Episode 65
Daniel Hass, Senior Manager of Digital Experience at Toyota Motor Europe, uncovers some of the most burning CX challenges the automotive industry is currently facing. Adam and Valentina ask Daniel to introduce them to the problem of "online-only" demand, digital innovation, and the future of car dealerships.
Episode 65
Let's start with the challenge of online-only demand. According to Daniel Haas, this problem is not entirely established, as what customers want is a transparent and convenient purchase journey that does not have to be exclusively online. Online presence is crucial for businesses to engage with existing customers and attract new clients but it is only one step in the whole process. It is essential for businesses to look at the complete customer journey, identify the pain points, the needs of the customers, the information required and the emotions they go through at each touchpoint, to deliver the right service at the right time on the right channels.
To turn customers into advocates, businesses need to aim at delivering memorable experiences which stand out and make customers want to share their positive experiences with their friends and colleagues. Daniel has identified three steps to get to memorable experiences:
As stated earlier, face-to-face interactions play a huge role when aiming to deliver memorable experiences, and according to several surveys, they are still preferred by customers whenever they have doubts or questions about the product. Some surveys run by Statista found that while 63% of recent car buyers would consider buying their car online, 82% of people intending to buy a car in the UK consider a physical touchpoint with the dealer to be essential. This is because, even if we are often trying to rationalize our purchases, buying a car is an emotional process and it's the role of the dealer to leverage those emotions, providing personalized service to the customer.
This article summarises podcast episode 65 ”Uncovering CX Challenges in the Automotive Industry" recorded by CX Insider. For more information, listen to the episode, or contact Daniel on his LinkedIn profile.
Written by Alessia Trabucco
Full episode transcript
Daniel: I don't think that a customer is actually thinking 'I want to do an online purchase journey'. I think customers think more about 'I want to do a journey which is convenient to me and I want to do something where maybe I have the transparency and I can look for the best prices, but it doesn't have to be online. Online is, of course, a natural channel to start it and to engage with. But I don't think there's any requirement that everything should be or has to be online.
Valentina: Hello everybody, and welcome to another episode of CX Insider. Today, Adam and I talked to Daniel Haas, senior manager of digital experience at Toyota Motor Europe. We will talk about things like the online-only demand if there is any or is it a myth? about the future role of car dealerships, and way more. So, stay tuned. And don't forget to comment and share, like or follow the podcast on your preferred channel.
As mentioned before, Daniel is a Senior Manager of Digital Experience at Toyota. He is based in Brussels and comes from a lovely medieval town in southwestern Germany called Heidelberg. However, unlike most people, Daniel has a very close connection to Toyota, and that is that when he was ten years old, his family moved to Japan. As you know, Europe and Japan have massive cultural differences, and these differences are also reflected in customer experience.
Daniel: I grew up in a little village in Germany and the Heidelberg, but then at the age of ten, I moved to Japan because my father was working there. And I mean, at that age, everything which I experienced in Japan seemed quite natural to me. That was normal for me. And I very much like this Japanese mindset the way they think and interact and the way they present themselves. They think less of themselves as individuals, they often see themselves as part of a collective. And that was very, very common for me. And you see this if you're in Japan and if you see images of the rush hour in Tokyo in the morning, how disciplined they are and how respectful they are for the other people, even though there are millions of people commuting, but there's no pushing. There's everyone stands in a line and they all follow the instructions. And that's the way they manage to live together very well. And I think it represents their way of thinking. Also, when they are in somebody sick, they always immediately wear a mask not to protect themselves, but to protect others. And I always say that this one also translates them into a kind of a service mindset.
