Sophus3’s Quarterly Insights Event: some of the things we learnt

1. Marcus Casey | BMW's global head of digital and e-commerce

Today’s digital car buyer is more interested in the facts about products than ‘beautiful pictures’, according to BMW’s head of digital.

Speaking exclusively to the Sophus3 Digital Car Buyer Insights event today, BMW global head of digital and ecommerce Marcus Casey reveals that his budget has grown rather than reduced in the past six months as BMW has sought to accelerate its digital strategy.

 

‘Coming from marketing, you often show beautiful pictures,’ he says. ‘What we learned from the data is that customers want hard facts. We are really changing the narrative there.’

 

BMW’s brand strength means that others will do a better job of talking about their cars on editorial, video and social media sites than the brand itself, with the result that BMW can focus on a digital user journey that was information-rich while still fun and enjoyable.

 

In a wide ranging interview, Casey also tells members of Sophus3’s eDataXchange digital benchmarking partnership:

  • Everything is in place to buy a car ‘from your couch’, but the issue is pricing. ‘You will never have that final price, although you can get close to it,’ he says. In the future, though, that will change as BMW transitions from a product company to a service one
  • In the meantime, all sales will be ‘digitally infused’, with dealerships showcasing the products. In ten years’ time, he predicts that 30 to 40 per cent of BMW new car sales will be exclusively online
  • The car industry needs to improve its approach to digital and challenge old-fashioned thinking such as online forms, which are ‘very 1990s’ and far removed from today’s Amazon customer experience
  • BMW generates more traffic to its websites than it needs, creating significant opportunities for improved efficiency
  • Online sponsorships such as BMW’s recent commitments to eSports will allow them to ‘connect the dots’. ‘That’s the fun thing about digital – it’s all measurable,’ he says.

Casey also encourages his audience to learn from competitor activity and best practice. ‘Don’t reinvent the wheel,’ he said. ‘Just copy it.’

2. Russ Hill | former Head of Sales at Audi USA and Penske Retail

Digital car buyers want the deal they see online to come true when they finally go to the dealership.

Russ Hill believes that customers want ‘confirmation’ when they get face-to-face rather than ongoing negotiation. ‘As soon as there is any disconnect between what they’ve seen online and what they see as they get closer to the actual experience, that’s when people are saying, “bye-bye”,’ he says. ‘It used to take six hours to buy a car in a US dealer from start to finish. It was wasting the customer’s time. They want to be in and out, driving that car, within an hour. It’s confirmational selling.’ 

 

Hill sees a user journey that ‘leaps ahead’ but does not change fundamentally. A customer at the top of the purchase funnel may want to check on deals available before going back to the start of the selection process. ‘The old road to the sale is not dead,’ he says, ‘it’s just reprioritisedSome want the Amazon version, others want personal service to reflect the number of choices they could make.’ 

 

He sees a future need for ‘highly talented, capable people’ with digital sales skills, who can move through the data at the right speed for the customer. Those who are ‘clumsy’ with digital are simply adding cost to the transaction because it results in a poor hit-rate. 

 

For the digitally equipped dealer, the pandemic is an opportunity to accelerate trends that were already in process, reducing the cost per sale. In the short-term, it is a ‘defense’ move to help dealers to survive on lower turnover of sales, but in the long term it becomes ‘offense’ as it will increase profitability thanks to a reduction in expensive physical infrastructure and staff. 

 

Hill is optimistic for 2021. Research in the US suggests that, for the first time since the Great Depression of the 1930s, the majority of young people in their twenties are still living with their parents. They are saving up and will eventually leave home and do all the things other generations have done – including buying a new car.    

 

 

3. Scott Gairns | Managing Director at Sophus3

Comprehensive benchmarking of brand sites helps identify the factors separating winners and losers during the disruption Covid-19 has wreaked on the car market.

Scott GAIRNS

So far in 2020 events and their impact on the automotive market have been dramatic, disastrous, yet also straightforward to summarise.

 

In quarter one the market was entering the downturn of its ‘normal’ cycle. Site traffic, brand spend and vehicle registrations were all down across the Big 5. Car manufacturers were fretting about the impact of EU emissions penalties and the threat of large fines. Covid-19 moved front and centre only at the end of the quarter as it began to rage out of control and lockdowns were implemented across each market.

 

In quarter two things fell off a cliff. The automotive sector saw website traffic tumble as consumers focused on more immediate concerns: hunting online for groceries and toilet paper. Across Europe the car industry effectively shut up shop: advertising was pulled as outlets closed. Vehicle registrations consequently fell an unprecedented -55%.

Graph The car market falls of a cliff

Quarter three offered signs of recovery. Traffic to car websites showed positive year-on-year growth, adverts reappeared. ‘Big 5’ car sales were down ‘only’ -4%.

 

But within this overall picture there were clear winners and losers as car brands weathered the crisis with very different outcomes. Five brands in the Big 5 saw their combined sales in July and August increase by more than 10% over the previous year. At the other end of the league table were five brands whose sales were down more than 20%.

 

So what accounts for the difference in fortune? Analysis of the data can help us clarify the factors driving success.

 

The first factor that seems pertinent was the retention of online engagement. Of the top ten brands in terms of registration performance in Q3, nine of them all retained or grew traffic above the sector average during Q2. At the other end, more than half saw website traffic fall below the average.

 

The advertising spend data for the period gives a more mixed message. Six of the top ten brands continued to advertise at a level greater than the sector average during Q2. But, so too did five of the brands that fell into the bottom 10 in terms of Q3 sales outcomes.

 

Clearly it was not ‘business as usual’, spend did not necessarily lead to increased engagement or sales. As is being repeatedly stated – but then ignored in practical terms – this is a unique situation. The problem is medical not economic, and the solutions therefore cannot be lifted from the playbook for previous recessions or downturns.

 

The winners in this situation were those who were prepared for, or adapted quickly to, the unprecedented constraints the pandemic imposed, chiefly by falling back on digital tools and workarounds to overcome the enforced closure of their retail network.

 

So, of the top 10 ‘winners’, eight brands offered Live Chat or Video live chat with a product genius, replicating the sales possibilities denied by showroom closures. At the other end of the table, only two out of 10 offered some kind of live chat facility.

 

But half of the winners offered even more: a complete end-to-end online purchase facility whereby a sale can be negotiated and fulfilled using a suite of digital tools including vehicle valuation, provision of finance, contract completion and delivery logistics. Only one of the worst performing brands offered such a facility.

In the unique situation that Covid 19 has presented, it seems the differentiator has been the capability to respond to consumers, interact with them, and seamlessly move towards a transactional conclusion using virtual technologies.

 

For access to the full interviews, please contact Sophus3 commercial director Nick White on nick.white@sophus3.com

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