This is the first article within our bi-weekly series entitled “Digital Customer Experience in the Automobile Industry“.
It doesn’t lack public proclamation: nowadays, almost every statement from top managers in the automotive industry contains the buzz word “digitalization”. Disrupted by changing customer expectations, cutting edge technologies and new competitors, the digitalization of the customer relationship and customer experience (DCX, short for “Digital Customer Experience”) is being declared as a game-changer in the automotive industry.
Taking a closer look at current practices within the automotive industry, it becomes evident that the commitment of top managers to drive digitalization projects caused massive pressure to act, resulting in countless ‘digitalization lighthouse projects’ across original equipment manufacturers (OEMs).
These ‘lighthouse projects’ are ones which aim to have a ‘signaling’ effect for numerous follow-up projects, which take inspiration and guidance from the ‘lighthouse’.
Some examples of such projects are Daimler’s “Mercedes me”, Audi’s digital Showroom or BMW’s product genius, depicted below.
However, the question remains whether these ‘lighthouses’ lead to a valuable and sustainable progress in the area of digitalization?
Isolated lighthouses: How to burn money
According to the findings of our joint research with the MIT, only those companies that approach, understand and implement digitalization as a holistic transformation program will be successful in the long-term.
On one hand, investments in lighthouse projects in order to shape the digital customer experience do pay off and result in increased revenue (+6% compared to competitors). Nevertheless, on the other hand, it is equally important to realign the organization holistically for the digital transformation.
Neglecting this important aspect and investing in isolated showcase initiatives will have a measurable, negative effect on profitability in the long term (-11% compared to competitors). Money is being burnt.
Lighthouses + organizational change = profitable growth
The structure, culture and infrastructure of today’s organizations evolved under the premise to deliver the best performance in the pre-digital era. However, the digital era brings along its own organizational requirements, which are often not supported by the existing organizational foundation.
The following example illustrates this dilemma: the sales structure of many automotive companies is traditionally shaped by a two-dimensional fragmentation:
- There are generally clear breaks in the sales process (OEM, importer, dealer)
- Silo structures for marketing, sales and service exist within the different sales stages
This organizational set-up is frequently mirrored by fragmented IT- and data-landscapes. Of course, it is difficult or even impossible to implement a seamless digital customer experience given such an organizational and technical setting.
The lever for sustainable, value-adding digitalization lies in the following: companies that combine investments in showcase digitalization projects with fundamental organizational change report higher revenues (+9%) and higher profitability (+26%) than the competition.
From theory to the real world: relevant fields of action
Our current projects in the automotive industry reveal that managers are on the right track, interpreting digitalization more and more as a holistic task which is in line with our joint research results with the MIT. Accordingly, transformation programs combining investments in digital customer channels with investments in organizational change arise more frequently.
Drawing on our project experience, we will discuss elements of holistic DCX-programs while simultaneously outlining typical challenges in the automotive industry in our upcoming blog series. Amongst others we will talk about the role of digital customer portals, innovative data management concepts, internal analytics service providers and digital retail.