Application of the customer experience concept in automotive retail

Customer experience and the decision-making process of buying in automotive retail. Analysis of the search for solutions for benchmarking. Carry out a survey of experts in marketing and consumer surveys in the transport trade of the Russian Federation.

Рубрика Иностранные языки и языкознание
Вид дипломная работа
Язык английский
Дата добавления 31.10.2016
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PERM BRANCH OF THE FEDERAL STATE

AUTONOMOUS EDUCATIONAL ESTABLISHMENT “NATIONAL RESEARCH UNIVERSITY “HIGHER SCHOOL OF ECONOMICS”

Faculty of Economics, Management and Business Informatics

APPLICATION OF THE CUSTOMER EXPERIENCE CONCEPT IN AUTOMOTIVE RETAIL

Table of contents

Introduction

Chapter 1. The customer experience concept, the decision buying process and benchmark solutions search

1.1 The customer experience concept in marketing

1.2 Customer experience and the buying decision process in automotive retail

1.3 Case analysis and benchmark solutions search

Chapter 2. Local market analysis and benchmark selection through research

2.1 Market analysis: automotive retail in Russia and automotive retail customer experience in Perm

2.2 Interviewing marketing experts and surveying consumers in local automotive retail

2.3 Selecting benchmarks applicable to the Perm automotive retail market

Chapter 3. Implementation details of the selected solutions

References

Abstract

Applications

Introduction

With technology development and emergence of new media, customer behavior is changing significantly. The traditional stationary sales outlet is losing relevance. Hence, new semi-stationary formats and web-based customer touchpoints are emerging. Beyond that, younger customers demand a higher level of interaction with the manufacturer than the traditional ones. They also expect the manufacturer to be available and responsive at all times. The landscape of possible touchpoints is becoming more complex, creating new types of customer journeys. This means that car manufacturers can no longer fully outsource customer handling to retailers. Instead, they are required to be present whenever customers desire interaction. In addition, the state of the automotive retail industry is heavily influenced by the solutions made by top original equipment manufacturers, as generally they are pioneering the market in the context of customer experience. As a consequence of this complexity, the variety and risk of message and behavior inconsistency is growing as there is a lack of direct customer contact along specific journeys. Therefore, a systematic management of these new customer journeys needs to be implemented. Dealerships around the world develop new solutions. These solutions are analyzed by top consulting companies and best practices are defined. (McKinsey & Company, 2014)

The international benchmark solutions prove to be efficient in improving customer conversion, increasing the amount of traffic, and facilitating customer loyalty. Therefore, their application to the local market can result in certain benefits too. This paper studies how international best practices can be applied to the Perm automotive retail market and what are the possible benefits and difficulties of their application.

The general problem of the research is aligning benchmark customer experience management solutions with the current Russian market experience. Thus, the purpose of this research is to offer customer experience management solutions, which can be applied to the Perm automotive retail market. This purpose can be decomposed into several tasks, namely:

· To analyze the customer experience concept.

· To examine customer experience and the buying decision process in automotive retail.

· To analyze existing customer experience cases in automotive retail and to collect benchmark solutions.

· To analyze the automotive market and to research the current customer experience in Perm through interviewing consumers.

· To select benchmark solutions through interviewing local marketing experts and surveying consumers.

· To develop recommendations based on the research.

The object of the study is a number of customer experience management solutions. The subjects are the aspects of customer experience management solutions and their applicability in automotive retail. The first method to solve the problem of this study is case analysis. It implies to analyze existing automotive customer experience management cases. After selecting specific solutions, a semi-structured interview with local consumers is used to analyze the current customer experience and marketing experts are interviewed in order to select benchmarks. Then a customer survey is carried. This study shows how and why benchmarking works on the automotive retail market in Perm. Furthermore, applying the developed recommendations may help a particular dealership to gain competitive advantage, which is a valuable benefit of conducting the research. The study is structured in accordance with the outlined tasks.

