MobilityCommentary & Insights

Mobility
Everywhere I look, I see automotive

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Steve Schmith is the director of automotive industry strategy at Acxiom . He has spent nearly all of his 25 years of professional experience working in the automotive industry, including 17 years at Deloitte, wrapping up his tenure as the Global and US Automotive Marketing Leader and two years at Automotive News as the Executive Director of Custom Research and Data and host of the Daily Drive podcast. I caught up with Steve at 7am, as he has his morning coffee and is accompanied by his three Boston Terriers. The Industry of Opportunities “I had no intention of ever working in automotive. In fact, I had never even been to Detroit.” I went to journalism school, I got a degree in journalism with a minor in television and radio production. I actually started my career in economic development. What I have come to love about this industry and what outsiders sometimes don’t see is how much opportunity there is in the automotive industry. If you’re an engineer, a designer, a marketer, if you studied supply chain, I really believe that there is an unrecognized opportunity for folks who didn’t grow up in an automotive family, to create their space here. I think that when most people think about the automotive industry and dealers, they stop with the transaction; the sale of the car. The truth is, when you think about it more broadly, and you think about how people connect with all the brands in their lives, it is so much more than that.  There are so many vendors because there are so many opportunities. From selling a vehicle, to financing a vehicle, insuring, repairing, and servicing, as examples.  If you’re in the business of reconditioning vehicles, or running fleets. And none of that even begins to touch on what happens when you’re inside the vehicle, particularly as vehicle connectivity improves, matures and scales and the opportunities to connect with customers those technologies create. There are just so many opportunities for people to connect with brands and there are increasingly a lot of brands – automakers, suppliers, lenders, insurers, in-vehicle content providers, etc. – competing for that attention.  “I think a lot, I think about the industry a lot.” Clearly these are exciting and fundamentally transformative times in the automotive industry, so it helps being such a fan of the industry, a fan of the brands and the manufacturers. It’s also very fun and inspiring to be on the road and to see these beautiful machines and all the technology. You often hear people speaking about automotive brands as if it forms a part of their identity. These brands are very personal to people. They take them on family trips, they take them to work every day, they hold our families and they are where some of the most wonderful conversations happen. I just feel so lucky to be a part of the automotive industry, to work in storytelling, in strategy, to bring it all together in such a personal way. Being able to relate the personal nature of automotive and the brands in this industry helps as our team at Acxiom thinks about and strategizes how we can best deliver value to our automotive clients. An Industry in Motion “It surprised me that it took a pandemic to really drive digital retailing.” Digital retailing in our industry has been around for 20 years but there was really no catalyst to put a lot of money into it because the model was working. Coming out of the 2009-10 Great Recession, we were on a growth trajectory that did not stop for 10 years.  So, understandably, there was no reason for automakers or their franchised dealers to go “all in” and fully invest in, adopt and scale what is best-in-class digital retailing.  Then suddenly, the pandemic hit and the environment changed. We saw disruptors entering the market who did not require the in-person relationship, and they became very big competitors. It’s amazing to see how far we have come in the last two years and, yes, there is a lot of disruption and, yes, there is a lot of investment and growth but I am truly excited and think it is so wonderful to see how companies are focused on connecting with customers.  An Industry Driven by Data: The Changing Ecosystem “As we push digital, we also need to understand that we have this entire ecosystem of businesses that have historically worked within very defined industry lines. Those lines are blurring.” There are so many opportunities for different brands in the connected mobility business ecosystem to connect with people outside and increasingly inside of the vehicle. There are so many aspects of the full customer journey when you think of the entire experience. Whether they are driving the vehicle, sharing it, or riding in it. Whether they are getting it serviced or charging their EV. The once clear industry lines separating the brands engaging people as they move from one place to another are blurring more and more each day.  On the flip side, having that single view of the customer gets very hard and that is where Acxiom really plays well and creates value for our clients. That is our core competency, our ability to create a single view of the customer and help brands deliver in real-time personalized, omnichannel customer experiences based on a deep understanding of people.  