Driving the customer experience with a customer data platform

June 2023
Srinath Mukundan, Hariharan Mallikarjunan, Sridhar Vedala, Sebastian Werner

Although automotive OEMs are using customer data, there is much more they can do.

A shift toward customer experience

Over the past few years, the automotive industry has made positive strides in using data analytics for supply chain, maintenance, and marketing. However, when it comes to customer experience and engagement, there is still enormous scope for effectively using customer data and behavioral analytics to help OEMs understand:

  • Key customer drivers to their brand
  • The psychological attributes that determine customer purchase habits
  • What makes customers switch to EV (electric vehicle) brands
  • The experiences that shape a customer’s emotional connection with the brand

While traditional OEMs understand that competitive differentiation has shifted to customer experience, a traditional product and engineering focus mindset lingers on.

For instance, during the pandemic, most OEMs responded to market disruption by controlling costs and focusing on their best performing models but struggled to adjust to rapidly evolving customer behaviors. As a result, when the markets gradually moved toward normalcy, most OEMs found they were unable to compete with new entrants when it came to customer experience. The gap that already existed between OEMs and their customers, and in particular with their Millennial and Gen Z customer base, further widened and they were not able to capitalize on market changes such as:

  • The purchasing journey moving online—from research and the customer review process to online offers and purchasing
  • Evolving customer expectations and increasing demand for personalized experiences
  • Brand affinity and loyalty driven by more emotive and experiential marketing tactics

By contrast, EV companies successfully connected with customers by:

  • Positioning themselves as technology leaders in the electric vehicle category
  • Using online as the primary channel of interaction for customer engagement
  • Maintaining complete ownership of the customer journey—acquisition, engagement, and retention
  • Focusing their retail centers on customer experience
  • Offering value-added services such as Tesla supercharger network
  • Running a tight network offering better residuals and used car values

The disconnect: a lack of data transparency

In the traditional distribution model, where engagement with customers was handled by dealerships, it made sense for OEMs to focus on production, engineering, and on-time delivery. The dealers maintained a somewhat transactional relationship with OEMs and were responsible for investing in retail showrooms and distribution sites. In return, they would make a profit margin on each car sold and manage aftersales. This model limited the sharing of information and data from OEMs to dealers. There was also lack of transparency in sharing of data from dealers to OEMs. For example, the dealers would only periodically share sales data with OEMs and only to prove they had sold a specific number of vehicles. There was no automated workflow that would integrate customer data into OEMs’ systems and inform OEMs’ strategy for customer experience and engagement.

Catching up: putting customers at the center

Traditional OEMs are now responding to EV competition and addressing customer expectations of outstanding experience. To that end, OEMs have started adopting an agency model that puts consumers at the center and are taking ownership of the end-to-end car purchasing experience by engaging directly with consumers (see figure 1). The dealers, on the other hand, play the role of customer experience centers, with publishers and media agencies working closely with OEMs to promote the brand.

Making the agency model work with a customer data platform (CDP)

To succeed with the agency model and win over customers, OEMs must establish a technology foundation that captures and acts on insights from data.

The biggest challenge is to emotionally engage consumers throughout their entire journey, online and offline. The focus should be on understanding what drives a customer to engage with a brand, rather than simply converting them into buyers.

In order to successfully adopt an agency model, OEMs must collaborate with retail, media, and distribution channels. This involves targeting specific segments, creating customer experience centers, personalizing customer journeys, and managing after-sales satisfaction.

However, there are certain technological challenges that must be addressed, such as limited data capture, difficulty integrating third-party data, and the lack of access to external social data. In this scenario, a CDP is crucial for enabling a seamless and personalized journey for consumers.

What does a CDP do?

A CDP simply integrates customer data from various sources, such as CRM systems, transactional data, data collected from mobile apps and web sites, social media, customer service data, and many other sources to create a single view of the customer, enabling OEMs to perform a variety of analytics (see figure 2).

To buy or build?

There are many off-the-shelf customer data platforms available that offer decent features and functionality. Still, many OEMs prefer building their own CDPs to gain greater flexibility and control.

Nonetheless, building a CDP requires a clear strategy, a strong technology foundation, and engineering expertise to overcome siloed on-premise solutions, disparate technologies and data formats, and limited scalability and restricted compute power.

Building a CDP in the cloud

Leading cloud service providers, such as GCP, AWS, and Azure, provide reference architecture, pre-existing solutions, tools, and integration capabilities that can be used to build your own CDP.

