Co-opetition – The opportunity for faster / leaner lifetime value.
The retail motor industry essentially had a profitable year in 2021 – largely courtesy of used vehicles. However, due to changes on the horizon, this sweet spot won’t last forever. A gradual increase in the availability of new cars, and the emergence of agency models, spring to mind for sales. At the same time, a forecast shortfall in new car servicing revenue over the next four years, which our REALinsights data puts at £1.3 billion, is now a genuine threat.
In the spirit that the time to change is when you’re ahead, now’s the moment to challenge ourselves to sustain the evolution of motor retailing and supply channels, which was such a feature of our industry’s response to the pandemic.
Establishing ways to open new profit channels, enhance customer lifetime value and address non-value-adding costs are all natural opportunities. So are there benefits to be had from working with businesses, which on the face of it are competitors?
Co-opetition or coopetition, as some prefer, can make perfect sense. The agreement between Pfizer and BioNTech to jointly develop a COVID-19 vaccine is an impressive example of co-opetition in action. Closer to home, OEMs working together on platform and powertrain development has become commonplace over the last 20 years.
At the heart of co-opetition is creating an environment where two or more organisations, which may be competitors in some areas, come together to develop or enhance a product, service or process that benefits all partners, the customer experience, and at the end of the day, profit.
The continuing digitisation of the retail landscape is a clear co-opetition opportunity. As a business, we already work in such a way with over 35 industry suppliers – sometimes supporting products that are in direct competition with ours. As an example, our technology enables dealers to use eVHC services that compete first-hand with our own. The ‘why’ for us is simple: we aim to be a long-term, authentic and, above all, trusted intermediary partner who works with our dealer customers to meet their needs. By getting that right for over 30 years, we have grown.
The type of shift to a dynamic, networked digital ecosystem that we are facilitating, where information and value flow between all parties interacting together to benefit our dealers, are a series of APIs. As a side note, who would have thought I would say about a business that ‘they’ve got a great set of APIs!’? Quietly and effectively, they facilitate coopetition because culturally, many digital companies have grown up co-opeting.
Much of our work with dealers and partners to date has focused upon the traditional ‘aftersales’ arena of workshop work. However, this can and should evolve.
It’s time for dialogues to be opened with other channels to enable dealers to build upon our obsession with lifetime value. Finance, warranty, added-value insurance, new products such as EV charging contracts, valeting and customer contact all have the potential for retailers and could finally help address that age-old trade question: ‘Who owns the customer?”’ – the simple answer is nobody. The customer cannot be owned, but by working together for mutual benefit, all of us can have a slice of satisfied customers’ wallets, which can be a win for everybody.
As always, I’m up for a discussion on reimagining the future.