If you consider the buying side, there are multiple channels where a person interested in buying a vehicle can enter the shopping funnel – an automaker website, a dealer website, a third-party website or simply walking into the showroom of a local dealer. Brands that can connect those channels and deliver a personal customer experience while doing so can be better positioned to win. Consider the finance and insurance aspect of buying a vehicle and services like extended warranties, gap insurance, or increasingly connected vehicle subscription services. They all come into play and there are just so many ways that people interact and expect those interactions to be personal. Having the ability to deeply understand consumer behavior, preferences, timing and then make it all personal, that is the challenge that the industry faces.  How do you create a consumer experience that brings all of that together, that is very personalized and that is done at scale and done in ways that are ethical and done with privacy built in? That is what we do at Acxiom.  What are you thinking about, what is next? I am really interested in how various segments of the U.S. market will adopt electrification. It is not a one-size fits all model. Acxiom has a point of view publishing in June where we will be presenting a bell curve that is essentially a view of EV adoption among people in the U.S. Not all consumers are in the same position, which means marketers require different approaches in terms of marketing; the mission is different for people wherever they fall on the adoption bell curve. People on the far right side of the curve shouldn’t be ignored today regardless if they are likely years away from buying an EV. They simply require a different message than that of people ready to buy today.   I am also thinking about the customer experience at the charging station and whether a good or bad experience may be associated with the type of charging station or the vehicle brand itself. Right now, that’s an unanswered question, but my sense is if a new adopter of EV technology has a poor charging experience, the person might equate that experience to EV technology and the brand EV they are driving and not so much the charge point provider. When you consider your in-depth understanding of consumer behavior, what do we know? We know that when it comes to autonomous technology, consumers are interested in technology that protects them from themselves. Interestingly, the paradox is that the willingness to pay for autonomy is not high. I think that presents an interesting opportunity when we consider connected solutions like infotainment and vehicle health monitoring, which, in contrast, is a faster and more near-term opportunity.  Right now, when we consider the regulations and the fact that there are somewhere between 15-16 million new vehicles entering the market in the United States annually, each one with about a 12-year life cycle, it is going to be a long time before we get to fully autonomous vehicles everywhere. The more near-term opportunity to connect with people will be through in-vehicle technology. That experience inside the vehicle, greater convenience within the vehicle, managing your calendar, your groceries, your digital communication from inside the vehicle, all of that, can happen in the vehicle right now. What I also really love about this technology is that it can be built, it can be upgraded, it can be scaled much faster than autonomous technologies can. We are going to likely see a lot more forward motion regarding what happens inside the vehicle in terms of connecting with consumers and creating experiences. Of course, the development of autonomous vehicles will continue to move forward but there are clear opportunities that are technologically rich and where the ROI and the value to shareholders is clear and scalable. “When we think of people, these are not experiences that are foreign to them. When you get an update on your phone, you don’t consider that a recall; your phone is now better because it got updated. Same should go for your vehicle. If your car is pushed an update, your engine can run more efficiently, the software inside your vehicle has been patched to provide better cyber security. Your car is better: The vehicle that I bought last year is better today. That is a very fundamental shift in how consumers view their vehicle." There were so many ideas shared in our session, so many perspectives gained. Steve is a deep thinker and it is apparent in everything he does, including the way he speaks and tells stories. His ability to seamlessly shift from technical, data driven conversations to sharing his personal views on the industry is flawless. Steve will be moderating a panel at CXAUTO2022 which will include Jeremy Beaver, the CEO of the Del Grande Dealer Group ; Richelle Estrella, Department Head – Customer Data Lab at Honda North America ; and Myles Rose, Automotive Digital Strategy Director at Acxiom . This Panel will be discussing “Harnessing the Power of CDPs to Nurture A Customer First Philosophy That Drives Profitability and Loyalty.” CDPs offer automotive brands the opportunity to build modern marketing platforms where customer identity serves as a foundation on which automakers and dealers can build strong, first-party identity solutions while also regaining control of marketing decisions related to targeting, media spend and attribution.
