Silo experiences are jeopardizing customer retention

Breaking them down will mitigate the effects of the automotive transformation

ag analytics


The automotive industry is changing. Rapidly.

The digital transformation changes not only the customer experience and interaction, but the vehicle itself. Cars are more connected than ever; Mobility as a Service (MaaS) is rapidly gaining traction and an increasing part of interactions with customers shifts from physical to digital. And still, the human touch remains critical.

Simultaneously, trends such as electrification, shared mobility and autonomous driving have the power to fundamentally change how people move from point A to B. Meanwhile, automotive incumbents are slowly positioning themselves for this apparent disruption, but heavy capital investments in the traditional automotive business model are, and will be, a weakness in the form of inflexibility.

Facing such an uncertain and disruptive future, how can automotive incumbents prepare? What should their roadmap for the future be?

In short, the winners are those that successfully minimize disruption by maximizing loyalty. When preventing customers from leaving one’s business, the transformation will be slower and the effects mitigated.

However, automotive incumbents miss one crucial aspect that prevents them from accelerating loyalty and thus meeting future goals; they do not consider the full customer journey as one.

An illustrative example
A key KPI for most dealerships is whether the customer had to return to the workshop after a service visit because the work was not done correctly. It makes a huge difference measuring the KPI from a transaction-based point of view or a relationship-based point of view.

  • Transaction-based: Have you been forced to return to the workshop because the work was not done correctly the first time?
  • Relationship-based: Have you ever been forced to return to the workshop because the work was not done correctly the first time?
Only knowing the transaction-based repeat repair rate, you miss the full picture.

Customers don’t experience companies through transactions and touchpoints. They get their impression of companies through the full customer journey, or in other words, the relation with the company and the brand — from start to finish.

The automotive customer journey spans across many clusters of touchpoints. From information search and test drives through sales and several service visits to repurchase or churn.

Although many of these touchpoints, or clusters of touchpoints, are already considered and measured, KPIs and targets are not based on the full journey, but rather touchpoints and transactions. Consequently, individual touchpoints might seem well performaning when in fact the end-to-end relation with customers is very poor.

Each touchpoint obtains high satisfaction, but across the journey the share of dissatisfied accumulates causing brand devaluation.

In this highly simplified case, only 5% of customers have a negative sales experience and 12% negative service experience. Individually, these processes might seem satisfactory, but in reality, 35% of customers are disappointed at some point in the end-to-end journey. This is simply because different customers get disappointed at different times, and thus when the full customer journey is considered a larger part of the customers have had a poor experience.

Evidently, current measures undershoot. They give a distorted picture of overall brand performance, hiding the true picture of how often brands do not meet expectations.

But this is only a part of the problem. As in the above example, automotive players usually measure performance on sales and service experiences only. However, there are many other touchpoints that they currently do not consider, leaving a gap — a dark figure — between the performance that they actually report and the true end-to-end brand performance. A dark figure that only increases in significance as more touchpoints are left unmeasured.

Leaving out as much as 7 touchpoints can have a dramatic effect. You might end up disappointing a staggering 50% more than you initially thought — and that is far from the worst-case scenario.

All this testifies to an urgent need for changing focus. Having a transactional focus will only yield mediocre customer experiences and poor customer loyalty. Consequently, customers will leave your business for as little as a marginally better functional value.

This value will most likely be driven by technology, and it is gaining traction very quickly. But trends like autonomous driving and electrification still have a long way to go, and adoption depends largely on politics, investments and R&D. No one can really tell how fast adoption will be, where we will end up and who will survive.

Uncertainty, on the other hand, is the only thing we can be certain about.

It is therefore crucial to understand that customers experience a company through every single touchpoint that emerges along the full customer journey. They don’t care about transactions, they care about relations. And, contrary to technology, you can start building your relationships today.



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