Chapter 1. The customer experience concept, the decision buying process and benchmark solutions search

1.1 The customer experience concept in marketing

In order to understand what customer experience means first of all it is necessary to look at different definitions and descriptions of the term and to select the most commonly mentioned points about it. The definitions may be very different, describing the concepts from different points of view. The first definition describes the term in broad sense. Customer experience: “is the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier. This can include awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy. It can also be used to mean an individual experience over one transaction; the distinction is usually clear in context.” (Schwager, 2007)

The definition above does not say that customer experience is what the consumer perceives, which is very important to mention. “A customer experience is an interaction between an organization and a customer as perceived through a customer's conscious and subconscious mind. It is a blend of an organization's rational performance, the senses stimulated and the emotions evoked and intuitively measured against customer expectations across all moments of contact” (Beyond Philosophy, 2016) and “customer experience is the customer's perception of a brand determined (consciously and subconsciously) by every interaction they have with your organization”. (Smith+co, 2013)

The next example of a definition describes more emotional experience using examples. “Customer experience is the internal and subjective response customers have to any direct or indirect contact with a company”, “Customer experience encompasses every aspect of a company's offering--the quality of customer care, of course, but also advertising, packaging, product and service features, ease of use, and reliability”. (Schwager, 2007)

The most clear and detailed definition is a combination of the following two: “The customer experience originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction. This experience is strictly personal and implies the customer's involvement at different levels (rational, emotional, sensorial, physical, and spiritual)” (Gentile, Spiller, & Noci, 2007). A second and related definition is that “Customer Experience is the internal and subjective response customers have to any direct or indirect contact with a company. Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. (Schwager, 2007) Indirect contact most often involves unplanned encounters with representatives of a company's products, service or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews and so forth.” (Verhoef, et al., 2009)

These definitions allow us to see the main points that the term “customer experience” should contain. To begin with, there must be two sides: the company (organization, product, service) and the customer. Obviously, experience initially comes from interaction between these two sides, thus interaction should take place. Mostly every definition above diverges from one another when it comes to details due to various aspects this term is connected with (for example, some concentrate on the types of contacts, some tell more about the organization side, and some describe the sensations and feelings of a customer). This way the core meaning of the considered term can be formulated as: customer experience appears when there is contact between the organization and the customer. When defining customer experience, it is necessary to look which constructs are included in this term.

There a several major points in describing how customer experience (as an experience, not as a concept) can differ. First of all, it is necessary to define basic concepts and criteria upon which experience is evaluated. To begin with, it is the customers' ways of perception and the area of experience we consider. They are not common concepts and are introduced to clarify the main groups of criteria.

Ways of perception are about different channels through which a human gathers and processes information. The channels can be, for example, more emotional or more cognitive, but generally perception is a holistic process, and the customer's perception (of a brand) is exactly what defines the experience. It is important not to make a mistake here, because many companies judge whether the brand is successful taking in account only what they want their brand to be perceived as. Area of experience is simply the stage of a purchase, which can refer to more general stages, like having an initial consideration set, or more specific, like bumping into shop personnel when searching for a product. (Verhoef, et al., 2009)

Managing customer experience is very important nowadays. Nevertheless, not all companies understand the necessity of this. Companies can be large or small or work in different industries, but there are only a few areas where customer experience could not be managed. For example, if a company is producing military equipment specifically for the government, there is obviously no need to research customer experience.

Another thing important to mention is that a company must manage its customer experience depending on the importance of every touchpoint between the customer and the company and whether the organization can affect it. For example, a company that works for the government and doesn't have any other client is not interested in satisfying the customer service-wise, as it usually has a long term stable contract. On the other hand, a company selling apples should care about every touchpoint with the customer, otherwise the customer may choose to go to a competitor. Also if a company has a lot of customers, it doesn't necessarily mean that it has to manage the experience, because there is a big amount of companies with limited clients but much attention to every single touchpoint.

A touchpoint in marketing is an “influential action initiated by a communication, a human contact or a physical or sensory interaction”. (Uhlig, 2011) Generally touchpoints (also can be referred to as “contact” with a brand) are divided into two types: direct and indirect. Direct contact with a brand is usually initiated by the customer and indirect is more often a random occasion. An example is when a consumer hears word of mouth about a certain brand (indirect touchpoint) and comes to a store aiming to get more information (direct contact). Touchpoints are an essential part of customer experience, as the combination of them forms the experience. (Brigman, 2013). There are also many concepts described by Hank Brigman, which developed due to researching touchpoints, such as: touchpoint economy, form, infrastructure, path, standard.

The average amount of times the consumer “touches” a brand before purchasing it is 56. This gives an insight on how important touchpoints are as a concept in customer experience, especially taking in account how versatile these touchpoints can be. The field of the “touch” can be absolutely different, from streets to internet. Nowadays modern technology makes this field even broader. (Westenberg, 2010)

The next point important to mention is the differentiation of the term “customer experience” and “brand experience”. Brand experience is conceptually distinct from other brand constructs such as evaluative, affective, and associative constructs (brand attitudes, brand involvement, brand attachment, customer delight, and brand personality). On the contrary, as we see from the definitions above, all mentioned brand constructs are a part of customer experience, so one should not have an impression that customer experience and brand experience are connected with each other and that one contains the other in itself, actually they are just two different concepts.

