Digital Solutions are Changing the Way Thai Consumers Buy Cars A Map to their New Buying Process

With the rise of the COVID-19 pandemic, the automotive market experienced a global slump that has been slowly recovering over the end of 2020 and early 2021. Now is the time for distributors and dealers to identify the best way of how to maintain flexibility in the future. As the recovery begins, insights into how customer purchasing behaviors have changed are more valuable than ever to support business making decisions and to steer company strategies in the right direction.

ABeam Consulting has conducted Car Buying Behavior surveys in 2019 and 2021 for the Thai market, designed specifically to focus on understanding the overall end-to-end customer journey from the awareness to the retention stage for both sides of the pandemic; the before and after COVID-19 behavior of consumers.

Thailand's average daily internet usage has increased over the last five years, increasing to 11.25 hours in 2020, up by 1.03 hours from the previous year, highlighting COVID-19's effect on people. Since customers' touchpoints have shifted more and more from face-to-face to online, OEMs need to make sure they are ready to be competitive when it comes to digital platforms and channels without neglecting major parts of their core business. 

ABeam can support OEMs and dealers to improve their various touchpoints along the customer journey, with the goal to provide increased productivity, simplified & richer data collection, additional data analytical insights, and an enhanced customer experience based on the current sentiment in the market, as well as finding the right fit out of the latest CX technologies.

The Car Buying Behavior study conducted by ABeam Consulting in 2019 and 2021 examines major trends and behavioral purchase patterns, as well as verifies whether COVID-19 has changed the way car buyers make purchasing decisions. The findings were consistent in that the quality of goods, services, and customer interactions are key to becoming a sought-after brand. 93% of Thai car buyers did not change their decision on the brand they wanted during the COVID-19 situation, only 7% purchased a less expensive brand or model.

When it comes to buying a car, there are three stages that are known to lead to a purchase: Awareness, Interest, and Consideration. Following the Purchase, After-sales is an important area that - if done correctly – can boost customer loyalty for the specific brand, creating a loop that will ultimately lead to further purchases. While companies may have long been aware of these stages, there is now an increasing number of expectations towards digital touchpoints involved in the end-to-end journey.

Brand awareness is the first stage in the customer journey and a necessary steppingstone to lead customers to a successful purchase. According to ABeam's study on Car Buying Behavior in Thailand 2021, 15.3% of survey respondents made their final decisions on which brand to buy before doing any research or even visiting dealers. As a result, manufacturers and distributors must ensure that their brands are always top of mind for potential customers through efforts towards awareness.

There are several ways to create brand awareness, such as TV advertisements or billboards, but with the increase of social media users and the fact that people in Thailand spend more than 11 hours per day online, social media has become an important digital touchpoint in raising brand awareness. According to a study conducted by Thailand's Electronic Transactions Development Agency (ETDA), Thai people have been spending most of their online time on social media over the past four years, with 95.3% of respondents in 2020 confirming the trend.

Social media sites have the capability of reaching a vast number of people. DataReportal’s research for Thailand in 2021 reveals that YouTube has the potential to reach 37.3 million users, while Facebook and Instagram have the potential to reach 37 million and 16 million people, respectively.

OEMs should focus on creating brand awareness through effective usage of digital touchpoints such as social media, using collected personal data to target unique groups of prospects similar to existing motivated buyers to encourage them to become interested in their products at the right time. When OEMs target the right group of people, it will funnel them easier into their brand’s customer journey, leading them to the next stage.

After having awareness of a brand, customers enter the Interest Stage in which they conduct research on the car’s details. ABeam's survey reveals that 25.7% of respondents decided on which brand to buy at the Interest Stage, even before visiting the showroom for the first time.

According to ABeam's survey, a combination of brand reputation, purpose of usage, and product design, among other items, can have a significant influence on a buyer’s vehicle purchasing decision. The survey also reveals that pickup and passenger car buyers spent the most time researching on Google whereas luxury car buyers tend not to spend much time getting their vehicle information from online channels. Using the sales staff as a reference point, the comparison between time spent and the usefulness of each channel shows that the most used channels are not always the most useful ones.

