Why Automotive OEMs Are at Risk—and 5 Ways to Save Them

Engi­neer­ing advances with­in the auto­mo­tive indus­try con­sis­tent­ly deliv­er more tech­no­log­i­cal­ly advanced vehi­cles on a year­ly cycle. How­ev­er, OEMs are fail­ing to dri­ve dig­i­tal trans­for­ma­tion from the top down and to active­ly change how they define a cus­tomer-cen­tric approach. Adop­tion and imple­men­ta­tion of tech­nolo­gies sur­round­ing mar­ket­ing and tar­get­ed adver­tis­ing are prime exam­ples of this hes­i­ta­tion and how the mis­align­ment it cre­ates between the brand and the cus­tomer con­tributes to an envi­ron­ment where lega­cy car brands are fac­ing threats from new competitors.

While large OEM organ­i­sa­tions are hav­ing exec­u­tive-lev­el guid­ed tours in the Sil­i­con Val­ley, talk­ing about inno­va­tion and strate­gies with LinkedIn, Face­book, and oth­ers, the areas of the organ­i­sa­tion respon­si­ble for mak­ing this inno­va­tion and exe­cut­ing these strate­gies are under-resourced, siloed, and not empow­ered to affect true change. Invest­ments are mis­guid­ed, deci­sions are ten­u­ous at best, inter­nal pol­i­tics pre­vents growth, and deal­er­ships are left in the dark when it comes to infor­ma­tion about the peo­ple walk­ing through their doors. Strat­e­gy with­out exe­cu­tion is hallucination!

The cur­rent auto­mo­tive indus­try is bro­ken, allow­ing com­pa­nies like Tes­la to rede­fine what it means to be cus­tomer-cen­tric and slow­ly erode the lega­cy brands’ mar­ket share. As Tesla’s approach proves, the com­pa­ny has the abil­i­ty to “pretail”—that is, sell a car even before it is pro­duced. Tes­la Mod­el 3, for exam­ple, has turned the auto-sell­ing con­cept upside down, with 400.000 pre­orders even before a sin­gle car has been pro­duced. No oth­er OEM can pull this off, even though every one of them would like to. This kind of suc­cess requires strong brand­ing, engag­ing with cus­tomers way before they are plan­ning to buy a car, and using dig­i­tal chan­nels to dri­ve ear­ly and con­tin­u­ous engagement.

Here are five ways to save the strug­gling auto­mo­tive OEMs.

1. Estab­lish strong leadership.

As com­pa­nies mature and expand, the demo­c­ra­t­ic organ­i­sa­tion­al struc­ture they use to man­age their busi­ness can cre­ate road­blocks for true dig­i­tal trans­for­ma­tion. Chang­ing from being prod­uct-dri­ven to cus­tomer-cen­tric requires strong lead­er­ship to remove organ­i­sa­tion­al road­blocks and deliv­er con­fi­dence for teams to test and try out new dig­i­tal tech­nolo­gies, and to some­times fail while fig­ur­ing out what works and what doesn’t. Hav­ing a best-of-breed rep­u­ta­tion is no longer suf­fi­cient for today’s con­sumer. Lead­er­ship needs to pri­ori­tise a holis­tic approach across the organ­i­sa­tion with­in a sin­gle plat­form if the com­pa­ny is to succeed.

With­out a strong leader, polit­i­cal issues with­in the organ­i­sa­tion can eas­i­ly erode a team’s abil­i­ty to suc­ceed. For exam­ple, in busi­ness­es expe­ri­enc­ing an organ­i­sa­tion-wide shift toward dig­i­tal, con­flicts can arise between the mar­ket­ing team and IT. As the mar­ket­ing team looks to inte­grate enter­prise busi­ness infor­ma­tion into their mar­ket­ing algo­rithms, IT will feel respon­si­ble for the bud­gets, use, and main­te­nance of that soft­ware and processes.

Polit­i­cal rifts between depart­ments can sink viable dig­i­tal mar­ket­ing trans­for­ma­tions, so it is impor­tant to iden­ti­fy poten­tial pit­falls with­in your organ­i­sa­tion and act to remove them.

2. Empow­er mar­ket­ing teams to respond quick­ly to cus­tomer needs.

A dig­i­tal trans­for­ma­tion is not a project, nor is it siloed in one part of the organ­i­sa­tion. It is not a fixed-cost imple­men­ta­tion with a one-time spend. It is not the dig­i­tal­i­sa­tion of the cars. It is a shift in mind­set for the entire busi­ness, and requires align­ment with­in all areas of the organ­i­sa­tion. With­out exec­u­tive buy-in and strong sup­port for the long haul, indi­vid­ual depart­ments may cling to his­toric ways of doing things, erod­ing the program’s effectiveness.

