Adopting the agency model: How OEMs are mastering a new retail approach

Retail business models are changing rapidly in line with mobility trends and customer behaviors. The growth in EV sales is pushing a generation of consumers towards online buying and omni-channel experiences. OEMs must overcome many challenges to transform their retail operations in time to meet their demands. New customer journeys should retain the familiarity and enhance the customer service of traditional experiences, even though the agency model has tipped the balance of responsibility dramatically in the manufacturer’s direction.

Taking on these extra tasks is far from simple. Today, customers expect information at their fingertips and effortless shopping around the clock, instant or swift delivery, and tailored products and services. The new retail model is designed to focus on convenience, multifunctionality, connected technologies, and an omnichannel shopping experience. Yet OEMs adopting new retail models are having to manage the logistical challenges of this transformation while ensuring customers remain as unaffected as possible.

Meanwhile, more online processes will offer greater convenience and a simpler journey for the consumer. But for OEMs, there’s a lot to consider. It is estimated that a single customer journey contains as many as 5,000 interactions between different stakeholders such as sales teams, finance departments, test drive teams, administrators, and valets. Until recently, these tasks were managed by retail networks, but today’s retail models mean many more interactions occur between customers, their mobile devices and the OEMs themselves.

OEMs are facing growing responsibilities

Few manufacturers are currently set up to support customers with purchases, repairs and other services without involving dealer networks or without developing additional renumeration models. When a customer requests a test drive, for example, the dealer normally manages all interactions between stakeholders. With new agency models, the OEM must provide a base from which all test drives take place, which is accessible by multiple agents, and which contains the right vehicles at the right time.

It’s also an expensive and complex transition. Manufacturers need to address the needs of consumers making high-value purchases and be responsible for a significantly larger proportion of customer engagement activities and touchpoints. They must streamline interactions within the customer journey and reduce complexity, while cutting costs elsewhere. These challenges can be overcome through automated processes, integrated retail systems, and the elimination of a significant proportion of interactions, leading to faster, more effective customer journeys.

Data helps OEMs understand and improve retail experiences

Across all industries, customers now expect an omni-channel retail journey in which they have a seamless experience across both online and offline touchpoints. Car manufacturers have little choice but to provide a more convenient, personalized approach to engage customers and retain their loyalty. Those customers who prefer researching or purchasing products from home will experience fewer physical touchpoints. The manufacturer must ensure that this online process is seamless – ideally the customer doesn’t need to know their interactions are no longer with the dealer but with the OEM itself.

The agency model gives manufacturers an opportunity to significantly improve the retail experience by adding more convenience-led tools and by personalizing the journey with the help of data-driven, intuitive information. This is because the model allows a clearer and more direct flow of data between the retailer, the OEM and customers. This data transforms the quality of reporting, providing a deeper level of insight that clearly reveals consumer needs, inspires the development of new products and services, and enables faster, more accurate responses to customer enquiries.

In an agency model environment, a vehicle’s price will remain consistent, regardless of the channel the customer uses to purchase it. With many buyers still used to negotiating discounts on their vehicle purchases, OEMs must communicate to customers the benefits of fixed pricing. Buyers no longer need to haggle or shop around for the best price and can have confidence that the agent is available to support their needs, not to make a sale.

Businesses must create a more seamless transition

Many factors will determine the amount of activity an OEM can manage within its new retail model, from the region in which the business operates, to the type of product lines or customer demographic. OEMs’ strategies will differ from those of disruptors, and some manufacturers will continue to work with partners who take over responsibilities such as aftersales. Proper business analysis that breaks down the management of aftersales, used cars, leasing, and insurance, is vital, as is the mapping of touchpoints and interactions. Many organizations are employing the help of experienced suppliers to support them in choosing the best models and in deploying digital tools to aid their transformation in a way that’s cost-effective and lean.

The restructure of an OEM also involves an effective communication strategy to engage the internal organization and the retail network, defining individuals’ roles in the business and the benefits of being part of it. New responsibilities will evolve with the introduction of new job titles and skill sets that help connect the employee to the brand and expand the scope of their positions. It’s also important to remember that in nearly all new models, retailers – or agents – will continue to play a very important role. An agent’s interaction with customers will be transformed from one that primarily pushes products and services on them, to one that’s focused on providing professional, personalized support and on building relationships that have the potential to last a lifetime.

The agency model supports the standardization of digital tools and more personalized customer experiences. But standardization does not mean identical implementations across the network. The model should support an omnichannel arrangement that can be adapted to meet local cultural needs or mindsets. Dealers (or agents) and OEMs will need to agree on adaptations to strategy, distribution, lead management and consolidation of the physical and digital customer journeys.

Agency model sales are largely driven by data, but many legal factors surrounding the use of customer data must be considered where the model is implemented. OEMs must comply with data privacy regulations, as well as competition laws which stipulate that independent auto retailers should have the ability to repair vehicles under the brand’s warranty, therefore allowing motorists flexibility in their choice of workshop.

A standardized and scalable transformation can be complex and costly, but it’s a long-term investment that will generate far greater savings as the business grows. By getting the planning right, the business can improve the speed of transactions and promote products and services consistently across markets, managing the customer experience to a standard that fully represents the quality of the brand.