Daniel: Right. So in Japan, when you go to a gas station and you cover it up, there's always somebody then jumping out and blocking the traffic and making sure that you can get without a problem on the street. And then they're going into your life. And this is a bit like the way each individual pays the attributes to service. So when you give a business card, you give it two hands and you take it with two hands to show respect. And then, of course, I moved back to Germany when I was 19 to go to university, and that was the first time I was really confronted with the German culture in such a way. Holidays, I think it doesn't count, but if you really live there, it's always a bit different. And I think there are a lot of things that are quite similar, such as the focus on quality, being precise, and being respectful. I think this is all similar but it’s very different in the execution and especially when translating this one into something. It's kind of a service mindset because there I think it's where German culture sometimes can really fail and this is one thing I experienced, and this was when I just arrived, and then I had to go to university, and I had to subscribe to my courses and I have to register at the university office. And I arrived 10 minutes before closing time and the person there saw me coming in close to the booth and says, 'Too late, I want to go for lunch. Bye-bye'. And he left. And that was for me, such a shock. How can you react and what can you say to this? Because I never experienced anything like this ever before, and you can argue it. This is just administration, it's not really customer service required. A university is not going to be better or worse if the person is really more engaged or not. But this is where the difference comes in, and this is where I think the Japanese culture has like really embedded service mindset. And just to give an example, which is very similar to this, when I was in Japan as a foreigner, I needed a registration card. And in Japan, it is called the Alien Registration Card, which a lot of foreigners do not appreciate so much. But then even when it works, there are two kinds of people who need to put a fingerprint on these cards, and these are criminals and foreigners. So there was at that time a lot of debate about how disrespectful this is. But the Japanese government, they said, no, we're not going to change these rules, but the people dealing with it, they didn't feel so comfortable also confronting the foreigners with this because it's a real pain point in the experience to go through. And I still remember this moment when I was at the office to get my new registration card and the person welcoming me prepared everything I had to sign. And then he, in a very apologetic matter, taught me, here you have to do your fingerprint, and then he gave me with both hands, a wet towel like one of the towels you get in the restaurant when you wash your hands or your face to clean my finger. And then he thanked me for everything. So he tried to make his utmost best in order to make the experience as good as possible for me, even though there is no immediate benefit for that person, it's just a contribution to the overall experience. And it's really a mindset. And this is what I always appreciated or saw as a key difference between the cultures I experienced.
Valentina: A lot of marketers are talking about the importance of delivering beyond perfect experiences or exceptional experiences, memorable experiences. But let people tell you how exactly to do it. And it might sound a bit easier talking about delivering memorable experiences in the entertainment industry. But the automotive industry, where a large proportion of the customer journey happens online, is trickier.
Daniel: No, this is of course, always a big task and a big challenge. But first, maybe let's look at what we really mean by memorable experience and why this is important. I mean, I think it's easy to agree that memorable experiences are probably there to generate advocates, to generate promoters because they buy more, they negotiate less, and they recommend also other new customers. So, from that point of view, it's very important, but, if you also think about memorable, I think in many things, especially when it comes to online, we don't need memorable. I think a lot of items you want to do online; you just want to get the task done. So, if you want to book a transaction, if you want to book a train ticket, reserve a flight, or check your mobile banking app, there is nothing you need to remember. You just need to make sure that this thing works. That's enough. And then you're happy, right? But if then a company tries to exaggerate this also, I think it would more have a negative impact rather than a good one. But anyway, if we talk about what is really memorable and how you get there, it's by delivering something you remember. So it must be something that is a bit standing out, right? And I don't know if you remember what memorable experiences you would have in mind that you would remember.
Daniel: And if you think back so what, what is always special about this? I like to use the example of hotels in if you travel a lot for business, stay a lot of hotels and then many people stay always in five-star hotels. And I'm sure the experience is always great. But does it make you remember it? Probably not. Right. If you remember something, it's normally if there is something that goes beyond expectations, something out of the normal. Right. And I think this is what is quite important to keep in mind. And then the question is, how do you get something, an experience which is outside of the normal, something which is not expected. And when I joined many years ago at Lexus, Lexus was founded basically on two principles. It's having a great product and offering a great experience. I had a discussion with a dealer who said, I'm providing a very good experience, very memorable. And he told me what he's doing. And then he said, Well, when a customer comes for a test drive. I give him chocolate. I give him a packet of chocolate to take home. And it's been mixed and said, Oh, and when he buys the cow, he gets a champagne, a bottle of champagne with the cow. And then when it's the birthday of the customer, they get flowers. So, this is really memorable.
