Delivering value in the auto-buying process

In many ways, the ability to identify someone throughout their journey is almost as important as the actual product, the car itself. Recently I bought a used car for my 16-year-old son, so not only is it nerve wracking prospect of having a teenager hit the mean streets of America once again. It’s also challenging endeavor as I moved between digital and physical media and locations, stitching the engagements together to create a seamless and potentially frictionless experience for me was less than successful. We still have a long way to go in the industry. So Dustin, you got any recent experiences on the car market?

Dustin Raney:

Well, funny you ask because it’s only been about a month since I purchased my latest car, and I’m one of those people that loves the process of finding a great deal. That huge green arrow that says Great Deal on cargurus.com just makes me feel like I have a leg up at the negotiating table, or I won the jackpot. As you see growing up, I remember getting rid by my older brother as he would witness my poor negotiating skills as I was constantly getting ripped off trading baseball cards with this old man named Wild Bill at the local market. So my ability to leverage that vast knowledge of the internet to really understand the value of a very specific car in a very specific market with very specific amenities and mileage, and what it’s going for is a game changer for me.

So no doubt that’s put a lot of pressure on dealerships and for them to be transparent with pricing and it also changes the way they think about customer engagement. Well, today we have an industry insider with us is Steve Schmith, director of Automotive Strategy at Acxiom. Steve is former host of the Daily Drive podcast for automotive news and is now working closely with our automotive teams to help OEMs, which by the way stands for Original Equipment Manufacturer, I’m going to save you from a search there, and dealers engage and convert customers into loyal customers. Steve, why don’t you take a moment to give our listeners a quick snapshot of what your background is and your role at Acxiom today?

Steve Schmith:

Absolutely, Dustin, thank you for the intro, Kyle, pleasure to speak with you. Really looking forward today, and as you said, it’s a bit of a different and exciting opportunity from here. Personally, I’m on the guest side versus the interview side of today’s podcast, but overall, this is just such an exciting industry and I think such an exciting, in fact, an inflection point for this industry and we’ll dive all into that in here as we go through our conversation. So about me personally, been 25 years in the automotive industry, really have spent a lot of time in different facets of the value chain. Started my career at a supplier doing marketing communications, then moved into the consulting role, spent about 17 years at Deloitte doing a number of things relative to marketing, consumer research, thought leadership, data-driven storytelling.

Went to automotive news as you said there, I hosted the Daily Drive podcast there, was also responsible for leading their data in research center and have been with Acxiom since November of last year. And really my job right now is to really build our eminence, our prominence in the market with OEMs, with dealers, with frankly the entire mobility ecosystem when you think about ride hailing and ride-haring and charging, and charging stations. And all of these unique areas where the customers really at the center of that and creating these experiences are really at the center of all of that, and really looking forward to not only today’s conversation, but as you mentioned, Dustin, working with our clients, working with our potential clients, really help them understand how identity matters wherever you operate in this automotive value chain.

Kyle Hollaway:

Well, that is awesome, man. So excited to have you, and not just here on the podcast, but just at Acxiom and your expertise and experience being brought to bear. You mentioned something there about the customer at the center. How have you seen that evolve, maybe say over the last five years with those players in the mobility eco? I love how you say that, mobility ecosystem, sounds really cool. But how have you seen that evolve?

Steve Schmith:

Well, yeah, I think it’s important when people talk about customers and vehicles and the cars they drive and the brands that they love, most people I think just naturally gravitate to and stop at shopping and buying a car and it’s natural, right? That’s where consumers are, et cetera, et cetera. And that has certainly changed as a result of the pandemic. It had been for years and years and years, a good 20 years that this notion of digital retailing had been percolating there in the background. And it was funny to watch how over the last couple of decades really not a lot of advancement in that. I mean, at one point digital retailing “was you ask some folks whether they’re dealers and OEMs, do you have digital retailing capabilities?” And yeah, I can have my customers sign their contract virtually or digitally, right? And that was the extent of what digital retailing was for a long time.