User experience is another concept, which should not be perceived as customer experience. User experience is “a person's perceptions and responses that result from the use or anticipated use of a product, system or service”. (Boston Consulting Group, 2006). Unlike the previous concept, this one is actually a part of customer experience. Most often this term is used to describe whether a product like a mobile phone has a user-friendly design or not.

Often a CRM system is opposed to CEM. Generally, customer experience management is defined as the process of collecting and analyzing information about the customer in order to understand how clients perceive the company, facilitate customer engagement and thus increase quality of the product or service and loyalty. The importance of feedback from clients is emphasized in this method. Overall the main idea is to make customer experience work for the company.

It is difficult to describe specific models of customer experience management, due to several reasons. Firstly, every company is different. Even competitors with the same product can offer different customer experiences, thus different solutions should be applied and a versatile model cannot be developed. Another reason is that experience is a not a quantitative indicator and requires qualitative research. Results of such research can be interpreted differently and are also affected by external factors.

To analyze customer experience a company has to track it. There are various ways of doing this, and depending on the type of pattern which is analyzed, different methods are used. There are three types of patterns: past, present and potential, which represent recent, current and future events respectively.

Past patterns include recent experiences. Monitoring these patterns helps a company to improve transactional experience, track experience and goal trends, assess impact of new initiatives, identify emerging issues. Data must be gathered persistently, in short cycles and gathering must be focused on more specific information. Such methods as electronic surveys or an ongoing feedback system, which are automatically triggered by the completion of a transaction. Also volunteer feedback on forums may be used. The channels to collect customer feedback can be web-based, in-person or via a phone call.

Present patterns include current relationships with the client. By analyzing present patterns a company can identify future opportunities and have a more consistent and deeper view of the customer relationship state. Research on such topics should be conducted periodically, for example quarterly. Relationships and user experience studies, as well as user-group polling are necessary to use. More personal channels of collecting information are used. Web-based surveys preceded by preparation in person, direct contact in person or by phone, moderated user forums, focus groups are examples of such channels.

Potential patterns are specifically aimed at unveiling and testing future opportunities. Research of these patterns is purpose-driven. The methods of researching are driven by specific customer problems, thus they are very focused. It is important to note that analyzing potential patterns still involves incorporating existing knowledge of customer relationships. (Schwager, 2007)

An important issue in researching customer experience is focusing on the right information. Companies, which manage the experience they offer, often use incorrect means to measure and assess whether their customers are satisfied. Some organizations have emphasized touchpoints in order to control customer experience, thus they evaluate customer satisfaction by assessing the touchpoints they offer. Usually, the touchpoint gets better, but due to unclear for the company reasons this does not lead to revenue growth. The issue is that touchpoints do not give a broad view on the customer's real satisfaction level.

When a company analyses customer satisfaction, it can carry out a survey, and after constant improvement of the touchpoint the results will be high. This approach misses what happens to the customer after the touchpoint ends. For example, a client may be installing home internet with the help of the internet provider personnel. After the process of hardware installation finishes, the touchpoint ends too. At this moment the company may collect information about customer satisfaction, and generally it will good, because the personnel is trained. But when the client is left alone with all the equipment and software he does not understand, his satisfaction level may dramatically drop, due to his inability to deal with it. This way, though every touchpoint is organized the right way, the general satisfaction level of the customer will be low. The solution is to observe the customers' end-to-end journey.

McKinsey has consulted different companies on customer journeys. One of them is a leading pay-TV provider, which was of the best on the market at keeping the customer attrition rate low, but as the market became mature, the costs of keeping customers became higher too. The company did not have an opportunity to lower prices, so another way to decrease customer churn was suggested, which was better customer experience management. The problem was exactly as described before: the firm solely analyzed transactions, but ignored the overall impression for the client. This also led to problems with motivating employees to change something, because on paper the satisfaction level with every touchpoint was high. A customer journey for an onboarding client usually lasts near 3 months, includes 6 phone calls and web correspondence. While every interaction with the firm is likely to go well, the average overall satisfaction level is low, falling by 40% in key customer segments. This means that the issue is not caused by particular interactions, but by flaws in the onboarding process.

