Delivering a Superior
Automotive Customer
Experience in
Developing Markets
Customer experience is becoming a crucial differentiator as the industry matures in developing markets.
Delivering a Superior Automotive Customer Experience in Developing Markets
1
“It is not the employer who pays the wages.
Employers only handle the money. It is the
customer who pays the wages.”
—Henry Ford
In developing countries, these words by auto industry pioneer Henry Ford ring as true as ever
for automotive companies. Competition is ramping up and customers are growing more
experienced and demanding. To succeed in today’s market, you’ve got to make customers
happy during the sales process—or else they’ll go find another automaker.
Customer satisfaction, however, can only come when automakers and their dealership partners
readjust their focus. Yes, making good cars will always be important, but that alone won’t cut it in
crowded markets where several manufacturers make quality, innovative, well-designed vehicles
of all sizes and styles. Creating a good experience opens the door to a long-lasting brand
connection with buyers, who will go from that first car to a second while referring their
friends and family. All in all, improving the customer experience could increase annual sales
by as much as 20 percent within a country.
We recently sought to find out how automakers are faring in customer experience across
developing markets. We conducted a study of customer experience at dealerships in three
high-growth yet different developing markets: Brazil, India, and China. This paper examines
the findings of that study and what automakers in these and other developing markets can
do to achieve best-in-class customer experience.
The Customer Experience in Brazil, India, and China
The three markets we studied up close share similarities, starting with an impressive array of
choices regarding brand and model, including the latest products from most major manufacturers. Chinese car buyers, for example, can choose from more than 500 models, 94 brands,
and 46 manufacturers. All three markets also feature experienced buyers; in all three, at least
40 percent of all customers have purchased a car previously. Lastly, demand in each country
varies significantly between urban and rural areas, requiring carmakers to differentiate the
customer experiences for different buyer groups.
These markets also differ in several important ways. For one, major income groups have varying
access to automobiles, reflected in different car penetration rates. For example, members of
the lower and middle classes are far more likely to own a vehicle in Brazil than in China or India.
In China and India, ownership are high in large cities but very low in rural areas. China and India,
starting at a lower maturity level, have seen greater sales growth over the past decade; China saw
annual growth of 30 to 40 percent between 2007 and 2010. Also, looking at our stages of excellence for customer experience, Brazil and China rate higher than India (see figure 1 on page 3).
For our study, we assessed customer experience performance for the six leading manufacturers
in each market, selecting cities where the share of experienced buyers is higher. Using a mystery
shopping approach, we visited dealerships and assessed the shopping experience. Our
Delivering a Superior Automotive Customer Experience in Developing Markets
2
Figure 1
The customer experience stages of excellence
Automakers
in Brazil
and China
Automakers
in India
Customer centric
Customer motivated
Customer aware
Customer neutral
• No customer reception
• Poor knowledge of
car features
• No comparison information
• No online presence and
limited general promotions
Global leaders
in customer
experience
Automakers in
North America
and Europe
• Dealers’ focus on what
customers say they want
• Customer reception
• Comparison tools focused
on brands
• Consistent information
on features
• Dealers’ focus on
product strengths
• Graphical and interactive
tools for features at
dealerships
• Needs-based analyses
• Promotions, subscriptions,
event launches in social
media
• Limited competitor
knowledge
• Customized product
presentation with detailed
needs-based analyses
• Good knowledge of
competition
• Graphical and interactive
tools for features
• Extensive comparison tools
• Personalized interactions
and active use of social
media for feedback
• Advertisements in
social media
Source: A.T. Kearney analysis
predefined process evaluated dealerships on six crucial dimensions of the purchase process,
which are often the difference between a sale made and a customer lost: customer greetings;
salesperson knowledge about the brand and competitive vehicles; test drive experience;
pricing and incentives; closing and follow-up; and dealership environment (see figure 2).
Our research shows good but varying levels of customer experience, with plenty of room for
improvement to reach Western benchmarks. In the following sections, we will look in depth at
each market’s state of customer experience.
Figure 2
The dealership visit’s pivotal role in the auto sales process
New car sales
Awareness
After sales
Research
Dealership
visit
Purchase
Ownership
Elements of the customer experience
1 Customer
greeting
2 Brand and
competitive
vehicle knowledge
Replacement
Product presentation
3 Test drive
4 Pricing, incentives,
and financing
5 Closing and
follow-up
6 Dealership
environment
Source: A.T. Kearney analysis
Delivering a Superior Automotive Customer Experience in Developing Markets
3
China
In the last decade, China has grown rapidly to become the largest auto market in the world.
However, China’s customer experience performance differs widely by region, with its largest
cities and coastal areas more advanced than more rural inland provinces. On the whole,
customer experience lags Western markets.
