What’s new about omni-channel?
Omni-channel retail seems to be back in the news again in automotive circles. This week the UK marketplace AutoTrader will publish a new report in conjunction with ourselves and the NFDA looking at the readiness of UK franchised and independent dealers to operate in an omnichannel world. I also had a conversation with Google recently whose perception is that manufacturers are not yet ready to address omni-channel effectively. This is borne out by the various delays in agency implementations where retail systems and the supporting processes will not be ready for the planned launch dates.
Like any term in the business world, omni-channel is used by different people to mean different things, and in the worst case is simply used as a buzzword to make something old look more forward-looking. It is more than offering multiple channels to the customer which might operate quite independently and not support effectively a customer who wants to switch channels partway through their journey. It is about how multiple channels are linked and work together to give the customer choice at any stage to switch channels, and potentially to switch back again at a later stage. It is about ensuring that those channel changes work seamlessly so that the customer does not need to repeat steps or provide data that they have already supplied at an earlier stage in a different channel.
It is important to us in automotive retail because despite the hype around online car buying, a pure end to end online journey is the preferred choice of only 4% of European car buyers based on ICDP’s consumer research. I acknowledge that this number could increase, particularly if product complexity was dramatically reduced in the same way that Tesla has done, but that still leaves the vast majority of buyers who for the foreseeable future will want to use both online and physical channels in combination. However there is not one overriding preference for which stages will be online and which stage is face to face. If you take the final stages of agreeing finance, closing the deal and signing the contract, some buyers want to be sat across the desk from a salesperson at this point, but others favour the privacy of their home where they feel under less pressure even if the earlier parts of their journey have been face to face.
There are obviously technical issues that need to be addressed to ensure that customer data and vehicle data can be accessed from any channel and are updated in real time so that for example an offer that has been made face to face can be accessed by the customer hours later online, or a car which is advertised as available on multiple platforms is removed from sale if a customer comes into the showroom and does a deal. With the patchwork quilt of legacy systems across multiple manufacturers and dealers then this type of data integration is not trivial, but it is tangible, the challenges can be identified and solutions developed.
What I think is more challenging however is everything related to the people and processes who will be sitting behind these omni-channel systems from the manufacturer and dealer side. If we genuinely want to give the customer a high-quality seamless experience then we need to remove all the potential barriers, not just the technical ones. If an individual employee feels that in some way their standing or financial rewards will be influenced by whether a customer uses the channel within which they sit or an alternative then they may try to influence the customer to support that rather than leaving the customer to make the choice themselves. Seamless omni-channel is therefore dependent in part on the alignment of KPI's and rewards across all channels.
Success is also dependent on the customer being able to address all of their needs regardless of the channel that they use. There is not one single customer journey – different customers have different preferences, and those preferences may differ depending on whether the journey relates to their main car, a ‘fun car’ or a car for a teenage child. Clearly examining the car will be more effective in a physical environment then it will be online, although personalised video can reduce the extent of that compromise. But if a customer has a more fundamental need such as a tailored finance offer that a dealer would typically invest time in, potentially speaking to a number of funders, will that same level of tailored support also be available if the customer is using an online channel, typically operated by the manufacturer? If that's not the case then that means that there is not a true omni-channel offer for any customers who do not fit into the plain vanilla category that the online channel has been designed around.
Despite it being 10 years since ICDP flagged up the need to be thinking omni-channel, I do tend to agree with the view expressed by Google that whilst people are using the term widely, they are not planning and implementing the changes that are required to make it work, particularly in people and processes. Without these changes omni-channel will not deliver what customers are looking for, and this leaves the door open to others who to do a better job, and through that establish a competitive advantage.