The onboarding customer journey is only one of the journeys which had to be improved. The executive team job is to identify the existing journeys and choose the ones, which need improvement. The case of the pay-TV firm shows, that a top-down approach to identifying the key journeys works effectively on the first stages. But it is usually good only when a company wants to fix current issues or any specific one. If an organization is in need of fundamental change concerning customer experience, then a different approach is required. To do this a company must make a detailed road map of every customer journey, which is possible only when a bottom-up approach is used. This approach implies conducting surveys both for customers and employees, comparing the firms performance on different journeys with the competitors and figuring out which journeys have a bigger impact on customer satisfaction by applying regression models. Another important thing to do is a simulation of potential outcomes of the companies initiatives.

Once the company gathers information about performance, it needs understand how was the performance level achieved and what held back further progress. This leads to more research: call monitoring, customer and employee focus groups. After this the company maps the most significant points of the journeys and describes the steps which a customer takes during the journey. At this stage the map allows to clearly see, where real customer experience differs from ideal customer experience. This step is important, because companies often make solutions with good intentions, but in reality ruin the experience. For example, a company may charge fees for phone-based technical support so that clients would use self-service. But eventually this leads to a lot of people who try to fix a technical problem themselves and brake a device, which absolutely ruins the customer experience. Generally, using the bottom-up approach can be very effective and help spot problems which otherwise would be much harder to see. For example, a telecom company had a 50% average dissatisfaction level after installation. Half of the consumers assessed their experience as excellent, but the other half described it as awful. The reason was that half of the customers had delays with installation, because the employees responsible for installation order had no motivation to do their job on a high level.

The next stage is to create a solution. Leaders should avoid desire to impose their own decision, but rather let the employees make them on their own. More often, even if the solution seems obvious from the outside, the real root of the problem is always in the inside, so the decision has to be made there. To make such an inside solution, an energy company, which was analyzing how people moved in new houses, gathered a meeting of employees and used one big wall to keep information on it. The meeting had great success and was a breakthrough, because no one before had an opportunity to analyze every little step of the customer journey. The company staff had an insight on how complex the process of house moving is, which dramatically changes how the firm deals with the customers.

To keep customer experience at a high level, researching and modifying customer journeys is not enough. The company has to implement changes in itself. This requires a journey-centric approach and a functional bottom-up structure. McKinsey's research show that this approach affects revenues, repeat purchase, customer churn, and word-of-mouth in a positive way (while focusing on touchpoints gives 50% less result). “Performance on journeys is 35 percent more predictive of customer satisfaction and 32 percent more predictive of customer churn than performance on individual touchpoints” (Grewal, 2011) Another big benefit from identifying and improving customer journeys is differentiation from competition. The company begins to understand what consumers want and can use this knowledge to improve service. (Schwager, 2007)

To give a more detailed description of how decisions in context of customer experience can be made specific examples are required. The retail industry is a comprehensible example with various marketing activity. In the current situation low prices and innovative products are not enough to have competitive advantage. Retailers have to focus on improving customers shopping experience. A lot of marketing research is conducted in retail and it covers every concept connected with customer experience. Existing long term research allows to define which drivers of the retail experience affect the decision making process more or less.

Pricing is a very important part of the marketing mix. If a company sets a price too high, then the product will not have enough value for the consumer. On the other hand, too cheap products may seem to be of bad quality. Besides the consumers perception, price is the only “P” which brings value to the company. Though it is obviously important to set prices correctly, stores often don't pay enough attention to this. The main reason is that pricing is the least researched and understood point of interaction with the customer.

Research made in 2009 suggests that the best pricing solution for a store is to set a high price for some categories of merchandise to gain from loyal customers and to set a low price for other categories to attract new customers. This is explained by the fact, that different clients have different market baskets, thus one product can seem cheap for one client, but expensive for the other. For example, this effect can take place when the appearance of luxury brands in a usual retail store affects the pricing of the store. Also a popular pricing strategy which correlates with the previous when is bringing in a loss leader. A loss leader is a product which is unusually cheap and can even lead to negative profits for the category, but it attracts enough customers, who by other products to compensate the loss.

One of the main problems of researching pricing is that it is impossible to separate the effect of pricing from other factors like promotional activity. Also it is impossible to clearly outline how a price change of one product affects the other prices and vice versa. A potential solution is to focus on a broader object: a product category, though most of research done this way is mostly aimed at grocery type stores. Also a big issue is that marketers know relatively little about the possible outcomes of introducing competition to the equation. To clarify, there is sufficient knowledge about the effect of changing the price of product A on the sales of a complementary product B. If the price of product A drops, then product B sales will increase, but it does not work the other way around. On the other hand, if the price of product A is changed, it is not possible to be sure how the price of product B will change and whether this works the same way if the price of product B is changed first.

