Image: Tesla Motors[/caption]
Even though the first «car» (more a steam-powered tricycle) was built by Nicolas-Joseph Cugnot in 1769, it was not until 1908 that Henry Ford made cars affordable for the masses. Ford achieved this by dramatically streamlining production processes iteratively. By 1914 it took his factories only 93 minutes to assemble a Model T, compared to 12.5 hours in 1910. Now cars were coming off the line in three-minute intervals. By betting on new technology and techniques Ford got hold of a 50% marketshare worldwide around 1920.
100 years later, the car is central to many people’s lives in developed and developing countries. Technology in general, engine power and efficiency as well as user friendliness and safety have considerably improved since Model T. However there is one aspect of the car industry which has not seen much innovation over the past 100 years: its business model. Automotive companies have been distributing their products, managing partnerships and generating revenues almost the same way all along.
Enter: Elon Musk and Tesla Motors
Tesla is not only disrupting the technological and environmental aspects of car production, but also how they integrate online-based measures into the whole customer experience. Let’s then have a look at the three main points of the online customer experience of Tesla compared to a car brand that has been around for quite some time and targets comparable users: Audi.
E-Commerce Best Practices
You wouldn’t say a car is your typical e-commerce good, would you? Well, Tesla seems to think differently. The whole user experience and usability of http://www.teslamotors.com is complying with e-commerce best practices: visible calls to action, short end-to-end processes (you can order a car in three steps), above-the-fold press testimonials and trust elements. Take a look at the competitor's homepages:
Audi's call to action is not conversion-oriented and vague: «Discover the new Audi A5 Coupé». Tesla on the other hand knows exactly what it wants you to do: «Order» or «Test Drive». Audi doesn’t offer an end-to-end user process, you simply can’t order online. Best you can get is requesting a quote or calling your local dealer. Also, there are no customer or press testimonials to be seen – of course you could argue that Audi is an established brand, hence testimonials are less important.
When buying a new unused car, configuration is an important part of the process. Both Tesla and Audi offer an online configurator:
Again, I am sure Tesla sees higher conversion rates from the configurator to the next step than Audi. Why? First, the nicely placed, visually attractive red «Order» button guides users by clearly indicating what the next step is and where they are going. Second, Tesla’s configuration interface shows a very pleasant overview of the different car parts at all times (in the lower portion of the screen), whereas in Audi’s you can get lost and frustrated rather quickly, resulting in exiting the page. Tesla has understood that, also for car companies, adapting user interface excellence has a high value.
I don’t have any numbers on this, but my guess is that most people like test driving a car before buying it. If this assumption is correct, you’ll have two categories of visitors with buying intent on your site: 1. Those who have already driven your car and are here to buy it. 2. Those who have not yet test driven it but want to do so before buying. You better serve both.
Tesla does this very well by adding a second call to action on their homepage: «Test Drive» (see first picture). I was not able to request a test drive on http://www.audiusa.com. Seems I would have to search for a local dealer – or just go to the Tesla website and click 2 buttons.
After having had a look at only three aspects – and there would be plenty more – you can clearly see that Tesla offers a better user experience and has optimized its website for a higher conversion rate. Why can Tesla achieve this excellence and other brands, such as Audi, can’t? This is why:
Tesla has a different, digital business model: While traditional car companies sell mostly through independent dealers (so their goal is to sell to the dealer, not the end consumer), Tesla directly sells to its end customers. They don’t have to coordinate the end-to-end process online, because it’s all integrated into the same company. This allows for a 3-step-process.
Tesla has no legacy issues: Audi, BMW and others have been in the marketplace for decades and therefore have legacy IT in place (think of CRM, ERP and so on) on top of which they build new applications (think of a website or software to communicate with dealers). This deprives them of their flexibility and innovation power.
In the end, Tesla are at the forefront of innovation in the way automobiles are being sold. Not only are they a technology leader in terms of forward-thinking engineering and design, but also in their marketing and sales activities – and digital is key to their success. Incumbents will have to adapt their business model if they don’t want to lose out in the long run. My key message to all the companies out there: Start thinking about digital. Now.
At the Digital Strategy Innovation Summit which took place September 19 - 20, 2013 in San Fransisco, Jaime del Valle, follow him on Twitter, Director Global Digital Marketing at General Motors, talked about inertia in automotive business models and showed cases of interesting innovations. His presentation «Reinventing the wheel: Innovation in the Automotive Industry» inspired me to write this blogpost.