A dig­i­tal­ly dri­ven organ­i­sa­tion does not evolve over long cycles. The change hap­pens quick­ly as a result of respon­sive action to the needs of the mar­ket. To bet­ter under­stand the under­ly­ing cur­rents in their mar­ket, busi­ness­es need to try new things and be will­ing to fail. Deci­sions can’t be held at the exec­u­tive lev­el, nor dis­trib­uted in silos; rather, employ­ees need to be trust­ed to inter­pret results and make changes to the strat­e­gy based on the infor­ma­tion they’re receiv­ing, with­out wait­ing for C‑level sign-off.

3. Invest in tools for cre­at­ing per­son­alised cus­tomer expe­ri­ences.

Although the advances in auto­mo­tive tech­nol­o­gy are with­out ques­tion, OEM invest­ments tend to be engi­neer­ing- rather than cus­tomer-cen­tric. This blinds the organ­i­sa­tion to what the mar­ket and the cus­tomer demand and expect. Hav­ing reli­able prod­ucts or a great rep­u­ta­tion is not a dif­fer­en­tia­tor any­more; today’s auto­mo­tive con­sumer expects the same per­son­alised, cus­tomer-focused expe­ri­ence they have when pur­chas­ing oth­er goods or services.

Auto­mo­tive brands need to invest in dig­i­tal mar­ket­ing if they are going to stay cur­rent in the indus­try of the future. Com­mer­cial web­sites have already begun to fill the gap, pro­vid­ing more per­son­alised search and dis­cov­ery ser­vices for car buy­ers. Emerg­ing auto-com­pa­nies are also fill­ing the gap, redefin­ing the con­sumer expe­ri­ence and lever­ag­ing improved, cus­tomer-focused adver­tis­ing and sales to find mar­ket share.

4. Pro­vide deal­er­ships with cus­tomer data and the knowl­edge to use it.

Many deal­ers are unable to deliv­er the expe­ri­ence that the brand adver­tis­es and is often built on. They lack the dig­i­tal infor­ma­tion that the brand cap­tures through­out the pur­chas­ing and after-sales phas­es. OEMs need to take an active lead in the cap­ture, analy­sis, and com­mu­ni­ca­tion of cus­tomer infor­ma­tion to deal­ers if they are ever to pro­vide a per­son­alised expe­ri­ence on par with an Apple Store.

OEMs also need to pro­vide the nec­es­sary infra­struc­ture and train­ing on how to lever­age this data, along with incen­tives for util­is­ing the process and deliv­er­ing on the brand promise. Deal­ers do not have the mon­ey, exper­tise, nor the cross-deal­er brand view to pro­vide it them­selves, and with­out it, they are left in the dark as to who their cus­tomers are, what they want, and why they want it. How­ev­er, they must be on board as well, as they’re the ones who come face-to-face with the actu­al cus­tomers. This type of knowl­edge must be dri­ven by a cen­tralised plat­form that exists at the OEM lev­el and is utilised at the deal­er level.

5. Stop fear­ing change to the sta­tus quo.

Unlike most indus­tries that rely heav­i­ly on mar­ket­ing and adver­tis­ing, auto­mo­tive has been slow to adopt mod­ern dig­i­tal mar­ket­ing tech­niques to per­son­alise, build, and seg­ment audi­ences, cre­ate more rel­e­vant and accu­rate com­mu­ni­ca­tion, and devel­op and use more com­plete pro­files of their cur­rent and poten­tial customers.

Accord­ing to a recent Accen­ture report, The Future of Dig­i­tal Adver­tis­ing: Over­com­ing the Chal­lenges to High­er ROI and Rev­enues, 41 per­cent of adver­tis­ing dol­lars are spent on tele­vi­sion. These ads are untar­get­ed, with lit­tle hope of reach­ing the intend­ed audi­ence. More­over, there’s no real suc­cess mea­sure­ment or reflec­tion on how they con­tribute to over­all sales.

The report goes on to note that “Ad buy­ers polled say they believe that the con­ver­gence of dig­i­tal and tra­di­tion­al adver­tis­ing, and the large amounts of data that are avail­able, will help them tar­get an audi­ence with even more accu­ra­cy.” In oth­er words, busi­ness­es are begin­ning to under­stand the true oppor­tu­ni­ties afford­ed by merg­ing their tra­di­tion­al and dig­i­tal mar­ket­ing strate­gies. This trend tran­scends indus­tries, and is quick­ly reshap­ing mar­kets and com­pet­i­tive landscapes.

Auto­mo­tive OEMs have a long way to go when it comes to real, mean­ing­ful dig­i­tal trans­for­ma­tion. Exec­u­tives need to help dri­ve dig­i­tal trans­for­ma­tions with­in their organ­i­sa­tions and empow­er their employ­ees to quick­ly ana­lyze and redi­rect mar­ket­ing, sales, and after-sales strat­e­gy based on their learn­ings. OEMs must invest in the cap­ture, analy­sis, and com­mu­ni­ca­tion of data and share their insights and cus­tomer pro­files with their deal­ers to enable them to tru­ly pro­vide the expe­ri­ence their cus­tomers desire. In a sen­tence, they need to get per­son­al with their customers.