Captives response to changing customer expectations

4. “I JUST DON’T WANT ONE BALLOON TO A CAR”. Page 4 To me, visiting a car showroom is a job that has to be done, rather like attending a funeral” Tim, 29 Google Consumer Survey 2014

5. BMW REPORT INTO CONSUMER PURCHASING BEHAVIOUR. Page 5 2003 Dealership visits Car buyers carry out online research before purchase 1% 92% Car buyers willingness to buy cars online <1% 42% 1.54 2013 Source: BMW Annual Report 2014

6. SO WHERE DO WE LOOK? Page 6 A snap look at Financial Technology: • London accounts for 53% of the total European Investment in Fintech • Fintech investment is growing in the UK more quickly than in any other market in the world • Since 2008 UK fintech investment has grown by an annualised rate averaging a remarkable 51%.

7. WHERE IS THE INVESTMENT GOING? Page 7

8. WHO IS DISRUPTING IN AUTOMOTIVE? Page 8

9. Page 9

10. RESEARCH PRIOR TO PURCHASE Page 10 In 2014, 97% of all consumers are using the Internet to research cars. Cars Online, 2014

11. DESTINATIONS ON THE PATH TO RESEARCH Page 11 Almost 90% of customers use dealer websites or OEM websites in the early steps of their decision making Source: Innovating Automotive Retail, McKinsey, 2013

12. RESEARCH Page 12 • Where can a prospect find out about finance on your website? • What kind of indicative pricing do you offer a prospect? • Do you only use the MRP?

13. Page 13

14. CUSTOMERS METHODS OF CONSUMPTION ARE CHANGING. Page 14 33% of car buyers say that they would consider purchasing a vehicle online.

15. A VIEW FROM THE MILLENNIALS. Page 15 More than half of millennials say they’d prefer to visit the dentist than haggle with a car salesman. Time

16. CARVANA Page 16 • What considerations have you made to enable a customer to transact with you online?

17. Page 17

18. MOBILE BANKING TRANSACTIONS Page 18 Mobile Banking Transactions in the UK Grew Nearly 105% in 2013

19. MOBILE FIRST Page 19 1.5BN Mobile Transactions expected by 2020 up from 356 million today Centre for Economic and Business Research (CERC)

20. MOBILE FIRST Page 20 20 million adults will use their mobiles to pay for goods and services by 2020, with the value of purchases tripling from current levels to £14.2bn in 2018. Centre for Economic and Business Research (CERC)