When asked what the preferred method of gathering information was during the Interest Stage, the result shows that more than half of car buyers prefer to do their research via digital channels such as Google and social media while others prefer to do it traditionally such as visiting a showroom or talking in person with sales staff. The figures below illustrate the distinct preferences of those who prefer researching via digital channels versus those who prefer using more traditional ones among buyers of three types of vehicles: luxury cars, passenger cars, and pickup trucks. Among the majority of car buyers who prefer digital means, some are already using digital channels and prefer to continue doing so while others are using traditional channels but prefer to do so digitally for their next customer journey. The percentage of car buyers who already used or prefer digital channels is highest in the luxury car segment.

OEMs must be able to recognize where potential customers are in their respective journeys and develop a strategic approach to move them along successfully. To build a smooth customer experience, OEM’s should have an automated, data-driven acquisition process to determine where in the journey the customer is and to further interact with them. Tracking customers to funnel them along an automated journey leads to an enhanced customer engagement that will also rely heavily on providing the most fitting content for the profile of the individual prospect.

After gaining brand awareness across multiple channels and gathering sufficient information to determine which brand of car they would be interested in buying, customers reach the Consideration Stage. In Thailand, the showroom is still the heart of the customer experience, where customers can get a close look at the vehicles and get information and advice offered by the sales staff. ABeam found that 59% of respondents chose a brand for their purchase at this stage.

Out of the customers who decided to buy a car at this stage, 31% of the respondents committed to a brand directly at the showroom before taking a test drive, 33% decided after doing a test drive, and 37% decided after leaving the showroom.

The majority of car buyers visit the showroom 2-3 times before purchasing a vehicle, with 84% doing so in 2019 and 79% in 2021, showing that despite COVID, this kind of behavior has not changed in any significant way. The relationship between dealers and customers is critical in determining whether a customer will choose the car at this stage, which also means that those 2 to 3 visits need to be leveraged by offering positive interaction experiences for customers and collecting data to enhance sales staff capabilities.

Interaction with sales staff has proven to be the most useful means for obtaining information before and also after the COVID pandemic.

Even though car buyers continue to visit dealers, a third of respondents, especially luxury car buyers, agree that the traditional showroom experience, such as visiting a physical store to look at different models, has become less appealing. When asked how they prefer to interact with dealers, some respondents said they would prefer to do it via digital channels while others prefer to keep things traditional. The responses varied depending on the type of car owned.

Since dealer visits along with sales staff interactions are important in influencing a car purchasing decision, dealers must be given tools that can further enhance and smoothen the customer experience with the brand. Many automobile manufacturers in Thailand have adjusted accordingly; for example, by creating brand websites that allow customers to schedule visits with dealers or book test drives. While not common at this point yet, companies like Mercedes Benz Thailand have implemented online chatbots to connect with potential clients who visit their websites. Traditional display and face-to-face interactions are not enough; OEMs need to collect data in order to determine what customers want and prioritize them accordingly, something that technologies like chatbots and others can offer. By analyzing collected data from different dealerships and interactions with their customers, OEMs can use big data analysis to map the most effective interactions, to spread best practices and avoid low-performing practices throughout the entire dealer network.

After customers pass through the Awareness, Interest and Consideration Stages, if they are satisfied with the product, price and offered service, they will move on to the Purchase Stage. According to ABeam’s Research 2019, cash was the most commonly used method for down payments of current vehicle owned by respondents.

Apart from regular cash payments, respondents chose online bank transfers as the most attractive down payment method for their future car, with 75% citing interest, and 72% selecting debit and credit cards. PromptPay, a service in Thailand that allows citizens to receive and transfer funds through electronic channels using their Citizen ID or cell phone number instead of a bank account number, came in 4th place.

