car buying & retail innovation deep dive report

Dude, where’s my car?The “complicated” relationship between the automotive industry and Millennials

Car Buying & Retail Innovation Deep Dive

About this reportThis report is the second follow-up to Different Spin’s

Millennials and automotive research study ‘Dude, where’s my

car?’.

This report is not about merely making the dealership

experience more engaging (although that’s an important

stepping stone). It is about revolutionising the entire car

buying experience.

We’ll explore the findings of our research in the context of the

wider market trends and challenge you to innovate as service

providers as well as product sellers.

The overwhelming findings from our report show that

Millennials WILL buy cars, but just not as we know it.

Download the full research report at: different-spin.com

#DifferentSpin | Car Buying & Retail Innovation | 2

If the trends seen in this report become reality, a business based purely on

production and volume sales will fail. Traditional OEMs and dealers must

become service-based businesses to thrive.

The Spotify and Netflix generation is as comfortable sharing and

subscribing to their driving options as they are to their entertainment.

Smart players will place equal emphasis on monetising services as they will

innovating their product range.

In almost every sector the 21st Century has seen the manufacturing and

retail giants of the 20th overtaken by nimbler, more forward thinking

competitors. Will Toyota and Ford go the same way as Kodak and Nokia?

Or will they have the courage to balance an increasingly out-dated model

with something fit for the next 100 years?


Foreword

I’ve been in the market for a new car

since July. I know I need to upgrade my

day to day run around which takes me

from home to the station on my daily

commute to London. Reliability is

paramount as I can’t be late for my job

and my current Fiat 500 is getting a bit

rickety.

But frankly I just don’t have the time to

drag my 2 & 4 year old from dealer to

dealer to decide which of the three on

our shortlist to go for. It would take the

whole of Saturday. There are other

things I’d rather be doing with my

Saturdays, like going on adventures

with family and friends.

So in late November I was delighted

when BMW Retail Online was

announced. I can choose, spec and buy

my car entirely online in under 10

minutes.

I decided to check it out and before I

knew it, had a new i3 winging it’s way to

me. Not a dealer in sight.

Who were the other pretenders on my

shortlist again?

In this report we look at the trends from

our Millennials research in the context of

the car buying and ownership journey.

We explore how the nascent trends we

saw in this study are likely to impact the

entire buying experience and who is

innovating in this space.

I hope it sparks some ideas and fires up a

desire to change the face of the industry.

Kate Cooper, Global Strategy Partner,

Different Spin and Bloom Worldwide


Contents

Introduction Page 06

The collaborative economy Page 16

CoLab Innovation Framework Page 20

Three provocative questions Page 23

Case Study: Tesla Page 25

Case Study: StoryStream Page 30

Case Study: Rockar Page 32

Case Study: BMW Online Retail Page 33

Case Study: Ford Credit Page 37


Section one

Introduction

A Different Spin

Methodology

Executive summary


A Different Spin

Different Spin is an automotive experience innovation lab founded by Bloom Worldwide.

We enable traditional players to innovate and new entrants to compete.

We are a heady but dynamic mix of commercial strategists, data geeks, futurologists,

technologists, designers, creatives and producers working across 5 countries.

We provide a different spin on automotive.

different-spin.com // bloomworldwide.com

RETAIL INNOVATION

ENGAGEMENT SERVICES

MARCOMS INNOVATION

PRODUCT & SERVICE

INNOVATION

STRATEGIC INNOVATION

EDUCATION & INSPIRATION

RESEARCH & INSIGHT


MethodologyDEFINITIONS

For the purpose of this research we focus on Millennials aged 19-34

years-old in the UK. Some charts in this report include different age

groupings, where the data is from external sources e.g. National

Travel Survey and we have been unable to obtain data in different

formats. All charts are clearly labelled and sourced.

RESEARCH METHODOLOGY

We used a combination of quantitative and qualitative research

approaches to create this report with a total sample size of 33,521.

1.  Audience profiling through GlobalWebIndex survey data from a

representative sample of UK internet users.

2.  Deep dive research panel of UK Millennials

3.  Reevoo Car Buyers Panel survey

4.  Analysis of publically available data on driving trends in the UK


URBAN / RURAL PARTICIPANTS

Within the Millennial segment, we included viewpoints from

both urban, suburban and rural participants. Each research

approach used a representative sample of Millennials across

these three categories, with emphasis placed on urban and

suburban over rural to reflect dwelling trends amongst UK

Millennials in real life.

As expected there were differences in current transport

habits, with more rural and suburban Millennials owning cars

and relying less heavily on public transport or services like

Uber and City Car Club.

