- 1. Commercial Services | AutomotiveThe 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 dealersIn 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. Its 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.Im 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. Introduction2. Executive Summary23. Key Findings 54. The Connected Customer: responses, suggestions and the challenges andopportunities for manufacturers and dealers. 75. In conclusion 106. Methodology 117. Detailed findings 13 7.1 Car buyers instinctively turn to the Internet to research their purchase137.2 Online sources form a powerful alternative to traditional methods ofresearching a car purchase147.3 Customers trust manufacturers on the empirical details... 167.4 ...but they turn to consumer review sites when it comes to the experience 167.5 Trust in dealers is low 177.6 Independence of opinion is key for future customers 187.7 Customers are actively engaged in providing content for websites187.8 A wide range of people are using online communities...207.9 ...and a shared sense of community is the most mentioned reasonfor using them217.10 Interaction and experience are high on customers priorities for online communities227.11 ...and manufacturers are going to have to be smarter about the features of their websites 227.12 Actually buying a car online is still a step too far 237.13 Manufacturers can be flexible in combining the online and the physical experience24 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 its 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.Amazonstarts tradingFirst cardealers goonlineBlockexemption1900 19502000 Model T BBCKwikFitFord launched Internet FaceBookintroducedRadiocreated launched AAFirst radioFirst TVRadio Caroline Top GearTop Gear Mini founded advert advertstarts BBC2magazineowners in USA in USA broadcastingloungeRACGMNext foundedAutoTrader socialITV online community launched WhatCaronline 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 changesInitially, 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 hes 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 Whats 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