Tag Archives: Technology

The New Technology Frontier: Parts and Service

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Let there be no doubt, automotive retail is undergoing rapid and seismic transformation that will permanently change how OEMs, NSCs and dealers retain profits and engage customers. Drawing upon my years of experience in the technology industry, it’s become evident to me that digital transformation is a certainty and will drastically disrupt how automotive retail businesses are run.

The parts and service segments of dealerships will be among the most profoundly impacted by new technologies and industry trends.

It’s up to OEMs and dealerships on whether they want to surf the technological wave, keep ahead of it or get left behind. Savvy dealerships see opportunity in change and will choose to invest in technology as a pathway to ensure successful aftersales operations into the future.

With the parts and service business supplying over 50% of a dealership’s profit, it’s a no-brainer that investment in technology is where OEMs, NSCs and Dealerships should be spending their time and money to retain their earnings.

Over the past few months, I’ve spent time speaking to some of our valuable OEM partners and Dealerships to discuss both the challenges and benefits of disruption, and how new technology is impacting the way they run their businesses and serve their customers.

What became apparent is that a number of technological trends have emerged. Here’s my take on the five areas that we anticipate will have the most significant impact:

  • Evolution of the dealership
  • Digitisation of the customer journey
  • Connected and more complex cars
  • Vehicle ownership structures
  • Electric vehicles and autonomous driving

Evolution of the Dealership

Thriving dealerships succeed for a reason – they’re responding to change and evolving. The dealership model is expanding and developing into larger, multi-brand dealerships that exploit the advantages of larger volume, economies of scale and greater processes and system efficiency.

These larger, more successful dealerships around the world are discovering more efficient and integrated software products that are specific to the automotive industry. Technology developers and software providers have realised this and are gathering data from OEMs, dealerships and customer sources to improve demand forecasting, boost productivity, drive better sales processes and create a more personalised customer experience, right across parts and service.

However, there are new challenges on the horizon. With cars becoming more sophisticated and customers seeking new technology, vehicles and components are becoming more complex. The need for more high-tech workshops and skilled technicians is at an all time high. Complicating this further is a skills shortage, with too few new technicians entering the industry – especially in the USA.

As I travel, I see that larger dealerships are placing a greater focus on keeping talent, with faster career pathways and more training. As vehicle technology continues to explode, customers will place greater value in ‘genuine servicing’, making great technicians even more vital. The little local garage around the corner might be in trouble.

Inside larger dealerships (and hopefully yours too), Parts and Service departments work hand-in-hand to boost workplace efficiency and create a good experience for customers. Having both Parts and Service departments accessing the same genuine data from a single source streamlines workflow and removes expenses, such as storing parts and the cost of financing. Shared technology also reduces cycle times for trade customers and gives a more consistent customer experience for retail customers.

Digitisation of the Customer Journey

In today’s fast paced and digital world, modern consumers expect new technology, both in their cars and in the parts and service sales process. In this new world, the flexibility of online engagement and self-service are expected by your customers, who enjoy it in all areas of their life.

According to Forbes, by 2025, roughly 75% of the global workforce will be Millennials. They’ve been brought up on a diet of Instagram and Snapchat, so an environment that doesn’t have modern tools, technology and resources is “unimaginable”. Automation, transparency and trust are crucial to retaining Millennial customers for future service and repairs. They want a personalised, digital process and they want to buy on their own terms.

Connected vehicles provide exciting potential to redefine the customer aftersales experience and drive better sales and retention strategies. OEMs and dealerships will have access to more customer and vehicle data than ever before. However, leveraging this data into information that is easily understood and actionable will be challenging.

For example, during a vehicle service, these customers want to feel like a priority at every step of the process – including before, during and after the dealership visit. We are gradually seeing a trend of more targeted individual service and engagement with customers.

Solutions such as online service bookings, self-serve quoting and electronic vehicle health check systems are playing a key role to improve the customer experience, but there is much more to do.

So, what’s next? How do today’s OEMs and their franchised dealerships continue to grab the attention of customers, improve communications and develop brand loyal vehicle owners?

We are seeing OEMs investing more in data analytics and insights to gather accurate customer information from multiple channels. Detailed and timely evidence that can reveal anything from lapsed service customers to the success of wholesale parts campaigns, as well as valuable insight to determine customer behaviour and buying patterns. Information that is rich in detail and allows for more targeted offers across multiple digital channels.

The transformative impact of technology adoption and changing customer expectations now means all departments seamlessly serve the customer. Everyone at the dealership who has contact with a customer is now a salesperson.

Connected and More Complex Cars

Why the challenge? Well, we see dealerships struggle to fully leverage the data they already have in their back-end systems and the availability of more data will only compound this issue.