However attitudes towards the future of mobility and

technology innovations were less defined between urban and

rural. The low availability of certain services in rural areas

now does not mean there isn’t demand for the future.

Further detail on methodology is provided in the full report.

Executive summary

INNOVATION IS KINGSo first to answer the BIG question. As the next

generation of car buyers, will Millennials actually

buy cars?

In short YES, but not as we know it.

The Spotify and Netflix generation is as

comfortable sharing and subscribing to their

driving options as they are to their entertainment.

Smart players will place equal emphasis on

monetising services as they will innovating their

product range.

And it’s this that is important for traditional OEMs,

retailers and new entrants to understand. It’s these

nascent trends we’re seeing in the Millennial

generation that tell us where the automotive and

mobility sector is headed.

One thing is clear: innovation is king. If the trends

seen in this report become reality, a business based

purely on production and volume sales will fail.

Traditional OEMs and retailers must become

service-based businesses to thrive.

Our goal in openly publishing both this and

upcoming research projects is to accelerate

innovation and change in the automotive industry.


Executive summary

CAN’T DRIVE, WON’T DRIVEMany of the Millennials in our study that do hold a

full driving licence choose not to own a car and

rarely drive. There are a number of reasons for this

but primarily it is because they simply don’t need

to.

Millennials in the city are less dependent on driving

because there are more alternatives. They ask

people to give them lifts, they have taxi apps on

their phones and Google Maps in their pockets to

help get around on foot or public transport.

Learning to drive and owning a car is less of a rite

of passage for many Millennials.

There are other things fighting for their money and

time, and other priorities in their lives.

Committing to car ownership is a burden for many

Millennials, who favour financial freedom over

driving freedom. They aren’t comfortable putting

themselves in debt in order to own a car. Of those

that do own cars, many wouldn't change their

lifestyles to own a more expensive or newer model.


“Whilst having at car as a young person can be seen as cool and even 'grown up' most young people get by without and with the abundance of new luxury goods available for them to wish for cars are taking a back seat as unaffordable luxuries compared to the latest computers, phones and tablets.”

Emily, 19


Executive summary

ACCESS OVER OWNERSHIPWith the rise of car sharing options available to

Millennials living in the city, ownership is not the

only way to drive. For financial, practical and

environmental reasons (in that order), Millennials

are choosing to experiment with shared ownership

or short-term rental clubs.

Car ownership is becoming less of an aspiration

and less of a norm for Millennials, who are much

more acclimatised to subscription services and

access over ownership. The Spotify and Netflix

generation is as comfortable sharing and

subscribing to their driving options as they are to

their entertainment.

Owning the coolest car on the block is an

aspiration for some Millennials, but this aspiration

is becoming diluted by newer goals in life. Owning

the newest iPhone, starting a business, going

travelling and moving to the city are examples of

goals that take priority over car ownership for

today’s Millennials.

The idea of car ownership is not lost - many

Millennials talk about owning a car in the future -

but there are many other options for mobility

today, which means car ownership can be put off

for now.


“I think younger generations value experience rather than ownership. Look at Snapchat - they value the moment that day, rather than having a history (such as history/posts/photos on their Facebook wall). In my opinion they like to experience and share the moments rather than to own things.”

Ayako, 25


Executive summary

READY FOR DISRUPTION

Throughout the research, we found that

Millennials recognised the need for change and

disruption in the auto industry. They hold a belief

that traditional and long standing brands will have

to innovate and disrupt themselves in order to

survive in a market that is changing rapidly.

When we asked Millennials which brands they

thought would be leading the automotive industry

in 10 years’ time, brands that stood out were: Uber,

Tesla, Google, BMW, Apple and Toyota. In the same

task we asked Millennials to select the companies

they considered to be the most innovative. The

results were almost exactly the same. It is clear

that a perception of innovation for Millennials

equals long-term success.

OEMs & retailers: are you up to the challenge?


“Travel will be more collaborative, more shared. I think the focus will be less on full ownership…younger generations are less bothered about owning stuff”

Nicole, 34.


Section two

The collaborative economy

A transformative shift

Consumption and exchange

The impact on consumer experience



A TRANSFORMATIVE SHIFTIt’s important to understand that the trends we saw

in our report were not unexpected and have

happened as part of a much wider trend called the

collaborative economy.

More than half of the western world has woken up to

a new way of getting the products and services they

need.

The collaborative economy, also known as the sharing

economy is the biggest shift in the business landscape

since the advent of the Internet itself. And just like the

Internet, it’s changing the rules for how we market,

sell and innovate.

To compete in this growing economy, established

corporations must develop new strategies.

