Visit an Audi AG (AUDVF) showroom, and you can custom design your own 2020 Audi R8 Coupe replete with the advertised "Mythos black exterior, matte bronze 20-inch milled-cut wheels, and matte bronze intake manifold." While you're at it, virtually visit the Le Mans 24-hour race and get down and dirty in the pits with the mechanics.
This is the experience that Audi's new "Customer Lounges" are offering their buyers. The technology provided in conjunction with Facebook's (NASDAQ:FB) Oculus headsets, provides an opportunity for clients to come as close as they can to actually driving and seeing their bespoke car. It's also an opportunity for Audi to sell upgrades.
In 2017, Marcus Kuhne of Audi explained the strategy behind the brand's extreme customer-centric marketing technology at the European VR NOW Awards, which spotlights companies and their virtual reality (VR) efforts. Kuhne explained how AR meets the challenges that auto manufacturers face.
Audi, according to Kuhn, "is interested in a close relationship between the dealer and the customer. We wanted to develop tools to encourage customers to spend time at the dealership." Kuhne emphasized that "It's not about upselling, it's about avoiding wrong decisions, and it's also about giving them good consulting about their next car."
Audi is taking bespoke to the extreme, but will it show results for investors?
Image source: Getty Images.
Audi is listening
Auto sales have come a long way from Henry Ford's marketing strategy. "You can have any color, as long as it's black" would not cut it in today's market.
Audi is going for the big spender, and big spenders like control. At the Geneva 2019 Motor show, emphasizing the choice that customers have over the new Audi e-tron Q4's LED headlight designs -- all 25 of them -- was a focus for Mark Lichte, Audi designer, in his interview with Autocar.
Audi is responding
The theory behind personalization and customization is that it puts power back into the hands of the customer. For the type of buyers who want to stamp their initials on a product -- and many do -- being able to choose is reassuring; they feel that they are being listened to.
Among the findings of a recent study by Deloitte, "Made-to-Order: The Rise of Mass Personalization," are that "one in five consumers who expressed an interest in personalized products are willing to pay a 20% premium." Also, "48% are willing to wait longer for a personalized product or service". .
BMW AG (BAMXF -2.72%) (BMWYY) tried delivering made-to-order Minis back in the early 2000s. In an article in Forbes, writer Joann Muller describes BMW's early experiences custom-building in the U.S. According to Muller, BMW "filled orders from a central distribution center...When gas prices soared over $4 a gallon, demand for smaller, fuel-efficient cars like BMW's Mini brand took off. Not only were customers lining up to order Minis, but they were ordering them with an average $2,000 worth of features. After gas prices fell back, half of Mini buyers still wanted to special-order their cars," said Muller. BMW has taken customer ordering seriously ever since.
Audi will grow
VR is not the answer to everything. One disadvantage, according to Kuhn, is that customers are "a little bit lost... If you want to talk about your car, it's better if you can see your partner or your dealer." The headset isolates the user to some extent. To overcome this, according to Kuhn, Audi is working with augmented reality and advanced head-up displays. Head-up displays are transparent and do not require a headset -- think of the movie "Iron Man."
With AR, Kuhn envisages a "360-degree 3D head-up display that could explain all the workings of the car." He also said, "if a car company is not using AR and VR within eight years or so, it will be way behind." Right now, Audi is way in front.
Hildegard Wortmann, a member of Audi's board of management for sales and marketing, said, "Over the next few months, the signs continue to point clearly to growth for Audi."
Audi's media center announced that in the U.S and Canada, deliveries were up by 3%" and 2.1%, respectively. There was also strong demand for the new Audi Q3 in both countries.
According to Kuhne, Audi is the first major car company using VR to such an extent at its dealerships, and it now has more than 400 customer private lounges. Audi is looking after its customers and its investors.
