Inventing the Future with Our Customers: The Transformation of Automotive Retailing

Arthur Clarke is also credited with this notion: If a scientist can imagine a future technology, it will happen. What is technologically imaginable in automotive retailing has, in fact, become technologically achievable and has, in fact, begun to resemble magic.

Automotive retailing has undergone more change in the past five years than in the previous one hundred. It began with consumers who, armed with new found knowledge about the vehicle they were seeking, turned the process of buying a car upside down. Today's automotive consumer is increasingly demanding, better informed, and two out of every three consumers starts the car buying process on the Web. In fact, the average consumer now visits more than half a dozen Web sites during the buying process, gathering information and impressions at each stop. They are truly informed consumers.

A decade ago, the process was simple. The consumer walked into a dealership, the dealership held most of the information, the consumer would be told the Manufacturer's Suggested Retail Price, and the consumer would begin negotiating down with the sales person's price.

Things have changed. Today, the consumer interacts with the dealership on multiple fronts - the telephone, mail, e-mail, Web Site, kiosk, Telematics devices, and, yes, the new car showroom. The consumer has already done the homework before she (I say she, because almost two-thirds of all car buying decisions are made by women) interacts with the retailer. She knows the wholesale price, vehicle comparisons, option packages, safety record, and national averages for the make and model she is interested in. Now, the tables are turned. The sales person must negotiate up with the consumer, based on their frequently superior knowledge of the product, dealer invoice price, holdbacks, and loads of information recently gleaned from the previously mentioned sources. Simply speaking, it has become much more of a true retailing model, which is why we use the term automobile retailers at Reynolds & Reynolds. While the physical business is a dealership, what now happens in the business is retailing.

As we watched this market change in the last decade, we were reminded of an important lesson in customer relationships: It's not enough to understand your customer; what's required is an understanding of your customer's customer, the forces shaping their behavior, and the forces shaping the world in which both meet. It doesn't matter whether you are selling technology or sheet metal stamping machines. Knowing your customer is important; knowing your customers' customer is more important.

Inventing the future of automotive retailing with our customers is about transforming automotive retailing into a connected model - a seamless consumer experience - bringing together people, processes, and technology that change the business model for automotive retailers and the customer experience for consumers.

A glimpse of the future we are inventing with our customers begins with an electronic service reminder from the automotive retailer - generated automatically and sent anytime 24/7 - to a customer needing a 60,000 mile service. The consumer replies to the e-reminder one evening - at her convenience - using an online service scheduler, selecting the day and time that works best for her and selecting her preferred service technician.

The next morning, the service manager sees the electronic reply and the scheduled service appointment. With one click of the enter key, the service manager can check to verify that parts needed for the service are in inventory and available for this customer's appointment; if the parts were not available and needed to be ordered prior to the customer arriving for service, then the technology would have alerted him of that situation, too, and automatically generated an electronic order for the parts.

With another key stroke, the service manager pulls up a complete record of service and parts for the customer's vehicle and notices that the tires are reaching their maximum mileage life. He makes a note to discuss new tires with the customer when the car is dropped off for service. He even uses the technology to generate a percent off coupon tied to the specific vehicle and the recommended model of tires.

Next, the service manger checks another screen that displays the entire value history of this customer's relationship with the entire car dealership and sees that she and her family have been long-time customers. This prepares the service manager and his colleagues for the opportunity to treat one of their best customers with something a little extra - in the same way that retailers such as Ritz Carlton and Nordstrom respond to their best customers.

With only a few key strokes, the service manager has gained the knowledge and information that will make the consumer's trip to the service department go more smoothly and hassle free - and go further to meeting the consumer's total automotive needs. But the information doesn't stay in the service department.

Once the consumer has scheduled service, an e-mail alert is sent automatically to the sales manager's Personal Digital Assistant, alerting her that one of her best customers has made a service appointment. The sales manager checks the contacts between the retailer and the consumer - stored in a contact management data base. She reviews this customer's purchase history and vehicle interest, and takes the opportunity to follow-up on a previous desire expressed by the consumer to keep her eyes open for a convertible, if the model and pricing worked.

The sales manager greets the consumer on the morning of the service appointment, they discuss new vehicles, and the consumer takes advantage of viewing the entire new car inventory on the dealership's Web site that evening, constantly updated in real time. The consumer sees a model she likes and asks for a variety of options from lease to purchase. With the click of the mouse, different options are shown and tied directly to the car in which she has an interest.

The next day, the customer picks up the keys to her new convertible, retains her pervious car - with new tires - for her daughter to take to college in the fall, and purchases a "frequent user" card which encourages both of them to return for service.

In this ideal scenario, the unique - the "magical" - combination of technology, processes, and people delivers to the consumer the premium service she deserves, the kind of service and personal attention that can help make her a repeat customer for life. At the same time, the automotive retailer has strengthened its relationship with a repeat customer, created value for the consumer and for the dealership, and all the while has brought the consumer one step closer to being a customer for life.

Far fetched? No. Ideal? Maybe. But the technology is in place to do just that and there are automotive retailers operating in just this manner.