The volume of online bank transactions in Thailand has increased sharply from 0.5 billion transactions in Q1 2018 to 3 billion transactions in Q1 2021. In 2021, Kasikorn bank reveals that the number of Thais using mobile banking is the world's highest, accounting for 68.1% of monthly internet users nationwide. Most car brands in Thailand currently accept these forms of digital transfers for car down payments. For major Thai banks, online bank transfers and PromptPay transactions are limited. to a maximum of 2,000,000 THB per transaction, which is enough for an average down payment on a vehicle at around 140,000 THB¹.

Thus, automobile manufacturers are encouraged to build additional online payment processes into their customer journey to satisfy this emerging group of interested prospects. Companies such as General Motors Company (GM) have adapted to the new car-buying journey by putting the entire car-buying process online outside of Thailand. Customers can configure a car on the website's design studio and buy it right away, as well as fill out any loan paperwork. In Thailand, MG and BMW also allow customers to make online payments for car reservations on their websites. Renazzo Motor, Thailand's sole certified Lamborghini dealer and after-sales service provider, has gone beyond digital payment by allowing Bitcoin to be used to purchase a Lamborghini.

In order to adapt to the modern customer journey, all touchpoints between customer and company should include digitalized options, including car payment. OEMs can respond to this new e-commerce trend by enabling customers to at least do parts of the car-buying process online such as vehicle booking, down payment or loan services.

With these services available online, OEMs can identify that customers are now nearing or at the Purchase Stage, ready to buy a car. OEMs then send customers’ data to local dealers in the customers’ area and assign a salesperson to assist them from the beginning of the purchasing process until the car is delivered. For a full implementation though, outside of the technical capabilities of individual brands, the operational aspect of how to include dealers efficiently into the entire process needs to be defined and well thought through. While most profits come from the after-sales side, new car sales are still the major revenue generator for dealers, moving everything digital without considering how dealers fit into the end-to-end value chain might be detrimental to a brand’s local presence.

The customer journey does not end with the purchase of a vehicle; it continues throughout the vehicle's lifecycle. Service repairs and after-service maintenance follow-ups are now the key points of contact between the brand and the customer, through dealers. Digital touchpoints play an important role to improve the after-sales service experience through online service bookings, notifications on car checkups, repairs, and insurance extensions.

According to the 2019 survey results, loyal customers who own vehicles of a single brand value the overall experience with the brand more than other groups of customers and are also 34% more likely to stay with the same brand due to those experiences. But all groups agreed that the after-sales service experience was the most impactful reason for their decision to stay with a brand or to change it.

Nissan, Isuzu, and Toyota scored first, second, and third in the customer service index in Thailand in 2019, according to J.D. Power. Nissan came out on top largely because of a very high ranking in after-sales customer satisfaction with an overall satisfaction score of 838, excelling in three of the five factors: service advisors, vehicle pick-up for service, and service quality. In early 2019, Nissan launched a mobile application named "Quick Voice of Customer" as part of its "Customer Power" strategy to get direct input from customers on a variety of topics, which is considered one of the contributing factors to its high ranking.

The average time it takes to purchase a vehicle is only 1-3 months, on the other hand, the average after-sales service period is 3-5 years²for new cars. According to the Peak-End Rule, the customer’s decision to decide if they had a good or bad experience relies on mainly two moments which are positive peaks during and at the end of the entire journey, they determine the perception of their overall experience rather than the average of all touchpoints of the journey.

The after-sales service timeline and peak-end rules require dealers to maintain positive relationships with customers throughout all after-sales customer touchpoints, such as bookings, services and more. Dealers can personalize their service support if they have access to the data from connected vehicles using telematic devices. Collecting data from the beginning to the end of the customer journey, especially during the usage of the product helps OEMs gain new customers and retain existing ones. European car makers have pointed out that customers that used their connected services have in average a higher retention rate than the ones that do not.