In this new economic reality, the world’s largest

hospitality brand owns not a single room or hotel. The

world’s largest car service owns not a single vehicle.

And one of the world’s largest retailer is driven by

people buying and selling preowned goods.

These companies — Airbnb, Uber and eBay — are just

three players in a much larger shift that is

transforming our lives, our economy and the way we

do business.



CONSUMPTION AND EXCHANGEThe collaborative economy is an economic movement

where common technologies enable people to get the

goods and services they need from each other, peer

to peer, instead of buying from established

corporations.

This new form of consumption and exchange is not

only here to stay: it’s raising customers’ expectations

for all businesses.

This process of disruption isn’t new. A decade ago, we

saw how physical CDs gave way to illegal MP3

sharing websites, which eventually became the

dominant marketplace known as iTunes.

In recent years, we see that ownership of digital

media is giving way to streaming services and on-

demand media via membership and subscription

business models.


Efficiency

I need

Trust

You have


IMPACT ON CONSUMER EXPERIENCESo does that mean that the big fish are going to end up eaten by the might

of the heavily funded and nimble minnows? Perhaps. And almost

certainly for those unable to adapt.

But actually, the most important aspect of the collaborative economy

from a car buying and retail experience perspective is the extent to which

this movement has transformed consumer expectation, raising the bar in

consumer experience stakes.

Technology enabled buying, selling, trading, exchanging and sharing

means people now expect quick, easy and cost effective access to

products and services and this expectation extends to the experience of

car buying.

Smart traditional OEMs and retailers can find your own opportunities to

offer on-demand products and services, create peer-to-peer

marketplaces and enable platforms that bring your customers closer to

your brand.

We believe you can also find ways to make your existing products and

services more appealing to customers who would otherwise shift to

sharing, and identify opportunities to partner to offer greater value to

your customers.


Section three

Co-Lab Innovation Framework

Transforming consumer experience

Secure, easy and fast

Access over ownership



INNOVATION PROGRAMME

•  Consumer•  Market•  Product

•  Prototype•  Pilot•  Evolve

•  Brand•  Launch•  Marketing

•  Business model•  Education•  Inspiration

GARNERDEEP

INSIGHTS

BUILDINNOVATIONCAPABILITIES

DEVELOPPRODUCT

OR SERVICE

CRAFTCONSUMEREXPERIENCE

INNOVATION STRATEGY



AREAS RIPE FOR DISRUPTIONSo first of all, we know that there are clear areas

that are ripe for disruption. And this is your first

port of call when thinking about innovation within

your business:

COMPLEX EXPERIENCES

Where do consumers have very complex

experiences? On your website, when visiting a

dealer? When trying to configure a new car? When

actually trying to purchase?

BROKEN TRUST

Where has trust been broken? The recent VW

scandal provides a ripe feeding ground for

disruption and innovation. How can you play on

your trust credentials?

REDUNDANT INTERMEDIARIES

Where are there redundant intermediaries that

complicate the consumer experience and make

prospects and customers jump over unnecessary

hurdles. The dealership experience is ripe for

radical disruption or obliteration.

LIMITED ACCESS

Where is there limited access? For example how

can a premium brand create a product or service

that’s accessible for all?



THREE PROVOCATIVE QUESTIONS1.  How can you transform the consumer

experience of car buying & ownership?

2.  How can you remove friction from the system

to make it secure, easy & fast?

3.  How can you create models that facilitate

access over ownership?



TRANSFORM CUSTOMER EXPERIENCEAnd so to our first provocation:

How can you transform the consumer experience

of car buying & ownership?

The car buying experience as it stands today is

clunky, time consuming and in some cases

positively alienating to key consumer groups e.g.

women.

The Millennials generation is used to gravitating

towards positive experiences and engaging with

brands and products that have set the bar very

high at every single touchpoint.

Digitally enabled, personalised experiences which

connect with the heart as well as the head are all

hallmarks of experiences that resonate with

Millennial buyers.

The first milestone of transformation has to be to

be transformation of the retail experience itself.


“We have the technology, it just needs to be invested in and

honed and made more appealing by the motor industry.” Jody, 34

“Our technology is different, our car is different, and as a result our stores are intentionally different.”

Elon Musk, Tesla Chairman, Product Architect & CEO



TESLATesla aims for their retail experience to be rich, interactive and

engaging whilst also generating sales insight their high traffic stores.

They worked with Nurun to create a retail experience that they

believe reinvents the way cars are sold.

There are three cornerstones to their retail strategy:

1. Leverage Vertical Integration

Tesla’s focus on vertical integration enables a unified brand

experience. The company owns and manages every stage of its

business model, from concept to design to manufacturing and sales.

