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30 May 2017

How brand commerce is changing the scene for automotive brands

Brand commerce is changing the scene for Belgian marketers. Today, customers no longer differentiate between brand and sales experiences. They expect a seamless customer journey, both online and offline. The idea of brand commerce is to look at brand-building and sales activation from an integrated, customer-centric point of view. All touchpoints between the customer and the brand are managed in a personalized way, focusing on the customer experience.

While working on a project in the automotive sector, I experienced how technology and digitization are forcing automotive players to rethink their business model. Following the idea of brand commerce, the car itself will remain the main source of revenue, but will no longer be the only source. The goal is to build a digital ecosystem around the vehicle where all of the touchpoints become a source of revenue for car brands.

Two important trends that are challenging automotive companies to move towards brand commerce are car usership and the connected car.

Brand commerce automative sector

From car ownership to car usership

Today’s automotive business model (still) relies on car ownership. However, 50% of automotive executives believe that half of car owners will not want to own their own car in 2025 anymore(1). Mainly the generation of millennials is growing up with brands using technologies to create personalized and on-demand services. They are less interested in owning a car and more interested in using a car as a service to get from point A to point B. Why would you want to own a car when work can be done from any place and your office or even your job is mobile?

As a result, we are seeing a tendency towards more on-demand and pay-per-use models. According to Google, search queries for car-sharing services have risen by more than 50% over the last year(2). Their disruptive business models allow you to pay for a car only when you need one – a flexibility the consumer is looking for. Companies like Uber, Blabla Car and Cambio are experiencing a rise in popularity. We are also seeing new challengers entering the market in Belgium, for example Ubeeqo. This new player offers you a minicab ride, a rental car or a shared car only when you need one. You book a car using a mobile app, you then hit the road directly and make the payment on your smartphone.

What does this mean for the automotive industry? A shrinking revenue model? Or an opportunity to create more flexible and personalized on-demand mobility services? Successful car brands are evolving from being car sellers to mobility facilitators. BMW is already setting the trend in Belgium with DriveNow. This service allows carsharing at any place in and around Brussels, using a mobile app. You can rent a car without having to worry about parking tickets or taxes. DriveNow allows you to make car reservations at any place using a mobile when you need a vehicle.

The switch from car ownership to car usership is also creating opportunities for new revenue models. As a car brand, why not offer a platform where consumers can earn money by sharing cars, by “lending” their car for test drives or by delivering a package on their way to a destination? Smart partnerships with cities and other transport or logistics partners will allow car companies to become players in a larger mobility network. The challenge is to offer services in a relevant way by offering personalized content at the right moment at the right place.

The connected car

Another trend that is influencing the automotive sector is the connected car. Connectedness and mobility systems are being adopted in today’s modern vehicles. These include Internet or wireless LAN providing additional benefits to the driver and allowing car companies to link data between vehicles and drivers. Even more: the automotive sector is developing vehicles that are able to communicate with each other – e.g. your car decides to leave enough distance between it and other cars on the road – and cars will be programmed to drive autonomously. Connected cars and assisted driving create entirely new driving experiences and will become the norm in the future.

Data and technology are important enablers of brand commerce. Connected vehicles, enabled by technology, are sources of very useful data – both about the car and the driver. Using this information in micro-moments allows automotive brands to become more relevant for the customer. This includes real-time road data, monitoring maintenance, safety conditions, parking assistance, efficiency information, etc.

The results is a rise in new business models and partnerships. Automotive players partner up with (online) players to leverage data and create branded touchpoints and transactions. Imagine if every Friday evening when you are looking for a parking place in the city, your car could save you up to 30 minutes by offering real-time information about available parking spaces and by allowing mobile payment for your parking. Another example: when you are on the road, connected cars generate location data that could be linked to your personal mobile calendar. By the time you are ready for a lunch break or a coffee, you receive a reduction voucher on your smartphone for a Panos outlet somewhere on your itinerary. In the same way, car manufacturers could sell or share their data with insurance companies, to advertising or other partners to offer new services and create transaction points. These partnerships are based on strategic cooperations between players from different industries with a common interest.

We are already seeing a number of initiatives and partnerships in Belgium. Examples are Touring and Proximus, which recently partnered up with ConnectMy.Car, an integrated solution generating real-time data such as location, information about the vehicle and driver behaviour. Information is used to offer various mobility services: improve driver behaviour, encourage economic driving, detect technical problems, monitor road information, etc.(3)

Putting the customer at the center

Instead of being ‘simply’ car sellers, automotive brands are becoming digital enablers of new, flexible mobility services that meet the changing needs of consumers. The goal is to leverage data and technology to create customer-centric business models in a digital ecosystem. Brands need to focus on creating an integrated customer experience across different touchpoints, from the moment when people are looking for a car, to the moment of sale and the phase of owning or using a car.

Following this logic, measuring success for automotive brands will be less about profitability per vehicle sold and more about the customer value that is created over the entire customer journey. This idea where customer value becomes the focus of your business model is at the centre of brand commerce.

Interested to read more about the topic of brand commerce? The Yearly Marketing Survey gives you an insight into where Belgian brands stand today in creating an integrated, seamless customer experience.

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Fewer car owners and more driverless vehicles in the future Think with Google Auto Trends, Touring en Proximus lanceren de ‘connected car’