A constant problem for retailers is to get the right amount of merchandise at the right time. Usually this problem is perceived as a logistics question, but in real life the experience of a customer can be ruined if there a store cannot offer what the customer wants. Using product assortment planning a company can improve the customer experience, by changing the touchpoint, which is real life shopping. A clear example of effective customer experience management in this context is when the products are laid out with an easy to understand logic, so the customer will not get frustrated trying to find what he needs. A whole new experience can be offered with online shopping. Still both online and real life locations require to have the product in stock, so proper management in this sphere is important to maintain a good customer experience. (Grewal, 2011)

Proper understanding of the customer experience concept allows to make better analysis of the current market state. Further in this research a customer experience model will be introduced and this concept will be applied to automotive retail.

1.2 Customer experience and the buying decision process in automotive retail

The automotive retail industry in the whole word is undergoing substantial change, according to McKinsey's research. There are several reasons for that. First of all, digitization has a heavy impact on the customers behavior, alter how they interact with the company, and it is revolutionizing the sales and services processes. Therefore, enhanced touchpoint management is required. As the automotive technology develops, cars become more complex, so the dealers have to achieve high levels selling and servicing knowledge. Though the current dealer business model is becoming ineffective, customers still rely on them due to the need of test driving, service and other offline necessities. In a changing environment it is important to act first, since it can give competitive edge. Otherwise, competitors occupy the best location, attract more awareness online and gain better customer insights faster.

McKinsey have carried out a worldwide survey of automotive retail customers. According to it, over 80percent of new-car and almost 100 percent of used-car buyers now start shopping on the web. Thus, the customer journey begins online. Therefore, dealerships are losing their role of the primary information source. In addition, they have less power over the information shared, so the ability to influence a customer is becoming lower too. Almost 90 percent of young customers (from 18 to 34 years old) expect a decent online experience. Consequently, customers visit the dealership significantly less before making a purchase. The dealer often has only one chance to impress the customer. This research has shown that dealerships must become competitive online to at least attract a customer and get the only chance to retain him.

There are three major trends that reshape the current automotive dealership industry. The first is that customer behavior is changing. The modern customer is expecting a new sales process, such as the unique experience like in branded electronics stores or smart product suggestions based on customer relationship data. Customers make their decisions after a big set of touchpoints, which is individual for every customer, nevertheless the McKinsey research shows that there is certainly significant influence of the online world. Therefore, dealers need to pilot new concepts of bringing the right experience to the customer.

The second major trend is connected with the customer's expectations when he comes to the dealership center. The customer comes to the dealer with certain questions, so deep technical and functional knowledge of the car is a key requirement. This is gaining even greater importance now, since technology is developing and being implemented into most cars. For example the dealer has to know what the difference between 2 infotainment systems and explain it to the customer. This leads dealers to creating new formats of dealership centers. The main point is to give the customer more interaction with the brand like the BMW and Mercedes stores do.

The third trend is formed by the industry. Developed markets are becoming very saturated, so dealers have to compete by improving the service they provide, which includes close tracking of performance, implementation of new processes and standards. At the same time, original equipment manufacturers are concerned about developing a corporate identity, which leads to additional conditions. These include a one-brand policy, so that the dealer helps to create a holistic view of the brand it presents. Another important issue is that original equipment manufacturers demand the dealers to separate their new and used car businesses. Also due to the increase in original equipment manufacturer and dealership competition combined with the demand shift to smaller less profitable car models, dealer margins start to fall, bringing less profit to them. As the research shows, despite emerging markets having higher profitability, margins are still falling like in the Chinese market, where in a five-year period the number of dealerships has almost doubled, but margins are still low. (McKinsey & Company, 2014)

Deloitte too have defined three major trends in the automotive retail industry. Their research and the conclusions based upon it strongly support the information presented by McKinsey & Company. First of all, the modern consumer is strongly influenced by the opportunities appearing due to digitalization. Customers do not visit traditional showrooms as much as they used to in previous years, as they can access any relevant information online. Then, the market is adapting to these changes, and new retail formats appear. These new formats are appealing to the customer, thus dealerships will have to reshape their current sales channels, since the consumers will get used to an upgraded superior experience. Finally, dealerships need to learn to take advantage of big-data. Considerable amount of information can be collected through tracking a website visitor's behavior. Furthermore, by implement efficient customer relationship management systems and processes, the dealer can expand his database to a significant level. Eventually this provides an opportunity to realign and improve customer experience in accordance with the customer needs. (Deloitte, 2016)