China’s automotive dealers have high levels of brand and vehicle knowledge and have
created excellent dealership environments, a product of the country’s intense competition
and more experienced customers, particularly in major urban areas (see figure 3). Many of the
best-performing dealers in our study opened during China’s auto market peak in the late
2000s. As a result, these dealers are better designed for displaying and are more likely to
follow their brands’ targeted sales and after-sales processes.
Figure 3
The automotive customer experience in China, India, and Brazil
China
India
1
Brazil
1
4
3
6
4
2
3
6
2
1
5
2
2
1
1
0
3
4
1
3
6
0
3
Best
Average
Worst
(0-poor, 4-high)
4
2
2
0
5
1
4
5
3
4
4 Pricing, incentives, and financing
Customer greeting
2 Brand and competitor vehicle knowledge
5 Closing and follow-up
3 Test drive
6 Dealership environment
Source: A.T. Kearney analysis
China’s dealerships have room for improvement in several areas, including prompt
customer greetings; explanations about different models; consistent test drive offers; better
explanation of the costs and benefits of ownership, including pricing and financing options;
and follow-up contact.
India
India’s dealership environment gets high marks for attractive store layouts, but other dimensions
have low rankings, as demonstrated in figure 3. Most dealerships only make a basic assessment
of buyer needs, with product presentation usually driven by customers’ stated interest rather
than a concerted, structured approach to drawing buyers to certain products. Knowledge of
competitive products also tends to be limited.
Delivering a Superior Automotive Customer Experience in Developing Markets
4
In the past, Indian buyers were known for taking a long time to make purchase decisions, but that
has changed dramatically in recent years. Half of consumers today start their research just two
months prior to purchase, and almost 40 percent visit a dealership for the first time just one month
before purchase. Manufacturers now have less time to influence buyer decisions, which makes the
quality of dealership interactions that much more important—particularly in a country where many
family members are often involved in the process. Yet, Indian dealers seem to struggle with
training sales personnel, adhering to basic sales processes, standardizing infrastructure, and,
above all, demonstrating the passion needed to deliver a positive customer experience.
To improve conversion rates and upsell models or options, Indian dealerships can conduct
high-level needs assessments to determine customers’ real needs and fine-tune special
offers, understand competitive positioning, create a superior test-drive experience, forge
a stronger emotional connection with customers, help customers understand total cost of
ownership, offer alternative financial options, explain after-sales service support, and
develop stronger closing and follow-up processes.
Brazil
Brazil’s market has grown significantly in the past two decades, and preferences are evolving.
Today’s buyers are increasingly choosing small vehicles with small engines, balancing out the
product mix and creating a more challenging environment for major-brand dealerships. Dealers
have had to adapt their showrooms for all car types—small cars, large cars, and high-end models.
In other words, carmakers are serving different buyer groups within the same dealerships.
To meet these challenges, many dealerships in Brazil are investing in better serving mid- and
large-size car buyers, improving sales and after-sales processes, and revamping facilities,
scoring high rankings as demonstrated in figure 3. However, not all manufacturers have pushed
forward in this regard. The small-car segment’s growth led to new dealership networks focused
more on price-sensitive car buyers. To capture higher-end buyers, these dealers have to adjust
their showroom layouts and vehicle displays to incorporate new models.
Brazil’s major improvement opportunities include standardizing dealership facilities and
sales and after-sales processes; segmenting the customer experience so that different buyer
groups get more focused services; and enhancing the test-drive experience (see sidebar:
Test-Drive Performance).
Test-Drive Performance
One area in our study was
consistently problematic in all
three countries: test drives. The
variation within this category was
the greatest of the six dimensions
we studied: Top performers offer
immediate test drives and
interact effectively with their
customers during the process,
while the lowest performers did
not offer test drives at all.
Test driving is one of the most
difficult services to perform at a
dealership—but also one of the
most important steps in the
customer experience. More than
any other step, it is the one that
can create that strong emotional
connection between car and
driver. Doing it well requires
properly designed processes,
good management of car
availability, and understanding of
customer behavior and habits
based on local culture.
Delivering a Superior Automotive Customer Experience in Developing Markets
5
Best-in-Class Customer Experience
Every market is different, but players in each have plenty of room for improvement in terms of
customer experience. Improving, however, can only happen when you look beyond products
and seek to shape all dimensions of customer experience.
Localization is the biggest sticking point for multinational manufacturers as they seek to
create dealer sales processes that meet local customer requirements and cultural norms
while maintaining brand standards. For example, Chinese dealers may need the ability to
adjust test-drive experiences for customers who don’t have a lot of time to spend. Balancing
network expansion and the consistency of the brand experience throughout all dealerships is
always a big challenge, and multinational automakers will have to work jointly with local
franchises to achieve these goals.