Certainly with the onset of the pandemic, we have seen a massive acceleration on digital retailing. It’s everything from understanding what inventory is available to being able to finance your deal, pick your vehicle, do all of those things before you actually show up at the dealership. And the dealership experience then fundamentally changed to a delivery experience. It’s not so longer a shopping experience, it’s, “Hey, I’m here. I already know what my car is, I know what the payment is, I’m here to enjoy the pick-up, the delivery process. I want to smell the new car. I want to go test it for a test drive. Teach me how to use all of these new technology features that are inside the vehicle.” And so from a digital retailing perspective, creating, doing those things that you can before you actually show up at the dealership showroom has been I think a fundamental shift that you’ve seen over the last several years and that’s been brought on by the pandemic.

And I think exacerbating that is this emergence of these new EV only OEMs and brands that are allowed to go to direct to consumer, whereas incumbent OEMs are still working very closely with their dealer networks. I want to be very clear here. I’m not suggesting that there’s some disenfranchisement of those dealerships. They are still very important in the overall role of buying very important to the role of the consumer experience. But this notion of, “Hey, how can I create a more personal customized buyer experience,” has also been somewhat changed by these new business models that these new OEMs are also introducing. And that again, is just talking about the shopping experience. You then expand that into the overall ownership experience and you talk about, “Hey, where am I going to get my vehicle service? Where am I going to get my oil changed?” Where am I going to get my tires rotated?” Et cetera.

And more and more as you’re talking here in the next couple years, it’s that in the cockpit experience, what happens in the vehicle? Why I no longer have to drive it myself? What happens in my dashboard, right? Can I just talk out loud and my favorite digital assistant reorders my groceries while I’m going to pick up my children at school? All of those things are starting to be enabled by technology connected consumers, connected cars, connected infrastructure, and I think at the center of that, Kyle, to your question, the customer, how they behave, what makes them tick, et cetera, are certainly at the focus of all of that.

Dustin Raney:

Yeah. The advent of IOT and the digitization of everything, including your car. I mean, that’s been happening over the past several decades where now the computer in the car is so central to what you’re buying. So the OEM’s ability to really understand way more than just marketing about the customer’s experience that the car has an identity, right? The car has a digital identity that at scale brands can now leverage from the manufacturing component. So it’s all about capturing all that data and making use of it. What are some of the top trends and challenges keeping executives in the auto industry awake at night?

Steve Schmith:

Well, I think there are quite a few of them. So if we’re sticking with this digital retailing, and for all I intents purposes, let’s just describe it as understanding who your customers are, understanding who your potential customers are, and starting with that entire customer journey. I mean, you both talked about your experiences recently you’ve had buying a car, et cetera. And I don’t know where you started your journey, but I could guess it probably started in one of maybe several ways. One, you went to an OEM’s website and you built the vehicle, and then the OEM said, “Here’s the nearest dealer in your area.” Now, whether or not they had that exact vehicle that you bought, probably not, right? But they had something close enough and that lead was generated that you entered the funnel from an OEM website and you were then funneled to a dealership in your local area.

You could have gone to a third party provider, “Hey, I’m looking for an SUV, I don’t care what brand it is, I don’t care what dealer it is, is it within 50 miles of where I live?” And that third party then served up the inventory for you. Could have gone to a dealer website, right? Same thing, “I have my dealer, I’ve been working with them for years and years and years. I love them for one reason or another, I’m just going to go to their website.” Or you could have just even been driving by see a car with the color you like and swung into the parking lot and said, “Hey, I want to look at this.” The point is, where customers enter the funnel is so diverse and so different that that is right now when you push to digital retailing, that is one of the biggest things I think keeping industry executive up at night.