I mean, customers are not stupid. They know who's paying for this. And it's really kind of trying to teach your way out by buying basically this experience. So it must be something else that you really don't deliver. And in order to get it, maybe it's best to break down what actually are the different steps to get tomorrow. Because we always look at the experience in three parts. One is delivering a random experience. So random could be great. It could be a disaster. It's depending on the visual. There are no processes in place, no common execution. And this is something I think no company really wants to be there because it's going to be it's a big vulnerability or you're very vulnerable to the experience you provide to the customers. Then the second step is being predictable. So make sure you have clear processes in place. Consistent execution of course does not mean that you are memorable, but at least you are sure that across your whole business the customer can expect something and gets it. And based on this one. Then you can look at what is actually memorable and where do you stand out. And that should not be everywhere. It should be just and specific touchpoints that are really critical moments of truth, which are really critical by just, I think, clicking through a website you would never expect. Anything memorable, right? It has to be something where the human is actually interacting with the human is playing a role where it goes beyond the normal.
And so then the question is, is it then something which is then not cleanable or which has to be based on the individual's understanding and mindset? Well, I also don't think that's only the case. So you can engineer a lot of things. For example, if you know the pain points of a customer, if you look at it in automotive, often the whole element of maintenance, of service, you don't know what they do to the car. You don't know if they tell you the truth or if the job is done rightly. But if you engineer it into the process or it's a journey that, for example, the service advisor or the service technician who's doing the job comes to the customer and explains what he or she has done and, and, and provides that insights and even shows it creates a lot of confidence and it creates trust and it creates an experience, which is something customers like to speak about and talk about and share about, right? So you can engineer some moments which are memorable, but then the others, of course, if it's always an individual, you cannot. But I give you an example. When I worked with our Austrian Lexus team, they had a story about a customer.
It was very difficult to audit a top model of Lexus, a very expensive car, but they were delays in the delivery because of certain reasons. And the customers were getting very angry and very unpleasant. He was complaining and sending letters and nobody really wanted to deal with the person because it was getting a bit uncomfortable in pleasing that customer. So a young guy in the dealership got a task to then do the final delivery of the cup and he prepared for this one by looking at who it really I'm dealing with. And he found out this customer is young years in the sixties. It was a big Led Zeppelin fan. So he bought Led Zeppelin, said he welcomed the customer, explained everything, went through all the paperwork, make sure that everything is clear, and then told the customer when he was ready to drive off. Once you're on the highway, switch on your CD player and listen to the music, there's a little surprise for you. And then the customer was so overwhelmed when he experienced this and she thanked everyone and she wrote letters to say how great it was. So these are the little things you cannot engineer. It's up to the individual to take the initiative and the responsibility in order to do so. To drive this to do something which is outside of the normal.
Valentina: The first sea challenge that is spreading across all industries is the online-only demand. And when it comes to high involvement products, there are people who buy properties without ever visiting them or buy cars and complete the entire purchase journey online. And those are extremes. So before diving into the first challenge, Adam and I wanted to ask Danielle where exactly this online-only demand is standing in the automotive industry.
Daniel: The customers, of course, are more and more relying on the online channel. This is true in the digital channels to get this information. And there's also a lot of competition out there who tries to steer the customers from dealing with a car manufacturer, a lot of third parties who are there as middlemen in order to interact and order to engage and get then the business away. Because it's nowadays digital it's so easy to engage. But I don't think that a customer is actually thinking. I want to do an online purchase journey. I think customers think more about it. I want to do a journey which is convenient to me and. And I want to do something where maybe I have the transparency and I can look for the best prices, but it doesn't have to be online. Online is, of course, a natural channel to start it and to engage with. But. I don't think there's any requirement that everything should be or has to be online. It's just a battlefield where you have to be active and you have to be also very careful because it's to protect your business and to make sure that nobody escapes.
