From Wreckage to Revival

In the automotive industry, transformation in customer relationships is creating an imperative for change in CRM strategies and capabilities. The shift is from distant relationships mediated almost exclusively by the dealership to intimate relationships achieved through multiple channels and constant interaction.

The challenges are considerable. But so are the opportunities.

Today's B2C customer is hyper-informed and hyper-influential. In the auto industry, however, the customer makes a purchase only once every five or 10 years, with maybe a handful of buys in a lifetime. Thus, while the control wielded by the auto OEM is less than ever, the stakes are higher, due to diminishing opportunities for sales transactions.

The reason customers have achieved such empowerment is that they have become hyper-connected. The imperative for B2C industries has been—and continues to be—enabling communications and transactions across store, voice, portal, mobile, and social. Those industries have developed insight as the basis for personalized treatment.

Within automotive, hyper-connectivity creates an additional challenge: fulfilling customers' expectations that their vehicles will become extensions of their digitally connected lifestyles. In other words, the vehicle is no longer merely a transportation platform but also a commerce platform.

Enabling the connected vehicle raises technical challenges, but also commercial ones, in getting customers to cover the attendant costs. Technical solutions and commercial models are, however, available for overcoming these challenges. As they are implemented, the OEM (and/or its partners) can achieve control over the components of the vehicle, obtaining insight for product development and extending new service offerings to customers.

Omni-Channel Service

While in-vehicle customer interaction may be unique to automotive, omni-channel, knowledge-based interaction is not. CRM leaders in all industries are developing strategies and building capabilities to reach their customers across the range of available channels for communications and transactions.

In the automotive industry, however, success at commanding attention and securing investment from the organization is a new development. The newfound prominence of customer service (evidenced, for example, by the appointment within OEMs of customer experience executives in recent years) derives from recognition within the industry that a post-purchase, ongoing relationship with the customer is vital to satisfaction with the vehicle and the bond with the brand. It is a means not only for creating repeat buyers, but also for converting owners into advocates.

The challenge is that legacy capabilities are often short of where they need to be, not the least reason being that the relationship with the customer was long held almost exclusively by the dealer. This model is evolving, and the requisite capabilities are getting built, in no small part because of the alliances being forged between customer service and marketing.

Customer-Insight Marketing

In recent years, the automotive industry has begun to move from limited, infrequent transactions with consumers to ongoing engagement across an expanding range of channels.

As documented in IBM's Global CMO Study (October 2011), the marketing leaders within the automotive industry, though responding to these changes, feel unprepared. They are struggling with the data explosion, social media, channel proliferation, and shifting demographics.

The starting point is to devise a strategy based upon the three imperatives identified in the CMO Study: deliver value to empowered customers, foster lasting connections, and capture results from programs, campaigns, and activities. The unifying theme is the need to develop actionable customer insight gathered from many sources to enable personalized offers and services.

The automotive industry is emerging as a leader in strategies and capabilities for understanding and serving customers. The transformation demonstrates that through commitment to customer connectivity, service, and insight, organizations can attain revival, even from a wreckage of a marketplace.

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J. David Lashar is a partner in IBM’s consulting organization. He assists organizations in defining and executing CRM business strategies. He can be reached at dlashar@us.ibm.com.

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