Revolutionising Auto Sales: The Agency Model

We explore the transformative potential of the agency model, emphasising the potential for direct customer relationships with manufacturers, driven by the evolving nature of connected cars and the opportunity for personalised experiences and data-driven commercialisation.

Echo Auto i Spy: Mitigating motion sickness in the car

The agency or ‘direct’ model is a big topic in the auto industry

As the name suggests, the agency or 'direct' model is centred on the manufacturer's direct customer relationship.

More specifically, under the agency model:

  • Consumers buy their new cars directly from a manufacturer
  • OEMs have an opportunity for an ongoing relationship/conversation

On the face of it, it doesn’t sound like a significant change. After all, what does it matter to consumers if they give their money directly to a manufacturer instead of a dealer?

However, this change could change the entire journey from consideration and test driving through ownership and the right to trade up.

Testing your in-car voice assistant

Challenges in Manufacturer-Customer Relationships: The Dealer Dilemma

Reductively speaking, manufacturers create a car with the sole objective of shifting units. Manufacturers traditionally have had no relationship with their customers and no real desire to do so.

It has been down to dealers to:

  • Buy the stock from OEMs to sell it on
  • Hold the relationship with customers
  • Hold a database of customers for any level of CRM
  • Follow up with offers to upgrade, offers for servicing etc.

However, the dealer network is fragmented and does not follow a centralised mandate on the sales or the customer relationship management approaches.

The dealer dramatically influences a customer’s experience of buying and owning a specific brand for the first time.

Whether its a Porsche, Ford, Fiat or BMW, manufacturers primarily rely on a fragmented network of independent operators for experience satisfaction right at the beginning of the customer life cycle.

This is not to say that dealers are careless with their customers; they are not. Dealers have a commercial interest in facilitating excellent customer service.

Instead, the point is that manufacturers have no direct control and no opportunity to maximise the value of the customers they’ve fought so hard to attract.

The car is the only consumer electronic we step into; it’s the only product that immerses us

The Impact of Connected Cars on OEMs and the Shift Towards Direct-to-Consumer Strategies

If this isn’t reason enough for OEMs to justify change, perhaps their cars' increasingly sophisticated and connected nature could serve as the impetus.

The car is the only consumer electronic we step into; it’s the only product that immerses us.

Over-the-air updates and connected services mean that consumers will increasingly buy upgrades and value-added services directly from the cabin of their car.

We have personal assistants in our cars and individual driver profiles that automatically recognise the driver and respond accordingly.

Cars now amass interesting usage and behavioural data from the many sensors in the car, as well as interactions and inputs from drivers.

This provides ample fuel for manufacturers to drive towards LTV commercialisation models and personalisation on offers, services, and trade-up.

Many other industries have already taken the plunge and had great successes with direct-to-consumer approaches.

It is hard to imagine that Apple could have curated such a strong following had they distributed and serviced customers via 3rd party retailers only.

For those that do it well, they’re able to:

  • Curate their brand experience more effectively
  • Standardise offering and pricing and simplify the purchase path
  • Build relationships, and collate valuable behavioural data
  • Drive to Life-Time-Value commercialisation models

Polestar, Volvo and Mercedes are trail-blazing in this space. However, the transformation has focused mainly on who owns the financial transaction.

We are yet to see the extent of the change. Brave OEMs can change the game with everything from serving up finance deals based on affordability, offering connected services or putting forward a vehicle upgrade at the end of the term, based on the way a customer uses the car.

It’s really rare to find a group of people that have the breadth of skills and also passion to help us bring Snoop to life

Ross Logan, Snoop Product Director and Co-Founder

From Digital Strategies to Direct-to-Consumer Innovation

Hi Mum! already works with well-known OEMs to turn their strategies into digital experiences in the vehicle and beyond - whether crafting new services, incredibly personalised voice and visual interactions or connecting with peripheral services and hardware, today’s vehicle is highly connected, rich territory to break new ground.

Let us help you imagine, design and test how a direct-to-consumer experience could change the game for you.

Want to learn more, or turn your ideas into reality?