And so it's important to provide the customers with the right information and engage with them at the right moment of time. And through the right channel at the right moment of time. Right. And I think when talking about automotive and talking about online only, we look a lot at the transaction at the end of e-commerce. But the e-commerce is just the transaction is just the last step was one small step in the whole journey that has to be designed and how companies have to prepare in order to deliver this e-commerce or online experience. So it's important to look at the complete customer journey end to end, to make sure that you map it out and you look at what are the pain points of the customers? What are the needs of the customers? What are they? What kind of information is required and what are the emotions they go through? And then look at what needs to be delivered in these touchpoints. In which channel. In order to. And ensure that the customer demands are fulfilled and that the relevant information is provided to the customer.
Valentina: According to a survey published by Statista, 63% of recent car buyers are open to buying cars online, and that research was conducted by the end of 2020. Another survey, also published by Statista, says that 82% of people who intend to buy a car in the UK consider a personal touchpoint with the dealer to be essential. That means that somewhere between conducting extensive online research on the car and buying the car online, there is this one moment where the customer desires to talk to the dealer and probably get more information about the car or reassurance or whatever. They don't know. That is the moment of truth. So, Adam, and I wonder, what's the dealer's role in today's environment?
Daniel: Well, I think it is a big challenge and it's a big shift in the role. I mean, if you look at what you just explained in several years ago, an average customer who wants to buy a car visited seven dealerships or even more. Nowadays, it's between one and two. So by the time you come to the dealership, basically you're ready to buy. So the dealers have to be aware. Before it basically led to coming in and then the whole process started. But customers come in very educated because they have probably managed to collect most of the information already online or through different, different, different channels. So when they come to a dealership. They still have questions, but these are often very specific questions which they couldn't get the information online. So the details have to be prepared for this, and they need to be able to have this insight. So sometimes it's more the role of a product genius we have to play rather than the general salesperson to try to explain to you what the line-up is. Right. And then, of course, they come up in order to get the items you cannot experience online. Seeing the car and touching it. Smelling it. Right. Driving it. These are the things where a dealership has a big role to play. And as much as we are often trying to rationalize our purchase, in the end, buying a car is a very emotional thing and I think people are driven by emotions.
It's the role of the dealer whether to create these emotions or push for these emotions. I think there's so much you can do online to create emotion, but from person to person, I think there's much more the dealer can do based on also the personality and the customer. We can generate goods in the online world. We always have the personas and then personalization, and we know these kinds of people do this behavior. Maybe we can bring that information, but it's still different in a 1-to-1 exchange and to create a small effect or to build on these emotions. It's a big task. And maybe I'll give you an example. So, of course, Toyota we are very strong on electrification, especially in terms of hybrids. The hybrid is a very complicated technology. Very difficult to explain and I think it's very similar. Also, if you talk about EV, it's also a new technology to explain to customers and there are some things that are very factual. Range capacity speech. Right? These are things that then you can tick off, but you can find this information anywhere and you have a ticket. But what's the real value of driving this right? The silence when driving less hassle for maintenance.
You don't have to go to a filthy gas station. You can charge it at home. The connected features really make your life better. The environmental statement you make when you drive up the road, the driveway. Right. The acceleration in traffic in front of a traffic light when it goes green is much better, an electric or hybrid car gets sleeker. And these are the things the dealer can bring forward and really show and demonstrate the cars and build on these emotions. And so it's really important to adapt to this. And every customer is different. For some, this might be important for others and it's important to tailor this right. And this it's only human who can do it. And I believe it's very important, I think, the role of the dealer in the real life, because I personally had an experience with a bike and something came to me, it became clear to me how important it is to to have actually, like a retailer, a dealer, a motor brick dealer or whatever, helping you. Because I bought and I wanted to buy an electric bike and I did my research online and I found this company had a fantastic design. Good price looks great. Superb website, really excellent. Right. Everything is easy to do. And they didn't have a presence in Brussels. But no problem, I can order online. They deliver everything, and work fine. They're very friendly in the communication and setting. And then I got my bike delivered and the front wheel was damaged. So no problem. They sent me another front wheel, I could change it. And then after a few days of riding, there was a problem with the gearbox. No problem. They sent me a replacement gearbox, but then I couldn't install it myself. So I had to go to a bike shop, I said, no problem, we will pay for the bike shop, but then try to find a bike shop repairing electric bike of another branch where you have never bought a bike from and who will do it and who have time and so on. So all of a sudden things became very complicated and it became really a real hassle in order to deal with it. And I realized how much easier and more practical it would be just to have this company with a dealer somewhere where I can go and then I have peace of mind. I have somebody taking care of it, making sure it's all right and the bike is so much a simple product compared to a car. So I think it's sometimes. Although it would be overambitious to say, Hey, it's okay, we don't need the dealerships anymore because the business can be managed. Also.