How do I understand my consumers? How do I get an understanding of all of this data? How are they’re behaving? And how I can serve up that personalization in ways that regardless of where the data comes from? And I think between us on the phone and certainly what Acxiom does doing that, certainly in ethical ways not to encroach on consumer privacy, et cetera, are all very important to that. So digital retailing, how do I understand my customer when they’re shopping regardless of where they’re coming from is a big trend. Electrification is certainly a big trend, and this is like to call as a smartphone moment, right? These products have not existed before to scale. And so it’s not only I think an effort to say, “Hey, we have an electric vehicle that could fit into your life today. Here’s the technology, let us build trust with you that you have confidence in the technology that you’re not going to run out of charge driving your family down the road.”

And so this notion to electric vehicles and how do you build trust, how do you build scale is also I think something that’s keeping them up at night. What exacerbates that is this supply chain issue, right? Not only enough metal to build batteries, enough metal to build the cars, you talk about the inside technology, the semiconductors, et cetera, et cetera. The supply chain issue I think is going to continue to be top of mind for industry executives for the balance of this year, likely 2023, perhaps even into 2024, right? And it gets to then this notion of lots of demand, lots of new products coming. Can we actually build to a scale that meets customer demand and build to that personalization that customers want? I want a red EV with this leather interior, with this sunroof, and I want it here by next week. Those are all things that are keeping executives up at night at this time.

And then the final piece is beyond the transaction, beyond the service, beyond the financing, there’s this notion of new areas of business subscription models, “Hey, I want to a subscription model, I want an SUV tomorrow. I need a sedan two weeks from now.” Being able to swap out vehicles under the subscription model, being able to share vehicles, et cetera. New ways of opportunity, new value streams I think are created there. And again, that how you serve the customer boils down to that. But I think it also is you’re starting to see that there is just a whole host of different ways that this industry is thinking about engaging consumers, is thinking about creating value, thinking about personalization beyond simply building and selling vehicles.

Kyle Hollaway:

Yeah. That is so interesting because the more you think about the industry segment, I mean there’s just more and more ways you can imagine how identity and being able to recognize consumer, and then engage that consumer across all these different medium is fascinating. Without calling out any specifics, I mean I’ve been on a wait list now for almost 24 months for a new vehicle that was launched and they had OEM issues, supply chain issues. And so then now the consumer engagement started off digitally at the OEM, then it was passed somewhat to a dealer. Then, now I’m in this netherworld between dealer and OEM on communications and, when are things going to happen? When are they not going to happen? Who’s communicating to me? And of course it’s nice because I’m getting free gifts in the mail to keep me interested.

So I got a new hammock the other day and stuff. It’s like, “Hey, I mean, that’s great. It’s still not the car I wanted, but it’s a hammock.” But yeah, just the complexity or the diversity of the whole chain, the whole customer journey, touching all the way back into supply chain, especially nowadays of just being waiting on things and how does that take place through that, yeah, that purchase engagement, like you said, everyone thinks around that. But then the whole maintenance side or the whole just living with the vehicle side, whether it’s servicing it, whether it’s getting help on finding places to charge if you’re on the EV side of things and how you go about living that, extending that into the customizations within the vehicle. It’s almost sad to say old school is when you could push the button and your seat would go to your personal setting.

Now, just the plethora of things, including your entire dashboard layout could literally change on some vehicles based on who’s in the vehicle. Biometrics, another component of how biometrics are integrated, do they actually know it’s you? How do they manage that and incorporate functions into the vehicle? I don’t know, I just could geek out on it for days just from an identity standpoint of how all the cool ways to do that yet the challenges. And certainly that leads to another big challenge that’s across all industries, which is privacy. How is this being managed from a privacy perspective? Where does responsibility start and end on that engagement, and being able to usher a consumer through the funnel and through those different touchpoints? And how to get the consented engagement there that allows the consumer to feel comfortable and not intruded upon and such? Are you seeing that particular aspect of it within the industry? Are you hearing things around privacy?

