We spoke with Dr. Rainer Mehl, Managing Director Manufacturing, Automotive and Life Sciences at Capgemini Invent, about how automobile manufacturers are developing a digital DNA. The first part of this dla Perspectives interview details what steps need to be taken to move from product focus to customer centricity. In the second part of the interview, we present success factors for implementation by managers in the corporate organization and culture.
dla: Dr. Mehl, if there were a Champions League for transformation in German industry, the automotive sector would have to prove itself particularly frequently: climate change, e-mobility, trade barriers, digitization – there’s virtually no other industry that is so exposed to such huge pressure to change, on so many fronts. Where do you see the most urgent need for action?
Rainer Mehl: It’s definitely digitization. Even though it’s by far the most important issue to keep pace with their customers, at this stage there’s virtually no OEM or supplier that can position themselves as a champion of digitization. At least, there isn’t one with the maturity that the technology companies have been displaying for years – in the West, that means GAFA in particular (Google, Apple, Facebook, Amazon), in Asia that’s Alibaba, Baidu, and Tencent.
As drivers of digitization, these companies have already firmly anchored themselves in consumers’ day-to-day lives with their products and business models. The best example of this is the smartphone of course. Virtually no other product in recent history has shaped customer expectations in terms of relevant content and seamlessness, i.e. ease of use.
dla: And if you apply this to the automobile industry, it means …
Rainer Mehl: … keeping an eye on competitors that use this principle to build up customer relationships. The most popular example is Tesla: going by the traditional product criteria of the automobile industry, there is certainly room for improvement in terms of the quality, safety, and driving comfort of their models. But if you go online and configure your dream Tesla today, you won’t just get this done in a few minutes, you’ll also very quickly have an e-mail in your inbox offering you a test drive.
Initiating and maintaining a digital customer journey for a vehicle isn’t easy. But the ability to transform technological complexity into a seamlessly-functioning flow of information, while building customer relationships from the ground up, is now a skill which is crucial to success – and is something which most other car manufacturers simply do not possess.
dla: Why is that?
Rainer Mehl: Naturally, this ability also develops in line with the market and with customers. But for decades, the big global brands like VW, Audi, Mercedes, BMW, and Porsche focused on the constant improvement of their production processes. Given this heavy product focus, the attention to sales and customer needs decreased at times.
The “switch” from product focus to customer centricity does not work by simply flicking a magic switch called “digitization”. It’s a process that requires the intensive use of resources, in terms of money, time, know-how, and appetite for risk. But at least two of the three points I mentioned are usually simply not in place. Which brings us back to the reason behind the pressure to change.
dla: How should car makers design a customer journey to counteract this pressure?
Rainer Mehl: They need to feel the pulse of a digitized lifestyle and develop suitable products for this world. For one, they need to appreciate in minute detail the benefit and value of a vehicle in specific everyday scenarios for their target customer groups – how do drivers use the office functions or interfaces on the way into the office, for instance? What market potential does a KI software service have, that not only synchronizes the vehicle and smartphone calendars, but also shifts appointments automatically, based on the traffic situation?
The other thing car makers need to do is to move their horizons substantially beyond the vehicle, even if this is a difficult thing to do. Today, the “mobility” experience is now no longer limited to four wheels. And if 60 percent of the world’s population will in fact be living in cities in ten years’ time, relying on a vehicle will be a lot less common.
dla: Which for automobile manufacturers means …
Rainer Mehl: … that under this kind of scenario, the best mobility provider will not be the one with the smartest autonomous car – but rather the provider that has the smartest networking suggestions to bring its customers quickly and conveniently from A to B. This could include a mix of the subway, e-scooters, and cars. A “connected life” is better than any “connected car”. With this kind of networking, car makers would gain a degree of superiority over Google, Facebook, Apple, and so on.
dla: But particularly with regard to the market potential of the “connected car” and the “mobile office”, for years the premium manufacturers you mentioned had already been touting their determination to prevail in the competition they face from “GAFA” and others.
Rainer Mehl: Yes, but the crucial challenge is not just about technological superiority. The challenge is to move from a reactive position, back to a leading role in all aspects of the customer relationship. In terms of their digitization strategies, car manufacturers should be measured based on four customer expectations: as well as the ease of use aspect that I mentioned earlier, this means the consistency of the customer journey, the situational relevance of offerings, and premium services.
In all four aspects, an additional “complexity brake” also makes it difficult to shift from product focus to customer centricity. This obstacle is the challenge of finding solutions for the correct handling of customer data. An element of this complexity stems from the manufacturer and the manufacturer’s sales channel being legally separated; the dealers are independent businesses, legally speaking. As a result, for decades the industry has wrestled with the question as to who owns the customer data that stem from this relationship. Although it’s crystal clear to us that this is the customer, the debate still hasn’t been settled in the industry.
But in the argument between manufacturers and dealers as to who owns customer data, ultimately, it’s both who lose out. They both lose unless they recognize that they are heavily reliant on both digital communication with their customers and on personal contact, in order to provide them with the best possible customer experience.
dla: This is a problem that should be resolved in practical terms by all participants concerned, particularly in light of stricter data protection regulations such as the EU’s GDPR.
Rainer Mehl: Precisely. The first question should always be: has the customer provided consent? If that’s the case, then the customer may also expect that the manufacturer and the responsible local dealer are also in touch with each other. In other words, they expect that online data relating to things like the vehicle configuration go to the dealer. At the same time, significant information from the dealer should go back to the manufacturer, thereby ensuring a full set of customer details.
Without harmonizing all the information you have available, you will only be able to respond to the four customer expectations – simplicity, consistency, situational relevance, and premium services – with fragmented solutions and compromises. This issue has still not been solved in Germany, but it should be a high priority. And not only because it’s technologically feasible. But because all four aspects shape the digital DNA of car makers.
dla: What starting point is particularly suited for steering the corporate structure of an automobile manufacturer towards customer centricity?
Rainer Mehl: Rethinking the sales process! To date, most OEMs have found out what end customers really wants in a rather fragmented manner and in different areas: from marketing campaigns, surveys, and feedback from dealers. These are tools that they are accustomed to, and which will continue to work – but they’re just not suited for the dimension of the challenge we’re talking about.
On top of this, the unwritten rules of the organizational structure, such as “cluster information into fiefdoms and keep essential knowledge to yourselves” are outdated in the era of digitization. In the marketing process, this affects the sales division, with its various sub-units that are usually completely separated from the after sales team. This is perhaps the most fatal loss of information for the “customer centricity” element.
dla: For what reason?
Rainer Mehl: Because the customer experience is not transparent for the longer periods of time in which the vehicle is used. Let’s assume that the sales process takes a period of between a week and six months. During this period, customers are asked for their feedback a countless number of times. But then they use their vehicle, whether privately or as a company car, for at least three years, maybe even for longer.
And then the communication suddenly dies out, instead of maintaining contact with the customer by providing offers, service options, and information. Of course, there are a lot of “correct”, understandable reasons for this: the effort required to clarify the responsibilities of the after sales division and the manufacturer and to share information according to a plan; the risk of trying out new sales channels with a high level of investment, but with poor results, and so on. But what about the risk of customers being left with the impression that they’re on their own?
Dr. Rainer Mehl is Executive Vice President of Capgemini Invent and heads its global automotive and mobility business. He is also in charge of consulting for Manufacturing and Life Sciences and is part of Capgemini Invent’s global leadership team. He supports companies confronting digital transformation with focuses on customer centricity, agile organizations, and new business models.