21. BEEPI Page 21

22. BEEPI Page 22 • Is your digital real estate mobile optimised? • How well are you using video content?

23. SO WHAT’S LEFT OF THE BALLOONS? Page 23

24. SUMMARY Page 24 The battle is won or lost in the world of the digital real estate.

25. THANKS FOR LISTENING. Page 25

Notas del editor

By 2025, Gen Y is expected to account for 75% of all vehicles purchased. We live in a rapidly changing environment, pace of technology quicker than ever, if we don’t truly understand how gen Y’s and millennials consume goods, we will be dead in the water.
Instagram acquired for £1bn during which time it had 13 employees 3 months later Kodak filed for bankruptcy. Facebook the world’s most popular media owner, yet it has no content.
Serial was ranked at No. 1 on iTunes even before it débuted, leading iTunes rankings for over three months, well after the first season ended.[1][33] It also broke records as the fastest podcast ever to reach 5 million downloads at Apple's iTunes store 1 month at Jeep dealership on Long Island. Monthly target 129 cars Follow the various characters in the dealership.
As captives, have we leveraged too much from the balloons? Does that point of sale advantage still exist? What does the young consumer believe?
As Captives, when we see the competition coming, where do we look? Is it one big circle of Ford -> Renault -> VW -> Audi -> BMW -> MB etc…. I think we probably do do that, but we’re lulling ourself into a false sense of security. But what’s this all got to do with Gen Y? 73% would be more excited over new financial services from tech companies than from their actual nationwide bank Alignment of qualities Millenials rank all four of the biggest banks among the 10 least loved brands (http://dataconomy.com/like-bees-to-honey-millenials-and-the-future-of-fintech/)
Saving Global - SavingGlobal, based in Berlin, allows savers to open savings accounts around Europe without having to visit branches or learn the local language and they can manage their account quickly online. SavingGlobal allows Germans to ditch the paltry rates at home and put their cash in banks in other countries where interest rates are higher. Ffrees – Unbank be ffrees. “UK’s first unbank – you and your money are first and the fat cats are last.” Sheffield based. 400 account applications per day. Online only! Osper – mobile banking for young people. Targetted at 8-18 year olds. Prepaid mastercard with banking app. Parents have a separate login to keep an eye on things. Centralway - Centralway Numbrs is the new bank branch. As one of the most popular mobile banking applications in Germany, Centralway Numbrs enables you to manage your financial life on the go. App first. Squirrel – “Makes managing money easy”. Stagger disposable income into manageable amounts ensuring you stick to an agreed budget. Nutmeg – Online investment management. Build a portfolio based on your preferences. Can start with £1,000 per fund. “Commitment to being open and transparent.” Wikifolio - The idea being that, through Wikifolio, investors can put their cash into the trading strategies of professional traders via ordering wikifolios through various online brokerages — similar to existing investment products. eToro- the world's leading social investment network, you can tap into the wisdom of the crowds to help you make smarter investment decisions. “Use the wisdom of the crowds to build his portfolio”. Tink – “follow your money.” A simple way to keep track of your everyday personal finances. Gathers all your transactions, categorises them and puts them in one place. Live in Sweden, coming to Europe soon. Money Dashboard – a true view of all your finances. Makes money by offering products & services to you. Using big data! Moni – Co-founder was a former Google employee - Laurence Aderemi. One of the first companies to participate in the Techstars programme. Transfer Go – local in, local out. Money is transferred internally within transfer go. 10x cheaper than Banks. Engaged with 30,000 customers. World Remit - UK based, raised $100M investment to go after Western Union, launched by Ismail Ahmed when he studied in London and wanted to send money home to Africa. Azimo - part-British part-Polish start-up that intends to make remittance transfer easier, cheaper and more accessible focusing on lower skilled migrants. Launched 2 years ago, now in 198 countries. Currency Fair – Peer to peer transfer. First you send funds to your CurrencyFair account. You then convert these funds by matching with other customers on our Marketplace (or via QuickTrade), and finally you instruct us to transfer those funds out to a beneficiary bank account around the world Klarna – Provides payment services for storefronts Transfer wise – Peer to peer transfer. Save money by giving you a fair exchange rate “banks hide the fees in the exchange rate.” Landstar - Lendstar is your social finance app for paying and chatting among friends. Easy, fast, free & more secure than online banking. German based Aux money – Peer to peer marketplace for lending money. The company assesses the risk of borrowers by using its own proprietary algorithms which parse a range of signals, including some of the traditional metrics that banks consider when deciding whether to lend money, such as credit history, but also by looking at a multitude of more subtle signals (which Johnen calls its “secret sauce”) — such as how potential borrowers behave on its website and elsewhere online. Lend Invest - Peer to peer mortgage plarform. £423M invested in loans to date. Largest peer to peer mortgage platform in the UK. Founded on the back of the GFC. Property Partner – Invest in property from £50-£50k. Aim to jump hurdles that exist in the buy to let market. Landbay – Peer to peer investment in mortgages. Fuitful – Peer to peer lender on both private and commercial properties. Money secured by commercial properties. LTV of 65% and low risk borrowers only. Ledico – Founded in Germany, not in UK yet. P2P lender Pret d’union – P2P lender founded in France. $34M investment in July 2015. Lending works – P2P lender Zopa – P2P lender Bondora – P2P lender that secured $5M investment from the US giant Lending Club. Based in Estonia. Desire to conquer cross border lending. Borrow – Sale advance loans, Bridge loans & term loans for luxury assets. Create a new category of lending where top 10% of population can get loans secured by luxury items. £150M of transactions to date. Average loan $20k, $5k - $2M. As an aside: How many of these sites use video content as an explanation? How many are mobile optimised? How many were designed mobile first?
These have been picked because they are particularly successful in targeting Gen Y. Following slides outline why they are successful. Walk through. Transition: Next walk through different elements of the customer journey, look at some key stats which give an indication of wider macro trends Look at some example companies that really stand out in this area.
Previously looked at stats showing increase in research online. Customer’s are coming to a retailer/dealership knowing what they want.
For Gen Y, 100%
Ok so a few qualifying points here: Our websites are only one element here Consumers will look at trade press, social media, etc BUT: Our site is a massively under utilised resource. We have a huge volume of traffic going through so lets change it to make it more in line with what the customer needs. So who are the key disrupters when it comes to research?
TrueCar: Provide customer transparency on the price they pay Make their money from passing on very warm leads to dealers Have a network of 10,000 dealers in USA Founded in 2005, in 2010 won CNN money award in “20 best websites” to help individuals make finance decisions 2011 raised $200M in debt & equity financing, now listed on the Nasdaq. Conclusion: Look at questions which have been put to captive fleet lenders.
Purchasing a vehicle online. Big chance in consumer behaviour here. A couple of facts which help tell this story… Next slides…
There is a natural bias here towards younger generations…
Sums up the sentiment that exists out there. Almost been a sense of “if we build it they will come.” No they don’t. They’ll actively avoid it. Key contributing factor to why the disrupters are being successful. For example…
Based in Phoenix and their mission is to make car buying better by bringing technology, transparency, and exceptional customer service to the process. 100% online car retailer. Patented 360 degree photo process 2013 opened a car vending machine. Carvana ranked 5th on Forbes List of America's Most Promising Companies for 2015 If you get a chance check out Shift and Vroom…. Last element of customer journey for this presentation….
More people have access to a mobile phone than they do a toothbrush. Number of mobile phones has now exceeded the number of people on the planet. Mobile is the fastest growing manmade phenomenon that we have ever seen. 0-7.2billion devices in under 30 years.
On top of that, need to consider an estimated 6% of all instore sales are influenced by smartphones.
Value of purchases are increasing year on year Consumers are more and more willing to buy expensive items online. Story of recently purchasing a washing machine, did it all from my phone. So in our world, who is leading the way when it comes to mobile?
Beepi – peer to peer marketplace. Founded April 2013 Cars undergo inspection by a Beepi and they take up to 9% commission. 10 day return policy. Founded in April 2014. In 2014 valued at $200M.
Super intiative mobile site – designed with mobile first. Video content, very clear explanation. What mobile considerations should we make? Do we design our online real estate with mobile first mentality? In 2014 55% of our new car enquiries came from a mobile source. Are we designing mobile friendly video content for our customers?
Today we have looked at: The balloons don’t work any more. “We will build it and they will come”, that doesn’t work. As captives we need to engage with the disruptors in the fintech space. If we don’t our competitors are! Would love to talk more about accelerators and share our plans for an innovation lab. Taken a snapshot look at what’s going on with fintech in the UK and other disruptors Then looked at some key parts of customer journey – research, purchase and mobile optimisation. The conclusion is this…
Previously the battle has been in and around the showroom. But that’s long gone now. Gen Y’s and millennials don’t care. We need to have coherent digital strategy if we are going to stay alive.

Captives response to changing customer expectations

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Captives response to changing customer expectations

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