Indian automotive dealerships need to adapt to new customer behaviours, digital transformation and evolving maintenance patterns in the post-pandemic era.
18 Nov 2024 | 4532 Views | By Balaji Pandiaraj, Ipsos India
In today's "Experience Economy," the significance of customer experience is undeniable. Over the past few years, leading businesses have embraced experience as a key differentiator for brand success. Some of the most successful global brands have leveraged experience to create stronger, more successful businesses over the last two decades.
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In today's "Experience Economy," the significance of customer experience is undeniable. Over the past few years, leading businesses have embraced experience as a key differentiator for brand success. Some of the most successful global brands have leveraged experience to create stronger, more successful businesses over the last two decades.
There is a clear realisation across industries that customer experience is more than just a delivery process. It's an opportunity to differentiate and create stronger, more successful brands. Relationships with brands don't exist in a vacuum; brands must consider various factors that impact expectations, experiences, and ultimately, brand success.
The automotive dealership sector provides an excellent example of these dynamics. In recent years, especially after the COVID-19 pandemic, we've witnessed remarkable shifts that have led Original Equipment Manufacturers (OEMs) to rethink their approach to customer experience.
Changing Service Patterns
One significant change observed is the extension of the average servicing cycle across OEMs. What used to be a norm of 10 to 11 months has now extended to 14-15 months. Instead of three services in a three-year period, customers are now only having their vehicles serviced 2.5 times. This shift has resulted in a significant erosion of revenue for dealerships.
Several factors contribute to this drop in servicing frequency:
1. Reduced Usage: Post-COVID, vehicle usage has decreased significantly. Many customers now commute to work only twice or thrice a week due to hybrid work cultures, leading to less wear and tear on vehicles.
2. Improved Build Quality: Modern cars are perceived to be of better build quality, making customers feel less need for frequent servicing. Ipsos' Quality studies indicate that mechanical problems, which used to contribute to the bulk of issues, have decreased significantly. Today, most problems pertain to electrical/electronic components such as audio, entertainment and navigation systems, followed by battery discharge and rodent damage.
3. Lack of Awareness: Given the low usage and better build quality, customers strongly believe there's no need to service the vehicle as often.
4. Perceived Value vs Actuals: Many customers feel that servicing modern cars requires less effort than servicing older cars/models. Ironically, it's the reverse; whilst the physical wear and tear on modern cars is less, the sophistication of their technology – such as advanced safety features and automatic driving capabilities – demands high-tech equipment and ongoing training for technicians.
5. Low Perceived Value: Customers are of the view that minimal effort is put into servicing their cars. Those who drop off their car in the morning and pick it up in the evening often believe that only an oil top-up is done, and their cars aren't washed properly. Many have experienced that servicing was not done right the first time, requiring additional visits to resolve issues, especially during paid services.
6. High Servicing Costs: Over the years, the price of car servicing has increased significantly. For a mid-sized hatchback, costs have increased from Rs 7,000-8,000 to 13,000-15,000 in the last seven years. This is primarily due to higher input costs – such as oil, parts and labour. Ironically, the condition of the car before and after
servicing remains the same, leading customers to think that these costs are inflated and that they are being overcharged.
Building Trust and Meeting Expectations
The critical question now is how to ensure customers follow the service cycle as per the standard procedure. The fundamental issue here is the lack of transparency regarding what happens once customers hand over their car for service.
To build an authentic and mutually profitable relationship, organisations need to think holistically about their purpose and customer needs. Ipsos' R&D data shows that when the experience at the dealership doesn't match up to the brand promise, one of two things happens:
1. Customers adjust their attitude (visiting dealerships less often and only for major repairs)
2. Customers adjust their behaviour (stop going to dealerships altogether)
Conversely, when the experience consistently reinforces the brand promise, customers are likely to grow closer to the brand, use it more in the future and be willing to pay a premium.
Based on internal understanding and discussions with dealer partners and customers, we've identified several key customer expectations:
1. Communicate Continuously and Embrace Transparency: Customers expect regular updates on the progress of their vehicle's service, preferably through pictures or videos. Also, we keep hearing that many OEMs have made servicing bay video streaming mandatory. This transparency goes a long way in building trust and providing reassurance.
2. Offer Personalised Advice: Tailored recommendations based on individual vehicle usage patterns can enhance the customer-dealer relationship. In today's digitally driven world, customers anticipate personalised experiences tailored to their individual needs and preferences. Ignoring this expectation and maintaining a one-size-fits-all approach can make customers feel undervalued. So, if a dealer suggests that a brake shoe has some more life and can be used for another 5,000 kilometres after understanding the usage of the car, it goes a long way in building trust for the service advisor and OEM.
3. Learn from Other Sectors: Implement premium experiences inspired by best practices in allied industries.
4. Align Experience with Brand Promise: Ensure that the service experience at dealerships reinforces the brand's core values and commitments.
5. Focus on Fairness and Value: Deliver service that is perceived as both fair and valuable to maintain customer engagement.
6. Meet High Expectations: In India, customers demand excellent service quality, reliability and value for money.
"After-sales service at the dealership is facing challenges, particularly with heightened expectations. To meet these expectations, it requires highly skilled individuals to manage customer expectations without customers explicitly expressing concerns,” says S. Sivaramakrishnan, Lead - After Sales, Advaith Group:
Conclusion:
Aligning Customer Experience with Brand Promise is Key
The key, therefore, is to truly align our customer experience at dealerships with the brand promise, which will lead to stronger relationships and improved financial performance.
The actual service experience is where a brand's promise is put to the test. In India, customers have high expectations for service quality, reliability of service and value for money. Brands that consistently deliver on these aspects can build strong brand loyalty and advocacy.
Balaji Pandiaraj, Executive Director & Country Service Line Leader, Customer Experience, Ipsos India. Views expressed are the author's personal.