Phygital in Automotive: Bridging the Gap Between Physical and Digital – Part 1

Mobility | Tony Whitehorn |
20 April 2021

"Cost reduction" is the number one phrase in the auto industry today, but there is a new word which has entered the auto dictionary: Phygital.

With any change in society, new words emerge to mark that change. Covid-19 precipitated a change in our "retailing habits": the pandemic has forced many of us into digital retailing and transactions to avoid personal contact, and with it, the new word has entered the automotive language.

Customers have experienced the digital automotive world via automakers'/dealers' websites, digital configurators, and online service bookings, other e-commerce transactions, and virtual events, but they still want to enjoy the tactile benefits of the real showroom and the motor vehicle. It truly is an omnichannel environment of physical and digital, and with the "light at the end of the tunnel" coming through vaccines, many consumers will still want this omnichannel retail experience.

Most people will agree that the physical and digital experiences often have very little crossover. This confuses the customer who wants a seamless experience throughout the entire journey. The eventual "winners" in the automotive space will be those OEMs and dealers who appreciate that the customer does not differentiate between the environments and enable the customer to experience a seamless movement between the two. This may be obvious, but this is Phygital.

THE GREAT DIVIDE BETWEEN ONLINE AND OFFLINE CUSTOMER JOURNEYS

The customer journey is not as linear as first imagined. Marketeers have consistently talked about the "purchase funnel", but it is more of a circuitous journey of revisiting areas and re-evaluating aspects of the purchase decision. It is an oscillating, not a linear process. This has been made possible by the accessibility of information from websites, blogs and vlogs of dealers, manufacturers, journalists, owners, and enthusiasts, enabling customers to reconsider their decisions at the press of a button without any salesperson hassling them.

However, the digital journey also has its pitfalls. It is a great source of information, both objective and subjective, but it lacks the excitement of touching, driving, and experiencing the actual car. The digital retailing environment is efficient, whilst the physical is more emotionally charged and therefore more engaging.

The motor car is not solely a functional piece of machinery but falls into that category of being both a rational and an emotive purchase. The online/offline journey needs to be able to facilitate this dynamic and offer customers various convenient engagement touchpoints.

OPPORTUNITIES FOR PRESALE SYNERGY

The question has to be: "How can the digital framework become more engaging, enabling greater synergy between the online and the physical presale?"

There are ways to enable more emotional encounters in the digital presale experience. Virtual and augmented reality present an opportunity to do this and will engage the customer with the brand even before the purchase. Imagine driving the car down your own road, or having the new car positioned outside your house and walking around it. Gaming can also bring the customer closer to the brand, with the "fastest lap" on a simulated circuit being recorded as the potential customer changes the configuration of the engine.

Other multimedia solutions, which could far exceed what a customer could physically encounter, are also possible. Visiting a showroom seems to be so much more exciting; however, imagine visiting a virtual showroom or a virtual auto show and being able to interact with the car in a way which would not be possible in a physical environment. In fact, such a digital encounter has the potential to even surpass the physical visit or at least mirror the experience provided to the physical customer.

Virtual showroom solutions have proven to be successful, attracting many visitors globally without having to travel. For car manufacturers, this opens a variety of new options, like exhibiting more frequently, showcasing more models, servicing more customers, and finally, but of significant importance in this cost reduction environment, substantially reducing exhibition cost. In addition, it creates important customer touchpoint data indicating levels of interest. Thus, there is a great opportunity to increase the synergy between the two ecosystems. This is Phygital in action.

OPPORTUNITIES FOR SALE SYNERGY

When purchasing today, with many products we have a choice as to where we make that purchase - in a store or online. This is possible because the customer is confident that the price quoted online is as good as can be secured in store.

In general, this is not the case when buying a brand new car. Because the automotive industry is renowned for its haggling ritual, a customer is directed to the showroom for the final transaction, as the price advertised is rarely the price paid. This must change, and digitalisation can facilitate this shift. Customers want transparency, which is often not given in the physical selling environment. However, as manufacturers and dealers realise that they need to become more customer-centric, they are investing in e-commerce platforms with complete transactional processes embedded. With such a system, there is no haggling; it is entirely transparent, which is exactly what the customer desires.

OEMs are turning to IT services companies with electronic payments at the heart of their experience to introduce systems that are reliable, secure, and flexible. They are also looking for an ability to introduce payment gateways which provide harmonised global solutions, more flexibility, less dependency, and payment services cost reduction.

This is a great example where dealers and OEMs are having to change the way they have worked for the past 100 years to meet customer expectations. By offering a digital solution at the point of sale, e.g. through innovative digital signage, the physical point of sale must mirror that transparency in the transaction. This is Phygital in action.

In part 2, we will look at the opportunities which Phygital presents for post-sale synergy, including a detailed view of an automotive case study, and our top tips for OEMs to fast-track their Phygital journey.