2. Choose High Traffic Retail Spaces

Tesla deliberately opened its stores in high traffic retail locations.

This approach lets them interact with and educate potential

customers in a less formal, more experiential environment.

3. Enhance Store with Technology

Tesla uses technology to deliver a variety of informative experiences

in a small space. A remotely managed network of interactive stations

introduces visitors to Tesla vehicles and how they work.



AN ORCHISTRATED EXPERIENCE1. Learn

Interactive stations are designed to draw people into the store with

visuals and content that address the most common questions they

have about electric vehicles. They’re intended to move visitors from

general interest to real consideration.

Tesla found that in a crowded store, each station serves two

audiences: the current user and the individuals observing. The scale

and position of key visuals are designed to serve both parties.

2. Configure

Visitors can configure their own cars by choosing paint colour,

interiors, wheels and roof type. This creative process helps people

imagine owning a Tesla. They can also transfer their designs to the

large-scale display at the rear of the store, for everyone to see.

3. Experience

With their questions answered and their cars designed, visitors head

to the back of the store ready to buy. There, the sales team can easily

retrieve the finished design and discuss additional options before

completing the purchase.



SUPPORTING A COMPLEX DECISIONCars are a major purchase for most people. Electric vehicles only

extend the consideration cycle, which can last several months. As a

result, Tesla prioritised features that make it easy to design, save

and retrieve a customised Tesla at any time during this process.

The configurator works in-store, at home and on the go, providing

continuous support and education.

Prospective buyers can create, modify and save their car designs

on Tesla store stations and revisit them on PCs and tablets—or

vice versa. The experience is seamless across devices.



A LIVING SYSTEM


Tesla has dozens of stores and galleries worldwide, with more on the

way. Nurun developed a system that scales with company growth.

There are three cornerstones to their retail strategy:

1. A Dynamic Publishing Platform

This platform gives Tesla the ability to publish content to all stores,

supporting the company as it grows and opens new locations.

2. A Centrally Managed Network

From its headquarters in Palo Alto, the Tesla team can push out

software and content updates to Tesla stores around the world.

3. Retail Analytics

Analytics data from stations in each store are sent back to

headquarters, offering insight into usage patterns that enable

continual refinement and optimization.


ACCESSIBLE INNOVATIONIt is clear from the Tesla example that technology can transform

the retail experience across all industries not just automotive.

Yet at Different Spin we are pragmatists and understand a

complete global overhaul of your entire retail network may not

be feasible. We like to champion accessible innovation.

So why not take one aspect of this case study and

straightforwardly enhance the automotive retail experience.

StoryStream provide a plug and play solution for creating a

dynamic and socially enabled highly visual display in automotive

retail environments.

StoryStream can be used as a dynamic publishing platform

enabling you to centrally curate branded, expert and user

generated content onto an online hub or large display screen

within the retail environment. Perhaps a first step to enhance the

retail experience with social content?



SECURE, EASY AND FASTAnd so to our next provocation:

How can you remove friction from the system to

make it secure, easy and fast?

Traditional automotive remains complex,

cumbersome and a painful buying experience. Our

upcoming research project explores the extent to

which a disenfranchised group is alienated by the

current system. This is a group of decision makers

with massive buying power that is currently

underserved by the current system. Who is this

untapped potential? Women!

In this upcoming open research project, we get

under the skin of the passion and pain points of

four different groups of female consumer:

Mums, Millennials, Empty nesters, Professionals.

Insight gathered from this extensive research

project will be used by the automotive sector to

remove friction and make the service they receive

secure, easy and fast.

But back to the question at hand - simplicity is key:

How can you refine products and services to their

simplest and most transparent form?



ROCKARRockar is turning car buying in its head and

implementing many of the innovations we’ve seen

in the Tesla case study for a traditional OEM in the

UK; Hyundai.

With Rockar you can just click to buy online, at

home of in-store. The choose a date and collect

your new car. All without ever having to speak to a

salesman.

Let’s find out more…PLAY VIDEO

A good example of an OEM partnering to benefit

from the opportunity of start-up innovation.

#DifferentSpin | Product and Marketing Innovation | 32


BMW RETAIL ONLINEBMW customers are now able to choose, spec and buy their car

entirely online in under 10 minutes via BMW Retail Online.

The new process enables consumers to arrange a test drive if

necessary, agree financing options and payment method, and get a

trade-in value for their own car before finalising the delivery date.

Every step can also be supported by a BMW Genius or sales

executive at the retailer via live chat or email.

There are six key features to BMW Retail Online. The online journey

starts with the optional tool “Find your BMW”, leading into the

vehicle configurator on bmw.co.uk.