Building a CDP involves seven key steps:

  1. Data ingestion. This step brings together online and offline data from various sources, such as dealers, agencies, and publishers, and combines it with existing data within OEMs. These sources of data provide insights into buying behavior, demographics, preferences, interactions and engagement, and so on. Cloud providers’ existing components make it easy for data ingestion. For example, GCP provides solutions to ingest data easily into cloud storage.
  2. Data integration and standardization. This is an important step in which duplicates and inaccurate data are removed to ensure high-quality, reliable data.
  3. ID unification. This step stitches together data about a single customer from various sources under one unique customer identifier.
  4. Data enrichment. The collected data is enriched by adding additional information that improves data quality.
  5. Audience segmentation. The cleansed and standardized data is analyzed using various AI/ML tools, such as TensorFlow, and segmented into distinct audiences.
  6. Customer journey analytics. The data can be used to create journey insights and analytics using various native tools offered by cloud providers, such as Looker.
  7. Data activation. The audience segments can be fed into email, marketing, and advertising tools to deliver personalized experiences and engagement.

Working with specialist tech providers, such as Epsilon, BinaryCore helps OEMs develop a customer data strategy, bring together data from numerous sources to build customer profiles, and develop a single view of the customer (see sidebar: Spotlight on Epsilon). To find out more, please contact one of our experts below.

Spotlight on Epsilon

By Zachary Bambach, Vice President, Practice Lead – Automotive Finance, Epsilon

Epsilon brings together automotive OEMs, dealers, and customers

Consumers now prefer personalized experiences and communications to generic messaging and mass appeal. Their expectations have evolved from a focus on the purchase process to an ownership experience tailored to their needs and preferences. This includes all aspects of the customer journey, from initial research and purchase to long-term ownership, including maintenance, customer service, and eventual repurchase.

Epsilon is enabling automotive OEMs, dealers, and customers to bridge the historical disconnect between them. It uses its extensive insights on customer behaviors and purchasing patterns to align dealerships and customers through real-time personalized communications. Epsilon focuses on enhancing and using first-party data, dealer data, and online/offline data to create a unified, end-to-end journey that drives engagement and retention while connecting OEM and dealership initiatives.

Epsilon employs artificial intelligence (AI) and machine learning (ML) to shift from a channel-based view to a singular view of consumer communications. It creates personalized channel-agnostic messaging, based on knowledge of where the customer is and what they are looking to do. The focus is on who the customer is and helping them get to their desired outcome earlier and easier.

Epsilon collaborates closely with OEMs and dealers to understand their specific needs and goals, and then uses data-driven insights to build bespoke communication strategies. Epsilon also works closely with major partners, such as Adobe, Salesforce, and Microsoft, to deliver a seamless and personalized experience for customers regardless of whether they have an EV or a vehicle with an internal combustion engine.

More cloud computing and more connectivity equals a better customer journey and brand experience

In order to achieve seamless customer journey, streamline internal data processes, support technology acceptance and innovation and build a better brand experience, the auto industry is adopting cloud computing at a rapid pace. With the expansion of the connected vehicle market and with the advent of 5G and real-time connectivity, real-time messaging and preferences is no longer a ‘nice to have’ but imperative. By using cloud-based technologies, such as Epsilon Digital Customer Data Platform (CDP), or any data-driven decision engine, OEM’s, dealers and automotive marketers are learning from and adapting to customer behaviors in real-time.

As data, adtech and martech companies rush to market with ‘CDP like’ solutions, Epsilon’s Digital CDP is the industry’s first and only Digital CDP to deliver a true 360-degree view of the customer and provide insight natively across hundreds of DSPs and social media platforms. Epsilon’s Digital CDP is an extended first-party data solution that connects each customer’s online and offline worlds in a privacy-safe environment. With the ability to unify devices, digital data, transactions and engagement, OEM’s and dealers can have 1:1 conversations like never before.

Existing/legacy CDPs mainly focus on collecting customer data across touch points for analysis purposes, leaving automotive marketers with little ability to take direct action on customer data. Automotive marketers see the significance behind the native activation capabilities and 360-degree view of the customer delivered by Epsilon’s Digital CDP, especially as first-party data is growing larger and more complex (think vehicle diagnostics, connected customers, OTA updates and communications, etc.). Next-generation CDPs bolster data collaboration and integration, deepen informed decision making and grow first-party data with ease, ultimately building more lifetime value and loyalty customers and improving business outcomes and results for OEMs and dealers.

Epsilon’s unique position in the market enables OEMs and dealers to maintain relationships with customers throughout the research, shopping, buying, financing and the overall ownership experience. Its focus is on helping the automotive industry build communities and brands, acting as a trusted partner in every aspect of the broader transportation industry, not just in the EV market.

The authors would also like to thank Hariharan Mallikarjunan (BinaryCore Data Architect) and Srinath Mukundan (BinaryCore Data Engineer) for their contribution to this article.

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