Valentina: The increase of online-only demand questions the future of car dealerships because the number of cars being distributed in car dealerships is a huge cost driver. So we're not talking about closing these dealerships, but rather how will these places transform? So there might be few cars with advanced VR technology enabling customers to customize the car they see in front of them. Or there might be a concept of hyper dealerships.
Daniel: I think this is everyone who is working on the network probably has this a key task in front of them to enhance the showroom and to utilize these to better integrate it into the digital world. Because traditionally, of course, the role of the showroom was different. People were informed about the cars they were showing them around. But now digital tools are much more available. And you can have screens, demos, you can mock up cars, you can even use 3D simulations on your mobile phone, maybe show accessories on the cars. But these are all technology gimmicks, which of course have the experience. But it is not always so straightforward to implement on a broad range of dealers, because the digital maturity of dealers varies very much between the different businesses are in. And we experienced many years ago when we did like the first wave of things that many it was failing because the Wi-Fi was not strong enough and not really up to date and they didn't know how to what to do if it was falling, it was failing or not delivering. So this competency is just building up. And so you have to have this basic in place in order to build on it. But I think there will be a lot of changes coming. And if you look at all the big system providers, they're all having these digital showroom tools or digital signage tools as part of their offering, which enables really to enhance the dealership experience. And I think they will sell a lot of change becoming, but it's not so super easy to implement because you have so many parties, right? If you have two and a half thousand dealers or 3000 dealers in Europe to get them all to the same standard or to execute this and to use it the right way, that requires a lot of training and education.
Valentina: This innovation management gets more difficult with the complexity of the business ecosystem and looking at it from the perspective of the manufacturers. There are so many entities involved in the process. It made us wonder what exactly are the underlying issues that make the innovation all the more challenging? Is it the customer data? Is it legacy systems?
Daniel: I think the Cup is said before it becomes quite complex and there are a lot of stakeholders involved. So you have not only the head office and the regional offices and the national distributors and retailers yourself, the finance company, then you have insurance companies and so they are all somehow involved in delivering the product or the combination of products to the customer. And the way they play together is quite well established, right? There are clear roles and responsibilities. They are processes, they are agreements, they are contractual agreements. Also, contract signed or whatever between these. But how this is working. So, if you want to now come with innovation and change and you want a disruptive, of course, by definition already it's going to be difficult because there is something which is working, established, and needs to be changed. Right. So and especially dealers often get nervous if they do digital innovation, all of a sudden the manufacturer is going to engage with my customers directly. Before I was the one who could control it. So they are naturally getting nervous that something is going to be taken away or something is going to happen, which is going to happen, which normally, I think not to be the case.
Daniel: But I think the critical thing is like if you would like to. Innovates digitally and engaged digitally. There's one thing you need as a basis, which is data. I think this is, first of all, customer data about customer data, which first of all is correct, which is up to date, which has information about the history, about the products they own, and so on. The interactions, the issues, the requests. But looking at how many entities are dealing with the customers, this data is, of course, spread over all of the different entities. It's a database here and there, or maybe some people know it by heart because they are dealing with it. Right. So, and this and then to consolidate that data in order to have one basis of truth, in order to deal and to leverage on these digital channels. This is, of course, it doesn't only request the customer to explicitly accept that you do this. It also requires all the entities to agree that they share this, and they put it together and then one source of truth. Right? And this. These are things that are not. Stick it in the day of the week. This is a really fundamental thing.
Adam: That's a pretty big challenge, I guess. Yeah, it's a pretty big challenge because I suppose if you've got, as you said, down your multiple databases, multiple systems, that customer, if their data is in one of the systems incorrectly, it might be out of date. So I suppose that's that could really have a kind of detrimental effect to your customer experience, I guess if it's not all talking together and communicating. Absolutely.
