So what are automakers doing to overcome these issues?
The challenge for the car companies is, 'How do I get people to buy in?' Every manufacturer out there is working on a strategy to manage leads and provide retailers with the right type of technological advantages so they can manage the customer lifecycle. The challenge we have is finding ways to get product into the dealerships. What are the unique challenges that face the automotive industry in adopting enterprise-wide CRM?
The biggest challenge in this industry is the broad range of the ecosystem. If you think about it, the industry spans all the way down from suppliers to consumers. In between you have varying relationships, and the dealer system is one of the oldest franchise networks around. I, as GM, can't go down and dictate to a Buick dealer what systems they are going to use, what information they're going to provide me with. It's difficult to dictate to the retailer how they are expected to behave or in turn predict how they're going to act. When you think about what CRM does, it's going to drive revenue and profits and hopefully customer satisfaction, impacting the brand experience. Some 85% of that experience comes from contact with the dealer.
At the end, how do you get this whole ecosystem working as one? That's the biggest challenge in the industry today. The automated systems that are out there in the public are run by a handful of companies. They tend to be older proprietary systems that don't integrate very well. They have closed business processes because they want to protect their marketplace. So what is Siebel's role in all of this?
All of our competitors fall into one or two categories. Either they're a horizontal, broad-based CRM supplier or they're a vertical niche supplier that serves just part of the ecosystem. Some examples of that would be SAP, Oracle or PeopleSoft on the supplier side, or a Reynolds & Reynolds or an ADP, on the vertical-niche side.
What we realized was that in looking at different vertical industries, 70% to 80% of CRM is the same, no matter what the industry is. The automobile is an opportunity in our vertical, much like a consumer may be in another vertical. Within a vehicle there are certain activities that are going to occur that are going to produce revenue based on the vehicle, not the fact that somebody owns it. If I pass the ownership to you, those opportunities go with the vehicle to you.
Based on that, a standard CRM solution doesn't treat the vehicle as an opportunity. In our data repository we do. We match activities and opportunities with the vehicle and the consumer and treat them as independent events. So it's still an uphill battle to even introduce the notion of CRM?
Well, yes and no. The interesting thing is that car companies and dealers today realize that there's benefit to be had from CRM. The bad news is they haven't quite figured out how to do it comfortably. There isn't a lot of trust between the retailers and the car companies [based on] some good reasons and some perception issues. GM is taking a leadership role in that regard, they're trying to figure this out and work with the retailers to build the trust that's necessary to share data. At the end of the day you've got to share a lot of data if CRM is going to meet expectations. How replicable are CRM successes from one automotive company to the next?
Typically, what we've found is that if 80% of CRM remains the same, if I can use 80% of my horizontal application in all my verticals, out of that 20% that's left, 16% of that is the same across car companies. They have similar needs and structures. They need the finance aspect; they need collaborative marketing for the dealer network. The other 4% is what is unique. That's where they bring in a systems integrator to do special configuration to meet their exact needs.
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