SHIFTING GEAR: WILL THE TRANSITION TO AN AGENCY MODEL NECESSITATE A CHANGE IN TRAINING?
This second paper in a series of three considers potential changes for both OEM and Dealer as we assess the impact of the move to Agency selling and training requirements in the 2022 Automotive Market
THE CHANGE FOR THE OEM
By adopting the Agency Model, OEMs put themselves in full control of the sales process - selling directly to the customer, setting fixed prices of new cars across all channels and providing a transparent pricing scheme for customers.
Capgemini’s ‘Accelerating the Future of Automotive Sales’ report concluded that a shift away from a traditional franchised car retail model?would not only drive OEMs’ direct customer relationships but would bring “financial benefits on all sides”.
The direct-to-consumer model, where the OEM has a direct relationship with the customer will provide a host of benefits; most importantly - data. OEMs will be able to access valuable insights about customers and prospective customers, which previously had been trapped within the Dealer network.
These insights will enable OEMs to increasingly target new customers and laser-focus marketing on those individuals most likely to buy, optimising their sales funnel and conversion rates, potentially decreasing customer acquisition rates.
Having the direct customer relationship, also enables the OEM to extend the relationship with the customer and expand the offer – with additional customisation, extended warranties – a range of revenue-generating opportunities for the OEM which in turn adds value to the customer.
Full control over online and offline channels, allows OMEs to build seamless omni-channel customer journeys with a consistent experience. Capgemini’s report highlighted a need for an omnichannel customer experience, particularly in light of a shift towards digitalisation brought about by the COVID-19 pandemic.
“The new sales model is embracing the new ‘phygital’ world by connecting physical and digital experiences for consumers.” CapGemini
Adopting the agency model clearly gives the OEM the opportunity to push the adoption of online sales and accelerate a new customer-centric omnichannel experience.
The Agency model requires skillsets and additional job roles currently not within the OEM, which will necessitate an investment in organisational structure and/or restructuring.
Investment in digital infrastructure is also required, but these investments, will be offset by direct digital sales.
While investment is needed, both CapGemini and Accenture point to long-term cost reductions in the sales process – savings of up to 4%.
“Based on our estimates, the agency sales model significantly reduces the cost of retail across the sales network and will therefore increase revenue” CapGemini
Convincing the Dealer network to engage with the Agency Model is one of the biggest challenges to its roll-out, requiring careful and sustained communication to keep the dealer network engaged and motivated and bought in to the vision, a process already ongoing at many OEMs.
The adoption and roll-out of the new technical and financial changes will be easier than the cultural shift required.
Within the OEM, new skillsets and teams will need to be created, individuals reskilled or refocused, from customer service advisors to IT, data and cybersecurity professionals.
While the needs of positive customer experience remain the same, more efficient back-office processes will need to be in place, with potentially closer co-operation between the OEM and its sales network.
Vertex Professional Services (VPS) currently supports 14 OEMs with training in EMEA and is already addressing the challenges arising from a shift to agency. Based on this experience, we know that OEMs will need to ensure their learning strategy is?aligned with the goals of the new Agency Model, with new strategies and programmes in place to address all its evolving talent needs.
OEMs will need to push training in:
·????????Change Leadership to lead teams through the cultural change
·????????Marketing and Communication skillsets as OEM teams take control of direct consumer contact and direct marketing
·????????Finance as OEM manage direct payments and leasing for customers
·????????Data and Cybersecurity as new online sales platforms are created, customer databases and customer data are stored and processed
·????????Customer Service rather than Dealer Management, as teams manage direct customer contact and fulfilment
THE CHANGE FOR DEALERS
The dealer network, still has an essential role to play in the Agency Model, becoming delivery agents and ‘experience centres’ that act as a showroom for those unwilling to commit to a fully online sale, those who still need to experience a car in person, while also facilitating delivery and local customer service.
It will however be a cultural change from a sales culture to a customer-centric service centre.
“Heightened customer expectations, massive advancements in technology, and the rise of omnichannel commerce are just a few of the trends reshaping the world.” McKinsey[2]
Global new car sales are down, online sales are increasing, and with the move to electric vehicles, which are simpler and easier to service, there is a potential of declining sales and service revenue for dealers. The Agency Model provides a valuable role for dealers in this new world.
