Debunking Common CX Myths in the Automotive Industry

Understanding and debunking CX myths is essential for OEMs and automotive dealers to adapt to the evolving market demands. 

There are numerous myths and misconceptions surrounding Customer Experience (CX) across various industries, often leading to misunderstandings about its true nature and purpose.

Customer Experience (CX) refers to the overall interactions a customer has with a brand, from initial awareness through to purchase and beyond, encompassing loyalty or churn. It includes the entire buying journey and the emotional connection a customer feels with the brand. 

CX covers every aspect of a company’s offerings, including customer care quality, advertising, packaging, product and service features, ease of use, and reliability. It is about understanding the customer’s needs at every stage of their journey and ensuring their experience is positive, seamless, and consistent.

Customer Perspective In The Automotive Industry

The automotive industry has always been complex, despite being straightforward in theory. In recent years, particularly post-pandemic, this complexity has increased. 

Original Equipment Manufacturers (OEMs) and dealers have rushed to accelerate digital adoption to ensure their businesses survive and to make transactions easier and more beneficial for both customers and companies. 

However, while buying or maintenance of a car should be simple from a customer’s perspective, it clearly is not.

There have been significant changes in the OEM and franchised dealer model with the introduction of a new agency-style approach. Additionally, new brands are entering the market without the burden of legacy systems, which could theoretically enhance the purchase and ownership experience for customers.

Traditionally, the franchise model involves car manufacturers providing dealers with a set profit margin based on the recommended retail price, along with bonuses for meeting sales targets. Dealers then decide the final price for customers, often leading to haggling, which contributes to the stigma associated with the term “dealer.”

In contrast, the agency model sets and fixes the price by the OEM, who manages the entire transaction with the customer, typically online. Dealers are responsible only for receiving, preparing, and handing over the car, in return for a fixed handling fee.

The shift to agency sales could transform the car-buying experience, with no haggling over prices or added incentives to sweeten the deal. The price will be set by the manufacturer, offering a more transparent and straightforward method of buying a car.

Consumer attitudes to car ownership have changed radically; the purchase, or buying journey is a complex one, and that is just for retail consumers, and may include financing, online research, varied perceptions of EV’s, physical test drives and finding accurate information on pricing and specification to make an informed decision. 

Add to this the new style agency model and whether to buy online or in store and it’s even more complex and complicated than ever. 

However, buying a car is just the start of the ownership experience, add to this service and maintenance and it is even more daunting and potentially confusing for the consumer. 

Myths About CX In The Automotive Industry

All dealers are the same: It is true that the term “dealers” often carries a negative connotation, and some OEMs have indeed started using “retailers” to shift beliefs. The latest UKCSI report (July 2024) ranks the automotive industry 6th out of 13 industries in terms of customer experience. This shows there’s room for improvement, especially considering the significant variations in customer satisfaction across different dealers and locations, even within the same brand.

Customer experience is simply NPS: Dealers often believe that Net Promoter Score (NPS), obtained from traditional transactional surveys, is the ultimate measure of success. Dealer staff often receive bonuses based on their “scores,” which can lead to misguided behaviours and undermine the true essence of customer experience. Unfortunately, this misconception is reinforced by OEMs who impose financial penalties on dealers for low scores.

Aftersales is not as important as sales: The automotive industry often emphasises initial sales over after sales services, which are relegated to secondary importance. Original Equipment Manufacturers (OEMs) typically concentrate on the number of “units” sold—be it vehicles or parts—as this is their primary revenue source. 

However, the significance of the customer’s interaction with a dealer’s Service department cannot be overstated. It is equally vital to the purchasing experience. Indeed, a positive service experience plays a key role in ensuring customer loyalty and can be more impactful than the previous purchase in influencing the decision for the next vehicle.

Traditional sales models are still effective: While the conventional methods of car sales and services have proven their effectiveness over time, it is becoming clear that the evolving expectations of consumers are steering the automotive industry towards a transformation. Today, there is a growing necessity for the industry to embrace a more engaging, customised, and conscientious approach to meet these new customer demands.

Customer experience does not drive sales: It is a common misconception that the quality of the product alone is sufficient to boost sales. However, the reality is that customer experience stands out as a crucial factor. It not only differentiates a brand but also has a substantial impact on the decision-making process of consumers, often tipping the scales in favour of a purchase.

Digital interactions are not preferred: Despite the common assumption that face-to-face engagements are always favoured, a considerable number of customers are now shifting their preference towards the ease and efficiency of digital interactions. This includes a trend towards online purchases and the use of contactless services.

Customer relationships are too complex: The notion that customer relationships are overly complex in the automotive industry is a misconception. Far from being an obstacle, with a strategic approach, it is entirely possible to streamline all customer interactions to focus on and improve the overall customer experience.

Millennials are not interested in car ownership: While it is true that millennials value experiences over possessions, they still are a significant portion of the car-buying market. It is important for automotive companies to understand and adapt to their preferences

Personalisation is only aesthetic: The feeling that personalisation within the automotive industry pertains solely to aesthetics is a narrow view. Modern consumers expect a more comprehensive form of personalisation that extends to the vehicle’s functionality and seamless integration with their personal devices and service.

Data privacy is not a big concern: The belief that data privacy is not a significant issue is outdated. As vehicles become more connected, the importance of data privacy and security is escalating in the eyes of consumers. Overlooking this critical aspect can result in diminished trust and eroded customer loyalty.

Understanding and debunking these myths is essential for OEMs and dealers to improve their customer experience and adapt to the evolving market demands. By focusing on a customer-centric approach and using technology, the automotive industry can enhance customer satisfaction and loyalty. 

Service providers to the automotive industry such as DMS providers, finance houses and other key platforms need to be open to collaboration to put customer experience in the driver’s seat. 

Focus needs to be placed on not just using technology for the sake of it but customer-centric product development and customer-centric innovation to meet customers expectations.