Data silos between departments and aftersales software that don’t work seamlessly together are two areas that present an opportunity for improvement. Capturing and converting the connected data into actionable insights will require better cooperation inside the dealership. New technologies will also be needed to normalise disparate data in real-time to empower a timelier, more efficient and customer friendly process.

The benefits of customer friendly processes are evident. When you engage and involve a customer in the service process, they’re more like to have a positive experience and you’re more likely to retain them as a customer. Better alignment and shared open data integration processes between OEMs, dealerships and technology providers are critical to fully capture the value of connected data, and create positive customer experiences.

Here at Infomedia, we are excited about the opportunities that lie ahead. Our products are integrating with new vehicle technology that communicates with the workshop and customers – even before customers arrive for their service appointment! Soon, onboard vehicle technologies will help customers plan their service visits using their smartphones and devices. Before customers arrive, they will know exactly what parts are required and when their cars are available to enter and leave the workshop.

Not only that, dealership staff will be able to do more pre-planning, as the detailed information that they receive tells them the faults the vehicle has before it even arrives. Parts departments will be able to use just-in-time (JIT) parts ordering with better inventory control – saving valuable time and money!

Changing Vehicle Ownership Structures

But this is just the beginning. Technology will fundamentally change the way people get from one place to another. Cars-as-a-service (CaaS), ridesharing and car subscriptions are gathering momentum.The basic concept of mass vehicle ownership will no longer be the norm.

Technology changes, along with social and environmental pressures, will also impact the way people drive and what they choose to drive. For example, while travelling in Europe, I noticed the popularity of smaller and smarter vehicles, and that larger vehicles weren’t as common.

Naturally, smaller vehicles are less profitable than larger vehicles. However, consumer electronics – particularly smartphones – have changed consumers’ perceptions. Size doesn’t matter. Consumers no longer believe that smaller is cheaper or less valuable. In fact, they expect smaller cars to be just as smart and technologically advanced as larger cars.  Automakers will face a challenge in meeting this shift in perception.

A recent report by McKinsey said: “The automobile, mechanical to its soul, will need to compete in a digital world, and that will demand new expertise and attract new competitors from outside the industry. As value chains shift and data eclipses horsepower, the industry’s basic business model could be transformed. Indeed, the very concept of cars as autonomous freedom machines may shift markedly over the next 50 years.”

Based on our customers’ feedback and our own research, new technology will impact a consumer’s relationship with their vehicle. It’ll change how vehicles are sold, owned, serviced and repaired. IOT (Internet of Things) technology will give real-time data, throughout the value chain, empowering OEMs and dealerships with a better understanding of customer behaviour and preferences.

There’s another benefit of this brave new world of data-driven and connected cars. You’ll be happy to know it will lead to more demand for genuine OEM parts. With integrated systems, specialised labour forces and complex safety software, it will be difficult for aftermarket suppliers to replicate proprietary technology used in connected vehicles.

Electric Vehicles and Autonomous Driving

With more electric and autonomous vehicles on the road, dealerships are bracing for impact. But don’t panic, adoption will take time. McKinsey also predicts that by 2030, fully electric and autonomous vehicles will comprise up to 15% of new car sales and 10% penetration in the car parc.

The shift to electric vehicles brings with it a few small problems. Electric vehicles have more electronic components, requiring more specialised servicing than traditional internal combustion engines. Dealerships will need to invest in additional equipment and training. In addition, the cost of maintenance over the first five years of ownership for electric vehicles will be significantly lower than pure combustion engine vehicles leading to a reduction in parts and service revenues. Also, advancements in vehicle manufacturing quality and techniques will result in less frequent service schedules and longer replacement times for parts.

If you’re seeing your customers less often, you better make it count. Customer retention will be even more important. Dealerships will still be “brand experience creators” as customers see more value in taking their new shiny connected vehicle to a dealership for genuine servicing.

Embrace Change: The Key to Evolving & Driving Profitability

If there is one take away as we approach the new frontier in parts and service, it’s that the key to growing the aftersales bottom line is to use new technology that centers around improving the customer experience, both inside and outside of the dealership.

To do this, OEMs and dealerships will need to harness and implement means to capture vehicle and customer insights. They need to adopt new products that draw upon those insights, as a critical path in raising dealership efficiency and improving customer service.

I hope this article shows you that the future is full of opportunities. While there will be inevitable challenges, the benefits are genuinely powerful. I’ll continue to explore each trend in future articles, providing further insights into how OEMs, NSCs and Dealerships can embrace new technologies to drive parts and service profits and build brand loyalty with delighted customers.

 

Innovation – Is it Just a Cliché?

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In a recent article by the Australian Financial Review, it states that half of Australian firms believe that innovation is merely a buzzword. The survey results also show that 23% of companies aren’t innovating at all.