Steve Schmith:

Absolutely, absolutely. And you hear it in this, maybe it’s cliche, maybe, I mean, we’ve all heard the question of, who owns the data? Right. And I think my personal opinion, and you could probably have a debate on it. At the end of the day, the consumer has to own their own data is what it boils down to. And so when you think about, he’s merely shopping for a vehicle, it’s where you enter the funnel, who owns that data? Is it the OEM website? Is it the third party? Is it the dealer website? Is the salesperson that you just swung into the parking lot because you saw a car with a color you liked and you gave him your information? Who owns that data? And then you get into the financing, and then you get into the insurance, you talk about banks and insurance companies and who owns that customer data?

Then you talk about service, right? You take your car to your local drive-through oil change place, who owns that data, right? And so it is complex and there is certainly ongoing conversation around who owns that data and how do you make sense of it, et cetera, et cetera. But I think what is also very unique and I think interesting in this industry because at the end of the day, and there are a few examples of that, this next issue actually boils down to lie. That’s this issue of cybersecurity, particularly when you’re talking about more and more connected vehicles and the not only opportunities that those types of technologies enables, but also the potential vulnerabilities and the potential risks that come with it. And so yes, there is ongoing conversation around who owns the data, how do we share that and how do we protect it not only in terms of consumer privacy but also the systems, the architecture of protection as well.

And you look at the different players in this industry and there are different competitive advantages that we have seen this emergence, you mentioned some of them in the opening of these digital and native only used car retailers, right?They’re massive in terms of national scale, et cetera, et cetera. One of the things that I think that they do well, and I think that their market share and their growth is proving this is this notion of delivering that digital customer experience that people want, et cetera. I think where the opportunity is when you think about the overall ownership lifestyle is they have no service infrastructure, right? You can’t go to one of these big digital retailers and continue that relationship past the transaction. Where are you going to get it serviced? All of these things, right? And so I think there are also, we talked about the direct to consumer. Those folks have a bit of a competitive advantage because they own the whole thing.

They’re not sharing any party, it’s all in their first party data. By the way, they can build cars directly based on ownership as well. I want this red SUV EV with leather seats in the sunroof. They can build the order, whereas some of the other incumbents OEMs are still working towards that. But this notion of you see this mix of different competitors, different business models, what types of first party data they own, where consumers enter the funnel. And it all boils down to who owns that consumer data? How do we share it? How do we figure out how to get insights out of it? And how do we figure out how to personalize it towards what customers want?

Dustin Raney:

All great points and a lot of that in order to have that data, the consumer has to engage with you, right? And Steve, I want to go back to one of the challenges that keeps executives up at night. I think you’re the first one that you mentioned, and it relates to this when it’s just a prospect out there, a customer in market, you say there’s a lot of diversity of ways that customers engage with brands for the first time. Cars typically aren’t an impulse buy. Now, we’ll admit, I have one time in my life, been that guy that drove by and saw a car and pulled in and literally bought it that day. But that’s super rare. So for an OEM or a dealer, any brand for that matter to understand who is in market, a lot of times that requires third party data about customers that you don’t own.

And I would think in the automotive industry with the price of the product that you have, the value of understanding who’s in market, a lot of it has to do with relevance and what I’m doing offsite when I’m searching on the internet buying signals. What are some things that you’re seeing that successful brands are doing to overcome that challenge of finding the right customer upfront and understanding who’s in market?

Steve Schmith:

Well, I think there’s a couple of ways that we see it and certainly are working to help brands and dealerships manage that. Certainly this is notion of where consumers signal themselves that they are in market, right? They go do those things that we talked about. They go look at a car online, they go fill out a lead gen form, et cetera, et cetera. But we’ve created a lot of new partnerships through our data marketplace. Companies like Equifax, companies like Polk, where we have access to a lot of these data points relative to how much they’re paying now, how much they are left in market, head of household, how household income, how many cars they have in the garage, what types of vehicles have they been, do they generally buy SUVs? Do they generally buy sedans? We have these life moments, they’re married, just got married, might signal, “Hey, I’m going for my two door convertible because now I’m going to go buy an SUV because my family’s getting bigger.”