With a click on the “Buy your BMW” button the customer selects a

retailer, is shown cars with a faster delivery date and selects their

preferred finance method. The customer can then finalise all steps of

the purchase with their chosen retailer in the Retailer Online

showroom.


A 6-STEP PROCESS


1. FIND YOUR BMW

Helps customers find the ideal vehicle for

their needs

Four questions to select the right car:1.  Where do you

drive?2.  How many people

ride in your car?3.  What needs to fit

in your boot?4.  What’s important

to you?Suggests preconfigured cars with options most bought by other customers in the UK.

2. GENIUS LIVE CHAT

Personal support

•  Webchat or email

•  Opening hours from 8am-10pm, seven days a week.

3. VEHICLE CONFIG

Fully configure a car

Get proposal for pre-built car with faster availability.

4. FINANCE OFFER

Full integration of BMW Financial

Services

•  Easy-to-use finance calculator.

•  All national offers included online.

5. RETAILER ONLINE

SHOWROOMChat with sales

executive of selected retailer

•  Arrange a test drive.

•  Get independent car valuation of your existing vehicle.

•  Finalise all elements of purchase.

6. ONLINE CREDIT CHECK

Full online credit check with 90

seconds feedback if auto accepted

Payment of installment, deposit or full price online or by phone.

“We are the first car manufacturer to offer a digital sales solution for the entire product range and the full end-to-end buying or leasing process online. Now the customer can do it all from the comfort of their home.

The integration of the BMW Genius via live chat and retailer messaging functions where the customer is able to get personalised support in real-time, makes this system unique and a new benchmark for the automotive industry”

Ian Robertson, BMW Sales & Marketing Director



ACCESS OVER OWNERSHIPThe findings of our Millennials research shows

clearly that Millennials, as the next generation of

car buyers value access much more highly than

ownership. We’ve seen that car ownership is

becoming less of an aspiration and less of a norm

for Millennials, who are much more acclimatised to

subscription services.

Owning the coolest car on the block is an

aspiration for some Millennials, but this aspiration

is becoming diluted by newer goals in life. Owning

the newest iPhone, starting a business, going

travelling, moving to the city are all examples of

goals that are taking priority over car ownership

for today’s Millennials.

So the question you should be asking yourself is

how can you create models that facilitate access

over ownership? This is about shared access. You

need to reimagine the ways customers can access

the benefits of your product or service without

having to own it outright.

How can you facilitate exchange, sharing and

trading?

And how do you profitably monetise that?



FORD CREDITFord has developed an interesting approach to

finance that helps to overcome the friction caused

by the cost of ownership.

The car giant offers a creative financing program to

encourage new buyers to rent their new Ford car

to peers on Getaround, a P2P online marketplace.

This significantly reduces the cost of ownership.

Let’s find out more…PLAY VIDEO

Another example of an OEM partnering to benefit

from the opportunity of start-up innovation.

#DifferentSpin | Product and Marketing Innovation | 37

“Customer experience is the next competitive battleground.

It’s where businesses are won or lost.”

Jerry Gregoire, CIO, Dell


Coming February 2016

Automotive fails womenThere is a gap between the automotive industry’s comprehension of

women and the reality. Women don't show their true experiences in

traditional focus groups and via commonplace research methods. As a

result, marketers and product developers are failing to deliver

products, communications and experiences that truly resonate with

women. And this is effecting the bottom line.

In this ground-breaking research project, we get under the skin of the

passion and pain points of four different groups of female consumer:

1. Mums

2. Millennials

3. Empty nesters

4. Professionals

Insight gathered from this extensive research project will be used by

the automotive sector to truly engage with woman in a meaningful

way and develop innovative products and solutions that solve their

problems and meet their needs.

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PRODUCT DEVELOPMENT

•  Market entry and demand studies

•  Product innovation

•  Product testing

•  Crowdsourcing product ideas

•  Trend analysis

CONSUMER INTELLIGENCE

•  Target market analysis

•  Audience profiling

•  Conversation analysis (social media)

COMPETITOR INTELLIGENCE

•  Industry analysis

•  Competitor benchmarking

•  Gap analysis

MARKETING INTELLIGENCE

•  Campaign development

•  Creative testing

•  Campaign performance &

measurement

•  Attribution modelling

Do you really understand

your audience?Bloom provides in depth and human research using Hark, our global insights

community. Made up of over 5,000 active participants who can be segmented

demographically or psychographically.


Dude, where’s my car?

Car Buying & Retail

Innovation Deep Dive

Different Spin and Bloom Worldwide 2015

different-spin.com

bloomworldwide.com

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