Under the Agency Model, Dealers will remain the face-to-face product experts they have always been, responsible for allowing customers to experience and understand new vehicles, take test drives and upselling customers.
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“Having the dealer on hand to guide customers through their choices should never be underestimated.” Dash Gupyta, CEO of Marshall Motor Group
Rather than buying new cars from the factory and reselling them at a profit, dealers are instead provided a fixed commission for sales, this reduces the risk for the dealer, as in the agency model, the OEM owns the stock.
With the OEM handling the sale, the Dealer is also no longer burdened with administrative tasks such as sales paperwork, billing and payment.
Fixed pricing means fixed commission rates for vehicles, and national pricing reduces intra-brand competition between competing dealer franchises which previously impacted dealer profit margins.
As well as minimising financial risk, dealers would gain full access to national car stocks, allowing them to better meet customer delivery expectations; efficiently managing local supply shortages to reduce customer dissatisfaction or even prevent losing customers to other brands due to longer waiting times.
VPS has over 25 years’ experience working with Dealer Groups and has developed a range of customer service solutions. Under the roll-out of the Agency Model, the training individuals receive at the dealerships will need to become customer centric; for example, this could include:
·????????Short-term change leadership to lead teams through the cultural change
·????????Customer Experience Leadership rather than Sales Leadership
·????????Customer Service instead of Sales Training
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AUTHORS
Steve Thompson
Steve Thompson is Director of Business Development for Vertex Professional Services LLC (VPS). EMEA.
Steve has 30 years of leadership experience in the Learning & Development industry with a primary focus on automotive operations management and business development. He has extensive experience in the development and implementation of customised people development strategies across large- and small-scale international automotive, retail, financial services and B2B organizations.
ABOUT VPSVPS
Vertex Professional Services (VPS) is a leading provider of automotive learning services. We work with more than 30 global automotive clients that require a partner offering cross-industry best practices combined with in-depth automotive industry experience.
We have leveraged our scale and automotive experience to the benefit of our customers. Our innovative culture, learning technology expertise, class-leading design and development capability ensure our solutions are sustainable and add real value for our customers; whether shown through enhanced learner engagement, speed to market or rapid scalability.
Our operational excellence is enhanced by our knowledge of the market, industry and learning trends. We regularly facilitate and participate in automotive industry benchmarking activities and learning thought leadership symposiums; these activities are shared with our customers and bring insights from automotive and non-automotive organisations.
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AUTOMOTIVE SALES & MANAGEMENT TRAINING: We develop and deliver new product training, including the management of new product launches, for automotive and motorcycle OEMs. We partner with our automotive OEM customers to deliver dealer coaching, virtual mentoring, and regular support to introduce training initiatives, monitor performance and advise on effective performance management strategies in alignment with dealer targets.
AUTOMOTIVE SERVICE TECHNICAL: For over two decades, our service technical learning programmes have set the bar for automotive service training innovation and excellence. Our solutions continually evolve to keep pace with the accelerated rate of change throughout the automotive industry. VPS’ subject matter experts work directly with our OEM customers to assure training reinforces in-dealership service technician readiness and supports key service department metrics.
VOCATIONAL & APPRENTICE PROGRAMMES: Our Automotive and Motorcycle Service Technician apprenticeship programmes are designed to build the skills needed to diagnose and repair faults and carry out routine services on a range of different vehicles. We also offer programmes for Service Advisors and Parts Advisors. Our programmes have consistently provided qualified apprentices who become more productive members of the team, more quickly than alternative training routes.
ELECTRIC AND HYBRID VEHICLE EXPERTISE: We possess global experience in the design, delivery and maintenance of retail, service technical and safety learning programmes for the EV industry, including long-established electric vehicle nameplates and emerging new energy vehicle start-ups. The landscape and technology in the automotive industry continues to dramatically evolve; from multiplexed electrical systems; to high-voltage hybrid and electric powertrains; and pervasive autonomous vehicle technology. VPS’ learning solutions are founded on collaboration, continuous improvement, and on-going innovation, to assure our learning programmes remain focused on training service technicians to become as advanced as the vehicles they service.
REFERENCES
Business Operations Manager at VPS, a V2X Company
3 年Helpful! This will spark conversation!
MD @ Kilo
3 年Fascinating read !