Innovation

Innovation – What Does it Mean to Us?

It’s no secret that the term “innovation” has been overused, especially in the technology sector. Sadly, this has led many industry players to lose sight of the meaning and importance of the concept. It’s very easy to write-off innovation as just another cliché or buzzword – but the real challenge comes from making it tangible and infusing it in everything an organisation does.

Here at Infomedia, we choose to invest in innovation and make it a core part of our values. We’re always striving to be a unique kind of company, with a different view of the world. We use an innovation mindset to help guide our attitudes toward product development, customer relationships and performance expectations of our global teams.

While our vision is to solve big problems, our approach facilitates progression, not perfection. I’m a firm believer that improvement and growth comes from change, and having an innovation culture is mission critical for success.

Building an Innovation Mindset

To make innovation a part of our DNA, we’ve built a framework that challenges the way we view ourselves, our capabilities and our goals. This framework ensures our innovation priorities are focused and aligned with our business strategy. It enables us to harness not only our internal ideas but those of our global customer base – with a defined pathway for investment and action on worthy ideas.

The importance of this mindset also applies to external factors; the way we communicate and the type of discussions we have with our customers is equally important to foster innovation. This ensures our customers get involved in the innovation process early and get to shape the ultimate outcome.

Our Customers are at the Heart of our Innovations

One of our favourite ways to innovate is to collaborate with our customers. We put our customers at the centre of everything we do and they’re at the heart of our innovation process. With customers in 186 countries, we are presented with many innovation opportunities.

Some of our best product innovations have come from asking our customers: “What are your challenges?”

We encourage an open exchange of ideas and have multiple pathways for collaboration. Our team have a deep level of understanding of our customers’ challenges, and are well positioned to ask the right questions and innovate quickly.

What About the Breakthrough Innovations?

The best breakthrough innovations usually have a disruptive business model. This is sometimes a barrier to success if the current market participants are not ready for it – no matter how good the product innovation is.

In the retail automotive space, dealerships are under pressure to provide the complete ownership experience to vehicle owners, while lowering their operating cost at the same time. When I visit dealerships, I don’t hear them calling for ‘breakthrough’ innovations. They want the simplicity of cloud solutions, with smart interoperability to improve sales processes and customer satisfaction.

When we scope ideas and challenges, our goal is never about ‘disruptive innovation’, it’s about solving problems. We don’t want to build software solutions that disrupts a dealership’s process or workflow – we want to improve it.

Innovating with Purpose

We have a long history of innovation at Infomedia, and the key considerations when we introduce new technology to our global customers are always relevance and purpose.

One of Infomedia’s earliest innovations is the Microcat Electronic Parts Catalogue (EPC). In today’s retail automotive landscape, some might see EPCs as a mature product. Dealerships and Parts Departments use it to look up and order the right parts – nothing more, nothing less.

However, we look beyond what an EPC is designed to do, and think about how to evolve its value to meet ongoing business challenges. Reinventing its purpose allowed our innovation team to explore new and creative ways to leverage technologies. For example, we discovered mobility as an unexploited innovation opportunity for EPCs.

After months of hard work, I’m very excited to announce our latest innovation: Microcat Messenger. It’s a mobile messaging app that integrates seamlessly with Microcat Live EPC. It empowers a dealership’s Parts Department to chat with their trade customers about their parts queries, look up parts information and place orders – all in one convenient location!

Microcat Messenger provides a new way for a Parts Department to interact and engage with trade customers during the buying process. It caters to the next generation of shoppers who use technology, social media and digital platforms to research, interact and shop.

The addition of Microcat Messenger turns Microcat Live from an EPC to a powerful parts selling tool. Dealerships can now turn their Parts Department into an online retail store or e-commerce platform – now that’s innovation!

Innovating and Winning – Not Just a Cliché!

In short, I believe that innovation is imperative for the ongoing success for any company. To us, innovation isn’t simply about adapting and staying relevant. It serves as a good reminder for us to push ourselves to grow, improve and do things better. An innovation mindset challenges us to think outside the box and create cutting-edge solutions that meet the needs of our customers.

So is innovation just a cliché? No, I think it’s best practice. The companies that innovate will win, but they’ll only win if they focus on their customers!

It’s not all about the price

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When I joined Infomedia, one of my first goals was to get closer to the automotive industry and our customers. I set out a plan to visit our dealership partners across the globe to gain a better understanding of how they work and the growth drivers of their business.

One of the topics that I’m highly passionate about, and that we discussed about at length with OEMs and dealerships, was customer experience. In a world where there are many competing brands and services, I believe it’s never been more important to sell experience to your customers.

