The automotive industry presents a complex perspective around the franchise model. Unlike other retail sectors where the franchisees carry the same branding as the franchise owner (franchisor), in the automotive industry, this is not the case. The dealerships of a franchise group may represent several different car brands or original equipment manufacturers (OEMs).
Consumers however are generally more interested in the car brand (OEM) than the franchisor’s brand when selecting a dealership. This business model presents interesting challenges to the brands (OEMs), employees and customers alike.
One of the top challenges for the OEMs is ensuring that their brand and desired customer experience is consistently represented across the dealerships and franchise network – each having its own unique culture, ethos and operational framework.
The Consumer Psychology Lab unpacks some of the key CX challenges faced in the automotive franchise model based on consulting work done with leading OEM brands:
Challenge # 1 Getting the right people to represent the brand (OEM)
In most franchise models, the onus of recruiting, selecting, onboarding and managing staff, lies with the franchisee. This is also the case in the automotive industry. However, franchise groups often have licences to represent multiple vehicle brands (OEMS), and this presents a unique challenge! While the franchise HR department defines the group’s overall talent strategy and policies, it is often done without providing for the respective cultures of the OEM brands they carry and represent.
From the outset, OEMs should define their level of involvement and influence in the recruitment, selection, appointment, or management of key employees at the onset of awarding a license to a franchisor. This will provide an opportunity to influence the culture fit of the managers across different dealerships (and different franchisors), to the brand. It should apply to the key stakeholders of the business with the most impact on the brand reputation, such as dealer principals, sales managers, sales executives, and service managers.
Because multiple entities are involved in the ultimate service delivery to the vehicle buyer, the OEM’s only opportunity to ensure consistent brand experience across dealerships is to ensure that the right people represent it, and the best time to negotiate this is at the initial contracting and licensing agreements with the franchisor. It goes without saying that each OEM has its unique brand personality and desired customer experience, so employees at any dealership, irrespective of the franchise ownership, should reflect this ethos and culture.
It is incumbent on the OEM to provide a clear framework regarding the characteristics of the people representing its brand. For instance, the characteristics of the representatives of a luxury premium brand will be vastly different to a high-volume brand. Does the brand have a casual, quirky, humoristic vibe, or is it more focused on efficiency, with a ‘let’s get you sorted’ approach? Or is it about exclusivity, prestige and professional formality with a smart, exclusive, and aspirational tone? Employees representing the brand should be selected on this basis first and foremost, as these personality characteristics are far more challenging to cultivate than technical proficiency.
Challenge #2 Employees get confused! No one can serve multiple masters
The influence of the requirements and expectations of the OEM, franchisor and local dealership management should not be underestimated. The OEM will expect alignment in terms of the brand ethos, personality, and spirit evident at all the dealerships in their network, including sales, whereas the franchisor will expect operational excellence and profitability. The local management will be expected to balance the requirements and deliver on brand experience, operational excellence, and profitability. Dealership staff are incentivised to perform on these respective requirements, and at the end of the day, the prioritisation will lie with what brings in the most benefit.
Should the OEM have a strong focus on customer experience and brand reputation to underpin sales, but the incentives offered are not attractive, it is fair to say that the focus of the staff will shift towards the performance metrics that offer better financial rewards.
Dealership staff also get confused when the pressure to deliver on operational requirements is not aligned with the required brand experience. For instance, when cost-cutting measures are implemented by the dealership (franchisee) and as a result the expected value-adds associated with the OEM brand experience are suspended, the dealership staff are disempowered to deliver on the OEM promise to customers.
As a simple example, during the peak of the COVID pandemic, many dealerships stopped offering refreshments or a complimentary cappuccino due to hygiene and safety measures. Similarly, the complimentary drop-off at home when bringing your vehicle in for a service was stopped. However, many have been slow to reinstate these value-adds in a bid to reduce costs. Many also reduced the service staff headcount and are now slow to augment the staff complement as demand returns to normal, which leaves the customer experience of the brand flagging. This is clearly a recipe for disaster and customers respond to benefits and value-adds being taken away with resentment. The dealership staff are typically the ham in the sandwich of a complex environment, having to face customers who simply are no longer loyal to their brand, and bosses who expect them to cut all the frills customers expect. In these tough economic times, can any dealership afford to lose the patronage of customers by being penny-wise and pound-foolish?
Employees are expected to understand and embrace the operational requirements of both the OEM brand they represent and the franchise dealership who employs them, but confusion sets in when the customer experience focus is not aligned. Which one takes the front seat in terms of the employee’s priority? It is often said that one should not bite the hand that feeds, so dealership staff may find themselves in a quandary as to whose expectations to match. No matter how passionate they are about the car brand they sell, without the local support at dealership level to deliver the OEM brand experience, they simply cannot be true brand ambassadors.
OEMs are encouraged to ensure that the onboarding process with a new franchise includes showcasing the brand, its values, the desired customer experience and promises to customers that dealership staff will be expected to deliver on, ensuring that there is alignment of the right frameworks for consistent customer experience.
Challenge #3 Customers get confused
When consumers choose a car brand (OEM) they wish to buy, they typically opt to go to a branded dealership. They expect that all touchpoints will be consistent with those of the OEM brand. It becomes confusing when the website or e-mail signatures carry the franchise dealership branding, or even other OEM brands they are licenced to sell. Then, adding other third-party branding into the mix such as the finance, insurance and service plan/extended warranty providers further complicates matters. Who is the customer actually buying the car from? Customers are largely unfamiliar with the values, customer promises or expected service delivery of the franchise group, because they expect to be interacting with the OEM brand, and its associated positioning or reputation in the market. There is limited value in showcasing the franchise’s vision, branding, values and culture over that of the OEM brand which is what customers are actually interested in and buy into.
Customers get confused when they expect to be dealing with the OEM brand, but all the branding on documentation, staff uniforms, email signatures and the like reflect another. While it is standard practice for many third-party providers to play a role in the customer journey – from financing, insurance products, fitments such as tracking devices, smash and grab, panel beating, customer support and even post- service contact – these are non-core providers, and customers still expect an experience aligned with the OEM brand’s overall positioning. It is vital to ensure that all channels and customer touchpoints underscore ‘ONE VOICE’ (brand) throughout.
The automotive industry’s franchise model presents unique challenges and requires consideration of process standards, as well as customer experience standards. A manual outlining the process certainly goes a very long way in managing consistency, but customers judge consistency also by how they are treated. Their experience is influenced by their expectations of the OEM brand, and the moment a dealership does not deliver on this experience consistency, customers disengage, become disloyal or merely leave.
When it comes to CX and the people side of the automotive franchise model, OEMs should always start with the recruitment and selection process, as it lays the foundation for consistency by focusing on the culture-fit first, before skills or experience. Getting the right people, onboarding them to become ambassadors of the brand experience and continuing to invest in their development as empowered brand representatives, provides a far more realistic opportunity for consistency. The caveat remains that the desired experience and customer promises must be articulated and shared by the franchisor with the franchisee, on a consistent basis, with benchmarking and measurement for improvement built into the process.
Finally, the roles of the OEM Brand, franchisor and dealership management in securing the right people as well as the understanding of the respective roles in terms of service delivery, requires clarification and visibility for employees. Equally, the ‘voice’ of the Brand should be clarified, especially given the complexity of the many role players involved in the service delivery.
