Increasing numbers of would-be car buyers are asking about subscription services instead. Is your dealership prepared to answer?  - Photo by FG Trade via Getty Images

Increasing numbers of would-be car buyers are asking about subscription services instead. Is your dealership prepared to answer?

Photo by FG Trade via Getty Images

Car subscription services represent just one nascent yet promising new business model that manufacturers, dealers, and other entities are exploring. They have emerged amid an unprecedented period of disruption in an automotive industry that is set to change more in the next five years than in the past 50.

With the subscription model, generally speaking, subscribers pay a monthly fee for access to a range of models in the service’s fleet. The fee may also cover insurance, maintenance, roadside assistance, and vehicle swap-outs.

To take full advantage of this new reality, your dealership must have a few key elements in place:

Read: Volvo Adds Dealer Inventory to Subscription Program

1. Focus on the Customer

Dealers and manufacturers must put the customer at the heart of all strategic decisions to thrive in a mobility culture. That means gaining a stronger understanding of what makes millennials and Gen Zers tick as consumers of mobility solutions.

Generally speaking, they want authentic relationships with brands that align with their values and that communicate with them in their preferred modes. They value flexibility and convenience and generally are debt-averse.

The onus thus falls on dealerships, OEMs, and virtually any company offering a mobility solution to gain deeper insight into their customers’ attitudes and preferences — how they prefer to engage and communicate, what they want out of their transportation experience, and what you can do to provide it. This information can be used to shape the way you engage with prospective subscription customers.

2. Customer Experience Data

As critical as operational data (O) — including costs, revenues, and sales — is to running an efficient, profitable business, the elevated importance of customer experience means your organization also needs to have insight into experience data (X).

Experience from the first point of interaction with the customer, through their entire journey, connects directly to business outcomes.

By collecting and analyzing experience data in a timely way at every meaningful touchpoint, you can develop lifestyle-friendly mobility solutions that customers demand, tailor customer experiences around those solutions, and address any identified experience gaps.

It boils down to a simple equation: X+O=XM, where experience from the first point of interaction with the customer, through their entire journey, connects directly to business outcomes.

3. Factory Harmony

Capitalizing on the industry’s move away from the product-centric and toward the customer- and service-centric means setting aside the question about who ultimately owns the customer. Dealers must work with OEMs to jointly leverage their systems, data, relationships and expertise to better position new mobility solutions for profitability.

Under the subscription model, manufacturers and dealers can share the customer. In some cases, the dealer could be the face of the subscription service, with manufacturers more in the background; or those roles might be reversed, with the dealer playing an “expedience center” role.

4. Operationalization

Among the biggest questions surrounding the subscription model is how to make it profitable. You need to successfully operationalize the business — that is, to integrate it digitally and operationally into the mainstream enterprise from the start, so it is intelligently connected to supply chains and to customers.

This enables dealers and manufacturers to more readily identify trends, to handle impulses and short-term signals from one another and from customers, and generally to make better informed strategic decisions about the subscription service.

You will get questions about sub services, if you haven’t already. With forethought and flexibility, you — and, perhaps, your OEMs — can put yourself in position to provide the answers your prospects and customers seek.

Moncombu Raju is director of global solution management for the automotive industry business unit at SAP.

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