Daniel: Yes. An interesting thing is as a common fixture, you want the customer to see you as one. Well, see, this is the brand I'm dealing with. But in reality, the customer is dealing with your brand, but with the sales, with the aftersales, with the finance and insurance. But you want to have one. But the way we see the customer, we see the customer in many different bits and pieces because we have a little bit data here, a little bit data there, and sometimes it's complimentary, sometimes it's overlapping, sometimes a victory. And that makes the whole thing, of course, very difficult to deliver on this.
Valentina: Most companies realize that there is a need to innovate digitally, but sometimes the difficult part is to face the resistance internally within the companies. So we ask Daniel about his perspective on driving change and driving this transformation in the company.
Daniel: Most companies, don't really have a choice. I think oil companies, need to change. Or at some point, they will lose a disappear or really significant harm to their business. And there's I mean, there are these start-up companies, entrants who are focusing on bits and bytes of your business and trying to take it away if you go to look for used cars. There are so many used platforms that providers are very good and they only focus on digital. So they are excellent. While you're on this digital journey to, to, to pull you away and you have to compete with them, your competitors, not anymore. The other manufacturer with the dealership next door, your competitor is these interrupters, right. It could even be platforms like Google when you start to search, all of a sudden they lead you to an online sales platform, of course, available on the Google platform. Right. So all of a sudden customers are like approached from all different sites throughout their journey. So, it becomes very apparent and very important that companies change. And I think most of them are very, very aware of this. And to drive this change internally, of course, if you have people who are already working in a company for a long time and have. There are certain ways of doing business naturally. I think this is something which is difficult for them to encounter, but not for all of them. For some of them. It could be just a natural resistance. And so often I see that in the beginning, these are the issues identified. And then the natural thing is to give it to a team to say, you guys are not responsible for this change.
But that's a good beginning. But a team cannot fix the issues which are across the whole company because digital is becoming an integral part of the company. Right. And it is not one department alone changes, all departments have to change together. And this is where you move from a digital transformation to a business transformation. And because it really changes the way that you are doing business right, as a corporation, and that's really a big task. Right. And, and it's not easy for everyone. And you need to have this willingness to change. And it's not enough if one person has it. I think it's the piece to execute it. They need to have room for change and also the motivation in us and why to change things and the chances. I think often that the results are not clear. If you start to generate new business models or new ways of engaging, it could be that you test out something and it fails. Maybe you offer customers to buy a used car online, but nobody does. Then they have to find a way. Right? And then maybe you find other solutions and say maybe it's easier if they just resolve it and they go to a dealer, maybe it works or yeah. So so these are the things you have to have. So you have to have another way of working and it requires to work more in, in minimum viable products to, to, to start something tested and do the next thing and adjust it. And this way of working is different from what many companies are used to usually defining the end product and then delivering this.
Valentina: That was the end of today's episode, and I hope you found the insight valuable. If you're interested in continuing the conversation with Daniel, feel free to contact him on his LinkedIn. The link is provided in the episode description also feel free to chat with us on our main social media channels, LinkedIn and Instagram. And now Rapid Fire Question Time. What's your favorite memory from Japan?
Daniel: My favorite player from Japan ..sitting at a Japanese hostel on the Miyajima Island, which is the one where you have outside this famous gate and eat fantastic Japanese food. It's my favorite memory.
Valentina: Hybrid or electric car?
Daniel: Electric.
Valentina: How will the ban on diesel and petrol vehicles affect Toyota's product line-up?
Daniel: I think it is already affecting it, I think. I mean, you see this enormous shift towards electrification. And I think it's just a trend which continues like this for a time, all other manufacturers.
Valentina: My last question. In the future, do you think cars will be sold online only?
Daniel: No, I don't think so. I think they would always be. It depends on how much you look into the future, but I think they will always be a mix.
Valentina: I hope you enjoy today's episode and if you did, please don't forget to like, share, comment, or subscribe to the podcast on your preferred channel and I will see you in two weeks.