-warning quality systems, set up the systems and processes for new production plants, optimize their spare parts management operations, and develop and execute strategies for effective multi-channel customer relationship management. We have a genuine passion for this work and for the industry as a whole, and it comes through in our everyday approach and in the spirit of our people. We’re proud of a number of attributes that keep us at the top of our field: • Industry experience: We know our clients’ business problems, the trends that impact the industry and the processes required to achieve results. Many of our consultants join us with years of experience, working with some of the top companies in the automotive industry. • Experienced workforce: We believe we have one of the most experienced workforces in our industry. Our extensive business and technology experience and commitment to our clients drive our success. Our automotive practice has more than 15 years of experience serving as business advisors and systems integrators to the industry. • Enduring relationships with world-class clients: Each year, virtually all of our most significant clients renew their relationship with us by asking us to assist them in deploying innovative solutions to address new business challenges. • Innovative, results-focused solutions: We combine our industry knowledge with technological experience to create solutions that bring real, tangible and innovative business value to our clients. • Global presence: We support our clients’ operations around the world, seamlessly delivering the same results-driven solutions wherever they do business. We are constantly aligning these advantages with the needs of the industry. We know these needs can change over time, which is why we stay locked into the pulse of the marketplace— standing at the ready to apply our extensive experience on behalf of our clients.