Job changes, moving, “I’m moving out of the city from my apartment to out in the suburbs to a three bedroom, two bath house.” All of those are signals that I think talk to exactly what you’re talking about, these additional signals that you can investigate, these moments of that matter in terms of can considering whether a consumer is in market or not beyond consumers signal it themselves. And so number one, our clients are finding a lot of value in that obviously because within the automotive industry there are companies that have just a little piece of the data, right? We’ve got incentives, and we’ve got this, and we’ve got that, and we’ve got this. And companies pay a lot of money to license those things individually, but then aggregating it and figuring out how all of these things come together, what are the signals, what are the campaigns, what are the personalization, where are these people at?

That becomes very hard. And I think we’re helping solve for that through our data marketplace and this ability to take these multiple data points do so. And again, I have to say so right, we are known privacy by design, ethics, that’s what we hang our brand on and we’re very good at that. And so the ability to look at all this data, ingest it, serve it up not only our own data but these partnerships that we’re creating, ingest it, serve it up to our clients and do so in a way that does not encroach on these privacy issues that makes people feel trusted, that does so ethically. I think those are very important areas and quite frankly, one of the things I’m excited about having joined Acxiom is not only a frontier for this industry, I think we’re just on the cusp of it. But being able to help OEMs with the team we have here, with the experience we have here it’s been an exciting few months and I think it’s going to be just a very exciting future ahead. For sure.

Kyle Hollaway:

Well, awesome. Kind of on this piece about the data and following the data, there’s some exciting stuff going on, like I said at Acxiom and just released this new recall product capability and it’s patented. And so it’s a really exciting time for Acxiom within this industry segment. So why don’t you bring us up to speed on what are we launching, what the values are going to bring into the marketplace?

Steve Schmith:

Yeah, absolutely. So we’ve been spending the last, this entire time talking about the customer experience and shopping and servicing, et cetera. But I think unfortunately and inevitably in this industry, recalls happen and they happen in a lot of industries as well. But when you’re talking about recalls that include half a million units or a million unit and so forth, and the longer between when that vehicle is produced and when that recall is issued, where is the vehicle? It’s switched owners. Is it scrapped? Was it in an accident, right? So keeping track of not only the actual vehicle but being able to then understand the life of that vehicle, and then be able to create recall campaigns that tap into those various consumer segments that we have, those very consumer attributes. And develop and generate a recall solution that is very targeted, is very efficient, and is both omnichannel as well, right?

And so I don’t know about you, but I’ve had recalls on two or three of my vehicles and I get this postcard in the mail and that’s about the extent of it, right? Maybe I’ll get an email on it, et cetera. But it’s generally postcard and I think some of these things are quoting hope. I even got a postcard once for a vehicle that I had not owned in about five years, as an example. But our process helps solve for all of that. So our solution takes into account all of the data sources that we have, understands, ingest our customers first party data, we append it with our own data and that data that we get also from our data partners that I mentioned earlier. And we’re able to help our clients execute, stand up these very targeted omnichannel campaigns and which you have a result of that.

Number one, you have a better response rate of recalls that are fixed, right? You have a better response rate of the number of vehicles that are being fixed, but you also then are doing that or were able to do that in a way that is more efficient in terms of time, less cost, in terms of wasted marketing spend. You’re targeting channels that are proven, that are effective. And we’ve really had some good experience with this helping some major OEMs manage through this process as well. So excited to get it patented. You’re going to hear more about it as we go through 2022 and into 2023. But apart from the process itself, I mean you talk about customer experience and you talk about, “Hey, how do we create experiences that help people fall in love with the brands that they choose to do business with?” And this is a big deal, right?