digital car
The Future of Auto Retail—A Future Perspective

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What will be the business model and value of dealers in the future? In order to get a perspective on the future of auto retailing, we must first be clear on the definition and elements of retailing today and going forward. “Retail” is not merely the in-store experience or the physical presence of a brick-and-mortar dealership. It is more than just the online shopping activities of a consumer that leads to the dealer visit. In the future, retailing will mean more than just selling; it will include all interactions and engagements of the consumer through any channel aimed at a valuable exchange of goods, services, or even information and experiences. Retailing will be virtual, physical, multi-channel, and omni-channel. It will support all assets of the brand experience beyond just the product transaction itself.  The following diagram illustrates the new reality of retailing: Disruptive Forces It is clear and well accepted that the need and value of an auto dealership must adapt in the future to remain relevant. Not only does it need to remain relevant, but it must be sustainable and profitable. Natural forces of new types of auto sales competition, better vehicle and parts quality, other product/purchase options, and general financial and profit squeeze put pressure on the current dealer business model. Many disruptive forces are also driving this need for change. Simply trying to squeeze new value and offerings into the traditional dealership model and processes of today will fail. The following topics are some of the major forces driving disruption within the world of automotive retailing. Shifting Products We all know and see the beginnings and the future potential of electric vehicles, hybrid vehicles, and even autonomous vehicles. So what? What does it mean for the dealership? For starters, the value proposition for people buying/leasing/acquiring hybrid or electric vehicles is different. There is a total value of the investment proposition that customers consider in terms of electric charging expense and electric power surplus revenue potential. This very proposition includes more than just the customer and the dealer; it could and should include energy companies as well as the customer’s home or office utility considerations. This is beyond the traditional dealer salesperson’s current training and mindset in selling a vehicle. We also need to consider that the very service and parts for these vehicles are much different than the traditional mechanical repairs that the industry has been profiting from lately. When it comes to autonomous vehicles, the proposition is very different. Will this type of mobility change the entire vehicle ownership model? Fleet and city/government/corporate-owned fleets of transportation for personal access will grow. If an individual owns an autonomous vehicle (or any vehicle for that matter), there are car-sharing, P2P, and other services available to offer it to the market for sharing or usage. This, along with repairs, maintenance, and vehicle tracking — and management in this case — is a very different and disruptive model to the traditional dealer of today. New “Usage” Models Another influence on paradigm shifts of traditional sales and retailing in the auto industry is the increase in ownership and access models available to consumers. There is no longer a simple binary decision for a consumer that if they need a vehicle, they go to a dealer and either buy or lease that physical asset. Consumers interested in transportation or general mobility needs have many more choices, including subscription models for acquiring part ownership or usage of a vehicle or access to a fleet of vehicles. Other forms of mobility access such as mass public transportation, car sharing, and car ride services have increased the competitive environment for dealers to just “sell a vehicle.” This puts pressure on the dealership model, whose very essence is to stock inventory for sale on behalf of the OEM to “sell” to consumers. This is a fundamental breakdown in the current dealership model, with consumers’ mobility needs being broken up into many segments in the marketplace.” Consumer Expectations How could consumer expectations disrupt automotive dealers? In today’s digitally transformed world, customers are receiving more on-demand, instantaneous, and fully visible experiences and services. For example, just using a mobile smartphone, you can book a car ride to the airport, play your custom song list, plan your flight, and rent a property at a beach resort where your pre-ordered groceries, rented sports equipment and rental car is waiting for you. This could all be done in less than 5 minutes with a few