The modern consumer is getting used to an omni-channel experience. For instance, when a customer wants to buy a certain product, he can open an app, find what he wants, see whether it is in stock and only then visit the store. Now consumers will expect such experience in automotive retail too. Research shows that in retail generally, if a customer uses an electronic device in store as part of the shopping process, the chance that he will make a purchase is higher. (Deloitte, 2015) Though avoiding physical formats in automotive retail currently is not a viable option, customers already spend about 75 percent of their shopping time online. (Deloitte, 2014) It is crucial to create a seamless customer experience, connecting all channels. This is a strategy which allows a dealer to take advantage of digitalization trends and to satisfy customer expectations. (Lippincott, 2013)

Based on the research results McKinsey has defined what building blocks will positively affect the customer journey transformation. The first building block is how the dealer will build the foundation of excellence. By improving performance on dimensions (such as area coverage, profitability, customer satisfaction, etc.) that are below average, the dealer can increase profitability of the entire network. An important point in building foundation is to change the dealers mindset and capabilities. The first step is to enhance performance management by using clear and understandable metrics, implementing new quality standards in order to decrease disparity between relevant dimensions. Here it is crucial to find the drivers which stand behind performance metrics. Understanding these drivers will give the opportunity to see the root causes of problems, define benchmarks and develop consistent counteractions.

The next step after dealing with the performance spread is to improve the customer decision journey and to present upgraded or entirely new sales formats. This is the second building block of creating an innovative sales environment. A good start to do this is considering to implement modern technology in the sales process. Digital solutions allow dealers to enhance performance tracking and to handle existing customer experience data better, as well as they ease gathering new data in a structured and holistic way. This includes both physical formats and virtual too. For instance, Audi has supported its dealers online activity by introducing tools developed to be a standard for any specific dealer (like search engine optimization instructions algorithms, key metrics, etc.). Also they help to attract web traffic by advertising through banners, paid search and other channels. Physical solutions are executed by companies like Ford or BMW. They equip their dealership sales personnel with tablets. This provides a significant boost in the dealers expertise and improves efficiency as it is a convenient way of conducting operational processes.

A new interesting sales format is emerging, which is an online store. Mercedes-Benz tries to develop an online platform to sell cars, and though they had some pilot projects, unavoidable difficulties still remain. The main challenge is that customers still need a test drive before buying a car. Thus, to exclude dealerships form the sales journey is not viable. Nevertheless, online platforms prove to be an effective instrument to configure a car. Customers can see the expected price and other details about the car. Implementing online options to the dealers customer experience will be a significant source of competitive advantage and qualified leads in the nearest future.

The third building block resembles benchmarking in many ways. This block implies to make changes. First, the dealer has to lay groundwork. This basically means to do research, identify current performance and select specific improvements that are to be made. Then, a pilot version of the new project is to be tested. This allows to understand whether the new solutions are really applicable and what changes can be made before the complete rollout. Finally, new processes, standards or any other intended innovations must be implemented into the dealerships work. After that close tracking of performance is necessary. Benchmarking is a vital tool here, as it allows to compare the company's current and previous results, and it also shows its competitive position. (McKinsey & Company, 2014)

When the customer buys something, his decision to do it is usually not spontaneous. There is a process consisting of stages before and after the decision. The sequence of these stages is the buying decision process. In his basic model, Phillip Kotler outlined five stages:

1. Problem recognition: the buyer understands that he has a need through internal or external factors.

2. Information search: the buyer is interested in finding out more information, so he is looking for it in various sources.

3. Evaluation of alternatives: the buyer evaluates and compares attributes of various options and develops preferences.

4. Purchase decision: the buyer purchases the preferred option.

5. Post-purchase behavior: the buyer experiences satisfaction or dissatisfaction after using the product. (Kotler, 2002)

McKinsey compares the "customer decision journey" with the sales funnel, which isn't exactly what is presented in the 5 stage model. Nevertheless, the 5 stage model and the McKinsey models are comparable and coincide. The McKinsey model consists of four stages:

1. Initial consideration set: after the need to make a purchase is triggered, the customer has a set of brands, which he considers to buy.

2. Active evaluation: during this stage the customer gathers and assesses information, and the initial consideration set can be altered with brands added or subtracted.