So, I also spent a lot of time talking to dealership customers, my friends and my family about their experiences when it comes to vehicle servicing.

My takeaway from these discussions is that vehicle servicing is not all about price. It’s also about creating a positive customer experience through transparency, service efficiency, mobility and technology optimisation.

Understanding your customers

Many dealership customers shared with me about what they evaluate during a visit to a dealership.

Customers care if the Service Advisor:

  • is courteous, knowledgeable and able to address any problems
  • communicates the need for additional repairs in a clear and timely manner
  • delivers a final invoice which matches the quote
  • has the car ready at the promised time

I also listened to many stories of customers feeling confronted with technical terminology; which made them feel uncertain, anxious and fearful about cost.

Their feedback highlights the importance for Service Advisors to communicate clearly and transparently, to ensure customers are fully informed and in control of their service experience.

Beyond the quality of repair, customers often remember their interactions with Service Advisors – this has a tangible impact on their perception of your dealership and brand.

The keys to customer experience

customer-experience

I have seen firsthand that many Service Advisors already do a great job.

Despite this, a large percentage of customers choose not to service their new vehicle from the dealership they purchased it from. Many factors contribute to this, but a recent study by JD Power indicate price and trust as key reasons for customers leaving dealerships for independent workshops.

As mentioned earlier, many customers feel confronted with technical details; resulting in them feeling uncertain, anxious and fearing about cost. Many call “their guy” (aka an independent repairer) to get a better price. Independents are known for lower labour rates, but many don’t have the capability or capacity to accommodate a customer’s demanding schedule, provide loan cars or have access to up-to-date factory repair information.

Independents often agree to the service at a lower price; but when an unforeseen repair part is required, it results in the overall service requiring more labour, more time and more budget.

So, is it really all about price? In reality, price is not always the differentiator. However, the independents do a great job managing their customers’ expectation by talking through the work that needs to be done, showing them replaced parts and providing a more personal service.

Is there a lesson here for OEM service dealerships? How do we combat the perceived notion that independent repairers are superior when it comes to price and trust?

Dealership Service Advisors need to minimise customers’ fears and anxieties by communicating effectively, providing transparent pricing and empowering the customer to feel in control.

Technology is the keystone for today’s service strategies

The last ten years have seen technology companies introduce service sales software to aid dealership staff improve their customer experience.

Here at Infomedia, we’ve been at the forefront of industry innovation. With expertise in both parts and service domains, we’ve built software that:

  • improves communication with customers before, during and after the service has been completed
  • quickly generates service and repair quotes that are accurate, professional and easy to understand
  • provides transparency by sharing the technician’s photos and videos of repair work
  • provides customers with information that reinforces the value of genuine OEM servicing

The right technology can help your customers believe their best experience and value is with you. It allows for a more personalised service and faster repair process for the customer.

Service efficiency

I recently read a case study shared by Hyundai Motor America which concluded that customers are most willing to say “Yes” to service recommendations within the first 15 minutes of their visit. The faster the repair recommendation is delivered, the greater likelihood of the customer agreeing to the repair.

superservice_murphy_-2826Therefore, being able to quickly generate a personalised and accurate account of a vehicle’s needs is a ‘game changer’ in OEM Service Department sales.

Our Superservice platform facilitates this important objective, and is used by many Hyundai dealerships globally.

Power of mobility

My dealership visits and discussions with automaker influencers also highlighted the need to attend to a new generation of digital savvy service customers, who:

  • prefer text and digital communication to phone calls and printouts
  • appreciate automated alerts and status updates so they stay informed
  • want to use a mobile app to view service recommendations, with supporting photos and videos
  • want to be communicated on their terms so they stay in control of the transaction

This is an area where franchised OEM dealerships can take the lead against the aftermarket. Dealership only solutions like our Superservice platform enable a measurable improvement in customer satisfaction for these shoppers who demand a ‘mobile-first’ experience.

Increased sales – the benefit of good customer experience

I believe that with the right technology, dealerships can easily improve the service experience by being more open and transparent with customers. This leads to an increase in customer trust, which in turn, grows parts and labour sales.

How do we know this? One case study from a dealership in the U.S. showed that our Superservice solution:

  • adds nearly $200 to each vehicle’s service transaction
  • converts 44% of the service recommendations on the same day as the inspection report was delivered
  • closes an additional 24% in parts and labour sales; when photo or video evidence is delivered along with the estimate

As the saying goes, seeing is believing!

So while price is perceived to be a factor in the consumers’ ranking of a service provider, in reality it’s more about perceived value. Dealerships need to adopt service technology that facilitates better communication and creates transparency in the selling process. In doing this, your customers will feel engaged, educated and believe in the value of genuine OEM servicing. They’ll remember you for being trustworthy and trying to help.