In order to compete in today’s digital climate and gain market share over competitors, ABeam sees the following aspects as the most important ones;

Customers are – especially in Thailand – moving more and more towards digitized channels, reducing their dependency and preference on traditional offline channels. Besides the preference of customers to have the option to conclude parts or even the entire journey digitally, it also feeds into the second point regarding Data Collection & Intelligence Generation.

Technology that supports and enhances a brand’s performance by funneling their prospects and existing customers along a customer journey have been available for a few years now, but not many companies are using those tools’ capabilities to their full effect. Customer Journey Builders with defined triggers, content coordination and more, can help reach customers at the right time with the right message, as early as the Awareness Stage, usually just before the end of the product lifecycle.

These Customer Journey Builders are alone already powerful tools but can become even more capable and potent when paired with data sources from integrated dealer management systems and telematics data provided by connected cars. This holds especially true for retention of existing customers, by always knowing when a current product lifecycle is nearing its end and when customers should be approached again to refresh their investment in a brand.

On the other hand, the data collected from existing customers can help draw clearer customer profiles of first-time buyers. Understanding why people choose a brand and how they use the product can become invaluable when creating target segments to gain more market share.

Being able to capture as much data as possible from the operational environment – the physical world – can give insights into purchasing and retail patterns that brands might not have had access to until now. Interaction between customers and dealer staff, showroom visit behavior and more have been mostly black boxes to big brands. Only business relevant data centered around dealer management systems are clearly visible, like invoices, quotations, and bookings. How long did a salesperson discuss with a prospect? What kind of offers were made, or models shown? How long was the test drive? Did they meet outside the dealership? All those points could provide further insides into the most effective way of converting a prospect into an actual customer.

The challenge is to collect data without increasing the workload of the operational staff, which in turn can lead to reduced data quality. ABeam believes that tools need to provide value to their users while at the same time collecting data without the effort of having to enter it manually, and rather making it part of their daily business routine.

Another issue ABeam has been observing with many OEMs and their distributers, is still the lack of infrastructure and capability to analyze data collected by different sources to provide the intelligence needed to gain value from it. While the most common use cases are for dealers to improve their processes, it can also be applied to the effectiveness and workings of campaigns. Due to the lack of a common platform or approach, many departments build their own plan for data analysis and create silos to benefit their individual areas, highlighting the last success factor across for an effective Customer Journey; Data Flow & Interconnectivity.

As ABeam’s study has shown, customers judge brands based on an end-to-end experience, with a big emphasis on the After-Service. In the example shown, even with all individual touchpoints having a Customer Satisfaction of 95%, meaning that only 1 in 20 customer had a bad experience at each step along the entire customer journey, the number has to be added up for each touchpoint, since the chance exists every time the customer interacts with the brand’s customer journey. This results in our example above in 1 in 4 customers having a bad experience: 5% + 5% + 5% + 5% + 5% = 25%. 

It is imperative for brands in today’s digital age to break down silos and to incentive cooperation across departments to supply each touchpoint with valuable data. Making sure a customer is handed over from one touchpoint to the next in a smooth and controlled manner. All tools and processes highlighted across the stages of the customer journey should be connected and benefit each other to continuously improve the experience.

Examples that ABeam will explore in future papers is the inclusion of Connected Cars, interacting with Customer Journey Builders and Dealer Management Systems, by triggering events for pro-active follow-up and to analyze the exact position along a user’s product lifecycle to keep them within their entire brand experience. But before more advanced interactions are considered, dealers, distributors and OEMs should focus on collecting information, and supplying their staff with insights that can propel their business forward.

ABeam is introducing ABeam DRIVE, a supplement to pre-existing dealer management systems that enhances customer interaction and collects data more effectively, enhances its utilization, and provides valuable insights into the performance of customer facing processes & operations.

Contact us if you are interested in our research or for more information https://www.abeam.com/th/en/contact_th

Maliwan Saepoo is an Analyst working out of the Bangkok office, Jonathan Vargas Ruiz is a Senior Manager and Thana Vivathirun is an Associate Manager from the Automotive Industry Unit located in Bangkok.