3. Moment of purchase: this is the stage when the customer chooses a particular brand and makes the purchase.

4. Postpurchase experience: the customer gains experience of dealing with the chosen brand, and depending on the quality of the experience, loyalty can be created. In this case, the customer journey becomes circular, and the customer chooses the brand again (loyalty loop). (McKinsey & Company, 2014)

The models proposed by Kotler and McKinsey coincide, but attribute certain touchpoints to different purchasing stages. According to the descriptions above, the image below shows how the attribution differs.

Figure 1. Model comparison.

In this research the McKinsey model is considered, as it defines the stages clearer and is coherent with the automotive purchasing decision process. (Dealer.com, 2012)

According to Deloitte family need is the number one reason why people by cars. This means that consumers purchase cars when it will be useful for their family, for example if a person needs to transport his family or his children need a vehicle. In cases when the customer does a repurchase of a car the need for more space or a larger vehicle and new technology available are the top reasons. Other triggers in both cases include the ability to afford a new car, improved fuel economy and improved reliability.

The information search stage shows that price is one of the most important factors in making the purchase decision, as consumers believe, that the supply can offer a vehicle, which will satisfy their specific and unique needs. The other factors, besides the price, which are significant in choosing a car, do not directly depend on the dealership. Ranged by importance, these are:

· Vehicle features.

· Type of engine.

· Type of vehicle.

· Model of vehicle

· Brand of vehicle.

· Styling.

Deloitte's customer survey showed that personal recommendations are the most influential source of information worldwide. Contrary, social media is the least reliable source for the consumers, though dealerships tend to emphasize social media activity. Overall, at least half of the customers spend above ten hours to research different car brand and model options. As they use the dealerships website to do this, it is important to develop a quality website, which is also proved by the fact, that websites are one of the key factors in the buying process decision worldwide.

One the most important reasons why consumers visit dealerships at the evaluation stage is to verify their findings from other information sources. Some actually still depend on the dealerships expertise, despite that generally customers research options beforehand. Also the need to touch and feel the vehicle in real life is an important point in the decision process. More than three out of four customers use test drives to evaluate a car. These are the customers which consider more than one model. On the other hand, buyers who consider only one model do not take test drives at all, according to the survey. Though the customer spends a significant amount of time to research options, he desires to spend as less as possible time visiting a dealership. Despite this, consumers still have a positive impression about their experience after visiting a dealership.

As research shows, the opinion of people surrounding the buyer is the key factor in making a decision. This point extends to the postpurchase stage. A consumer with positive experience endorses the dealership. Overall, in order to impress the customer, as the dealership has little time and little amount of physical contacts with the customer, the efficiency must be as high as possible. (Deloitte, 2015) These points are proved by Digital Airstrike Study. They describe an identical customer decision journey and emphasize the importance of word-of-mouth.

Deloitte's survey also considered the differences between generation X (1965 - 1976) and Y (1977 - 1994). The options that these generations perceive significant in choosing their first car are similar. When choosing the second car, generation Y showed more interest in technology, but generation Y was more interested in more space in the vehicle. The older generation prefers to visit the dealership more often and thinks that online information is less reliable, compared to the younger generation Y. These trends seem obvious, taking in account the higher involvement of the younger generation in the digital world. Generally, customer preferences did not depend on gender, except that males spend more time to research possible options and buy cars as a statement of success more often. (AddThis, 2014)

The buying decision process model and the knowledge of the current automotive customer experience in Perm will allow to do thorough analysis in further research. It also allows segmenting results in a clear and holistic manner.

1.3 Case analysis and benchmark solutions search

This study requires to analyze existing automotive customer experience management cases in order to find existing successful solutions, which can be copied and applied to the local market. As research has shown, customers are strongly influenced by digital channels. The typical customer visits a dealership before purchase 1,5 times or even less. The customer journey mostly consists of online touchpoints. Consumers prefer to examine various options through independent web resources, and they tend to rely on their expertise. Statistics prove this fact, as 75 percent of people buy the car that they have already chosen after investigating online data. Evidently, web presence is a crucial factor to generate leads. This is supported by the fact, that 68 percent of customers find dealers through online search. (Deloitte, 2016)