For domestic automakers, clearly defining sales and after-sales processes and standards at
dealerships is crucial. This is particularly the case in terms of customer greetings, closing, and
follow-up, where “soft skills” are needed to attract more experienced buyers who are less
sensitive to price.
In other words, for all automakers, improving the customer experience requires a holistic
approach that spans multiple factors in the customer experience framework. Best practices
from both inside and outside the auto industry offer a way forward in customer experience—
from Lexus’s comfortable, customer-centered, service-driven dealership environments, to
the unique customer experiences that Starbucks and Apple have created in industries that
feature intense competition and a need for close customer interaction.
In particular, best practices in several areas are particularly relevant for automakers in developing
markets (see figure 4).
Figure 4
Customer experience framework
The
“experience
promise”
Organizational
alignment
Voice of the customer
Culture
Process and
infrastructure
Performance metrics
Source: A.T. Kearney analysis
Delivering a Superior Automotive Customer Experience in Developing Markets
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The “experience promise.” Leaders in customer service go beyond merely measuring
customer experience and comparing their performance with competitors. These companies
make customer service part of their corporate DNA by ensuring that their commitment to
customers is boldly communicated to all levels of the organization. For example, Starbucks
communicates its experience promise to employees through frequent discussions and in its
“Green Apron Book,” which contains guidelines for keeping that promise.
Organizational alignment. Front-line staffers need some measure of authority to adapt to their
local markets. Decentralizing decision making will ensure that the organization is designed around
customer experience. At the same time, clear guidelines and training guarantee that you are
meeting the interests of the broader organization. Southwest Airlines is a good example of one
form of organization alignment; there, normally non-customer-facing employees are “assigned”
customers and play a role in the customer experience. Similarly, Starbucks executives are trained
and periodically serve as customer-facing “baristas” so that they can better understand the
product and customer, and keep a strategic focus on customer experience.
For all automakers, improving the
customer experience requires a holistic
approach that spans multiple factors in
the customer experience framework.
Culture. Hiring workers with strong customer-oriented skills and providing ongoing training
will develop a culture empowered to support superior customer experience. Starbucks has
developed a two-pronged training approach that, in addition to the “hard skills” they are directly
responsible for, also focuses on soft skills required to connect with customers—welcoming them
into the store, establishing eye contact, and building relationships. Similarly, Singapore Airlines
trains all in-flight crew members to manage the customer experience throughout their travel.
Process and infrastructure. Keeping the above elements running smoothly requires underlying
systems, processes, and infrastructure. Leaders in customer experience pay great attention to
detail. Singapore Airlines uses two different-colored tongs for serving wet towels and then
collecting them. Lexus offers complimentary flatbed pickup and delivery of cars (for service or
repairs) in certain regions, and flat-screen TVs, coffee bars, and even putting greens at many
dealerships.
Voice of the customer. Customer experience leaders capture the “voice of the customer” in
surveys as a way of collecting continuous feedback with which to improve operational processes
and drive customer loyalty. Ritz-Carlton, for example, conducts more than 30 interviews per
month for all of its properties to collect in-depth qualitative and quantitative data.
Performance metrics. Performance measurement only gets you part way there—customer
experience leaders embed these metrics into business processes and corporate scorecards to
align the organization against common goals. FedEx and Texas Instruments tie their customer
experience metrics to operations by integrating internal and external perspectives. These metrics
are continuously tested, evaluated, and “balanced” with other critical business measures.
Delivering a Superior Automotive Customer Experience in Developing Markets
7
Staying Ahead of the Curve
The automotive customer experience in Brazil, India, and China is progressing, but there is
still plenty of room for improvement. Basic processes and service skills are in place in most
dealerships, but to truly differentiate, automakers will need to further emphasize the purchase
experience by enhancing test drives, customer profiling and needs identification, and
competitor comparison—seemingly small steps that can make a big difference in delivering
a satisfying customer experience.
To achieve these goals, remember Henry Ford’s statement about the customer paying the
bills—and then embed a clear vision and the supporting processes necessary to make it a reality.
Authors
Shiv Shivaraman, partner, Mumbai
Stephen Dyer, partner, Shanghai
[email protected]
Dario Gaspar, partner, São Paulo
Andreas Graef, principal, Shanghai
[email protected]
Vinod Kumar, principal, Mumbai
[email protected]
Fabio Fera, consultant, São Paulo
[email protected]
The authors wish to thank Yue Cao and Sharon Serrao for their valuable contributions to this paper.
Delivering a Superior Automotive Customer Experience in Developing Markets
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Delivering a Superior Automotive Customer Experience in Developing Markets