dozen screen swipes on the phone. That is the “On-Demand Economy” in which we now live. How long does it take at the average auto dealership just to complete the application, finance and contract process? The trip to the dealership and the customer experience that comes with it can be daunting because of the very long and drawn-out process. This does not align with today’s expectations of quick and easy. “The last best experience we have becomes our standard expectation going forward.” That mantra carries across industries, and across life; we expect more because more has been delivered to us in certain segments. One more trivial example: a person can order a $5 pizza from an app, choosing from a previous order and given an on - the - spot discount offer. The entire order is then tracked from start to finish, all from a smartphone. This engagement and visibility is available for a simple $5 pizza. Yet, more often than not, trying to get an update on a vehicle service repair at a dealership takes several phone calls and returned calls with estimate ranges given — a mismatch in expectation versus experience in the dealership business model. Future Point-of-View The future of auto dealerships survival will not be enabled by physical inventory and assets or traditional parts and service. No matter how much these departments are squeezed for cost reduction and profit margins, it will not be enough. The future survival and success of auto dealerships will be enabled by those that can create a customer network platform and deliver new goods, services, and experiences into that ecosystem. The future retailers in the mobility industry will be those that offer and deliver on the following: New Services These may include mobile servicing, electric vehicle charging and power utility exchanges, storage, rentals, shopping and concierge services. Fleet and Fleet Management Offering and managing a fleet of vehicles for consumers to acquire, borrow, or even serve as the outpost for person-to-person and car sharing platforms (pick-up/drop-off) and servicing needs. Access Models Retailers of the future will need to think of “offering mileage and mobility” and not just selling inventory. Enabling all ways for consumers of mobility to buy, lease, borrow, rent, and access mobility and mobility needs will be a major service of the future. Personal Concierge Serve and meet the multitude of needs that come with the consumer’s entire mobility journey. This includes vehicle access, usage, flexible servicing, full-service provider or manager of mobility needs that include finding and delivering mobility, vehicle options for use, scheduling, pick-up, delivery, insurance, financing, maintenance, and much more. Customer Mobility Platform Successful retailers in the future will operate more as customer mobility platforms — arranging and delivering all of the above possible services. This will help them become an “On Demand” mobility access platform for consumers of all kinds, all needs, and all models. Measures of Success One of the motivators and enablers of change is to start measuring and acting on what will become more important key performance indicators in the future. The traditional measurements of sales, market share, and monthly transactions will not be enough to drive a future retail model towards more customer connection and customer experience. These will be measurements of value, change, and of a more sustainable business model. These measurements will indicate the strength of the customer network and the business model to adapt and expand into other needs and values that customers will require in mobility and mobility services. So, What Do We Do? The answers to near-term success are not at our fingertips today. Shifting the model to a customer mobility network or platform will take one step or capability at a time. Think of the enterprise as an adaptive network of customers with mobility needs that future retailers must look to serve in a more holistic and experiential way. That adaption requires better customer connections, better data, better insight, and the ability to innovate. Change will come through five major areas or domains: Ask yourself what is being done in these five areas to be more adaptive, more insightful and more valuable to customers. Establish plans and a roadmap to begin to grow the capabilities in these areas that identify and deliver new services aimed at the future customer mobility journey. Take a look at other industries outside the traditional auto retail industry in terms of mobility access and value creation. Shift the customers, shift their mobility needs and shift the delivery of experience into their journey as the primal factor for success in the future, because it will be. It may not be easy, but it is necessary!