It’s, “Hey, when I’m ready to go trade in my vehicle that I’ve paid on for the last three to four years, am I suddenly going to find myself in a situation where my vehicle is not worth as much as I thought because it has a standing recall? And what impact does that have on trade-in value?” Conversely, “Hey, I have this brand vehicle, I’ve owned this brand vehicle for all my life that has a recall. Recalls happen. We’ve all seen them, we’ve all had to experience them. I’m going to go back and keep doing business with that brand because they proactively reached out to me, they thought of me, they love me as a consumer of theirs. They have my best interests in heart, so I’m going to continue to do business with this brand.”

So from an operations perspective, if you’re the customer, if you’re an automaker, if you’re a dealer, there is the operational side of it, the operational benefits from it, but then the inherent customer experience, how do they engage with the brand? How do they feel about the brand? Are they willing to be loyal with that brand because their recall experience was something that was pleasurable to them as much as a recall experience can be? I think all of those things are at play here. So we’re very excited about this.

Dustin Raney:

I was just thinking, keeping down the data path with technology, there’s so many things you can dream up of how you can leverage data. I mean, just think about what Google Maps has done with crowdsourcing and things like that. But I mean, just imagine a car being obviously connected to the internet, slowing down in front of a dealership and the fact that it’s reading a car that isn’t going to speed limit and it might not be traffic hour. So you could actually gauge intent off of that signal. And then going back to privacy and as you’re talking about recalls just about how you treat a customer, the customer experience and privacy and all these things kind of converge, right? It’s like what do I do with the data? What’s the right thing to do with the data? But how can I leverage new data coming in to engage in different ways to help a brand understand like, “Is this someone that could be interested?”

How do you then in privacy by design connect behavior that a car or a device is putting off, and then tie that back to a person, right? So there’s a lot to think about and there’s a lot of a new amazing things that the industry has access to, but it’s more complex than just having access. It’s like, “What’s the right thing to do? And what’s the right way to treat a customer without crossing those lines?” And certainly hearing you talk about the why behind this new product and about recall, it’s not just about brands just making a dime upfront. It’s true concern for the care of a customer, true concern for the value that that customer is able to pull out of that car. And that comes across to a customer over time. That’s how when we talk about retention versus acquisition, it’s like, “Man, every little nuance that plays into the greater story.”

Steve Schmith:

And I think if you look future, and we’re talking 10, 15, 20 years, right? And you talk about cars continuously and more and more driving themselves. What happens in that vehicle while you’re not driving? It’s all going to center around can, right? You’re going to have four or five different parties in one vehicle, all living in their own world. And there are suppliers right now that are building interiors that can compartmentalize themselves to support that type of in vehicle experience. You’re already looking at it now, you’re driving one place to the other and your favorite navigation is popping up brands of your local drive-through, right? There are just so many opportunities you think about the future mobility.

We’re even looking at a point that way out in the future about flying cars and the these different ways of mobility. One brand, being able to serve up your mobility experience. It doesn’t matter if you’re driving itself, it’s driving itself, whether it’s four wheels, these e-scooters that we’re seeing everywhere. And in the future, flying cars, being able to go to a local heliport, calling your shared electrified and autonomous vertical and takeoff landing vehicle and being able to fly to your next destination, short distances. And customer data and being able to serve that up, that seamless mobility experience. The future is just so amazing. And again, it boils down to the customer data and understanding the customer being at the center of all of that.

Dustin Raney:

Yeah. Yeah. I could talk about this stuff all day, but unfortunately time flies every time we get on this. And that’s going to bring us to a close of today’s episode. Steve, thank you so much for joining us and taking the time to share your wisdom with us. It’s so good to hear directly from an expert practitioner like yourself to hear your perspective as an industry leader. I want to thank all of our listeners for joining us. For more information about the podcast and define previous episodes, please visit acxiom.com/realtalk or find us on your favorite podcast platform. Good day everyone.