There are numerous significant benefits of creating an online platform for a dealership. A website will allow to attract attention of prospects to the dealership's brand, which will raise brand awareness. Creating an interactive website with features desired by the customer, such as clearly arranged data about the car (fuel consumption, performance, convenience) and immediate responses to any questions (online consulting) will drastically increases engagement. Another significant benefit, is that advertising online is still significantly cheaper than tradition channels. The investments required to develop and maintain a credible web platform will be overcompensated by the vast amount of generated leads. It is important to note, that only top-tier car brands have truly interactive web pages, which creates an outstanding opportunity to gain competitive advantage on the local market. A specific solution is introduced by Fiat. They have created an online showroom. Basically this is traditional online consulting upgraded with live video. The customer requests a session, and the manager initializes it through the website. During this session, customers can ask question and guide the manager with a camera through the car, while the manager gives detailed information on the vehicle. This approach has allowed Fiat to achieve the following results: 32 percent conversion rate, 90 percent customer satisfaction and a 115 percent increase in qualified leads in pre-sale. (Whisbi, 2016)

The next benchmark solution is strongly connected with the previous point, as it is focused on transferring the online experience to a physical platform. Seamless transition between virtual and real channels is a key point for a dealership. (Ernst & Young, 2015) If the person comes to a store, the manager should know in advance, what is the potential customer interested in. For instance, this can be done through offering a customer a visit to the office with the help of a pop-up tab in his browsing page. After he chooses what time and day is convenient for him, the manager will have time to prepare for the visit by observing the customers activity on the website. Due to such an omni-channel approach, when the face-to-face touchpoint takes place, the customer will begin perceiving his sales journey as holistic. To create this perception, the dealer must have a big and structured customer relationship management database. This is a successive solution on its own, but it requires correct integration and application in appropriate context. In the future this information will allow to conduct market research and detect the customer needs. Understanding them is a significant part of improving customer satisfaction, which eventually leads to acquiring loyal customers. (Arthur D. Little, 2013)

Another means of increasing customer satisfaction by providing better service is a test drive. Although the local market offers only dealership-based options for averagely priced brands, an improved format of test drives has emerged. To facilitate seamless interaction, the dealer can offer a customer to make an order, so the manager will deliver the car straight to the clients doorsteps or even to his office at lunch time. This approach to test driving saves the customer's time and effort to get to a distant dealership center. (Singh, 2014) This solution is especially important as 88 percent of customers want to test drive a car before purchasing. (Deloitte, 2016) It is also coherent with another trend: the average number of dealership visits before this purchase is 1,5. Very often the dealer has only one chance to convert the customer, when he does not have presence online. (Deloitte, 2014) It is important to note that this best practice supports the consistent omni-channel approach described earlier by integrating online and physical formats, creating a seamless transaction between different types of touchpoints. Consistency is a significant point in delivering superior customer experience, thus implementing this solution is a considerable step to gaining competitive advantage. (Lippincott, 2013)

Another best practice is based upon physical formats, which will continue the omni-channel customer journey is to open an office in the center of the city. This solves a problem of the local market - the dealerships are situated in a distant location. Clearly, the benefits are more spare time and higher convenience for the customer. (Arthur D. Little, 2013) An outstanding example is Audi's showroom. They created a heavily digitalized room to present any highly detailed information. (Audi, 2016) Though implementing such a format in the local market can be inefficient, since required investments are very high, there are still some specific tools to service the customer, which can be applied in a local dealership. The managers can be given tablets to have immediate access to any information that the client would like to know. This satisfies the customers expectation of the dealers in-depth expertise. Another unique solution to create an opportunity to present cars in a showroom without the physical presence of the vehicles is to set up large displays with interactive control. The customer can choose which part of the car he would like to study in detail and will be provided with a full scale image. Research shows that creating new formats is an important step forward in order to keep the customers excited, and the city center retail format fully copes with this task. (Deloitte, 2014) Also, as this format is not yet present on the local market, the niche is free, therefore it is reasonable to expect, that significant traffic can be attracted by opening a city center office.

An important point in staying consistent with delivering omni-channel customer experience is to provide quality after-sales service, although most local dealerships already provide such service. The necessity of this is outlined by many professional consulting companies. Deloitte's research showed that continued engagement is a key part of making the customer lifecycle long. (Deloitte, 2016) Also the reputation for delivering after-sales service (price and quality) influences the customer's decision whether to make a purchase or not. (Deloitte, 2015) Lippincott describe that creating a special experience of ownership is crucial to improve brand perception. (Lippincott, 2013) Ernst & Young point out that after-sales service affects customer loyalty and retention, which are significant drivers of profits. They also stress the necessity to rethink your value proposition if the after-sales market is growing and becomes more competitive and saturated. (Ernst & Young, 2015) Besides, 71 percent of Generation Y customers consider the availability of free routine maintenance an important factor while making the purchase decision. This benchmark is strongly delimitated by the technical ability of a dealer to carry out such service, thus is it will not be developed further in the research.


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