4 Ways Dealers Can Benefit From Blockchain Technology

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I know what you’re probably thinking. Blockchain is another one of those topics technology vendors throw around to show how smart they are, and to convince dealers how badly they need our expertise to remain relevant in the constantly evolving technical landscape. With all the hype surrounding blockchain, bitcoin, and other cryptocurrencies, I can’t say I really blame you for any eye-rolling. Blockchain, however, should not be dismissed as another fancy tech solution being shoehorned into automotive retail by overzealous vendors. It’s already very real, and many players are testing how it can benefit car sales and service. Despite the jargon surrounding blockchain, its whole reason for being is really pretty simple: to facilitate and empower the sharing of secure and transparent data. That’s it. Put another way, it’s a bunch of data blocks connected by a digital chain that are all related to a single topic — for example, a VIN number. If used correctly, blockchain opens possibilities for additional revenue streams and lower operations costs for dealers. Here are four examples. 1. Registration and title-processing efficiencies Just think: No more waiting 10 days for lender confirmation of title transfer. Thanks to blockchain, you can remarket a car immediately, and with data certainty. Leveraging blockchain technology to streamline registration and title documents is arguably the most relevant use of the technology, in terms of time and cost savings. Instead of multiple online forms and software systems for in-state and out-of-state registration, a blockchain solution would connect all parties: buyer, seller, government, and third-party VIN and insurance databases. It would potentially make the process secure, lightning fast, and transparent across all data-exchange points. As a result, it may also reduce chances for fraud. Just think about how useful blockchain could have been in eliminating the instances of storm-related title fraud in Texas and Florida. 2. Service and relationship management Perhaps the most obvious application of blockchain is in the collection of VIN-specific data. Easier gathering of points of information — such as GPS, service, driving record, and driving tendencies — would definitely be a benefit in the era of over-the-air updates and connected cars . But blockchain solutions can take this information beyond service. For example, it could enable more comprehensive and seamless owner driving history and behavior information, which would make service upsells easier and more powerful. It may also make valuations more accurate, which would come in handy when the time comes to assign a trade-in value, market a lease pull-ahead offer, sell accessories, and more. This is where blockchain really shines, and something we could use today. There are 4 million off-lease vehicles coming back to the market, many of which have unknown feature packages and equipment. Just imagine how profitable it would be to know exactly what a vehicle includes, both when buying at an auction and when selling it to consumers. 3. Ridesharing or subscription car ownership Ridesharing and subscription payment programs may be the most valuable area of influence. A blockchain-based payment program could enable dealers to easily operate a subscription service, or perhaps a ridesharing service in their local area. There are emerging models of need-based insurance that would also use blockchain to facilitate this sort of usage. If that sounds a little far out, it’s really not. In fact, with average transaction prices at or above $35,000, there is a real need for subscription-based options. Consider too that vehicles sit idle most of the time, costing both individuals and dealers money. With blockchain solutions, that down time could be put to good use. 4. Maximizing value and lowering fraud within auto finance When it comes to auto finance, there are a few ways blockchain will likely have a lasting, positive impact. Let’s start with the value of vehicle inventory. Powered by blockchain, vehicles will turn from depreciating assets to incremental profit centers — a key component to the on-demand economy. Simple efficiency is another way finance companies (and dealers) will benefit from blockchain, in that it could eliminate or compress many of the existing validation steps and required documentation. Currently, Toyota Financial Services (TFS) is investigating ways to leverage the technology, in conjunction with the R3 consortium, a network of more than 200 banks, financial institutions, regulators, trade associations, professional services firms, and technology companies working together on a blockchain platform designed specifically for businesses. It’s my opinion that blockchain technology does one core thing exceptionally well, which is why it’s so important: It connects buyers, sellers, products, companies, and regulatory agencies together in a transparent and secure way. This, as a result, can be used to expand business and streamline operations. And here’s the bottom line: Whether lender or automaker, large players are actively coming together with small and nimble start-ups in an effort to apply this technology. Why? Because it saves steps and creates efficiencies. With all the testing and experimental programs taking place, the chance of blockchain coming to your dealership is already pretty good. Pete MacInnis is founder and CEO of eLEND Solutions , a company specializing in online and in-store credit, finance, and deal-making solutions designed to create a more efficient, faster-moving sales and F&I workflow that helps dealers sell more cars in less time, improve profitability, and increase customer satisfaction. eLEND Solutions’ patented platform streamlines car selling by bringing more functionality online.