At the Epicentre: Transforming the Customer Landscape at Volvo Cars

Written by Justin Bull on

The topic of transformation in the automotive industry is well documented, with some of us carrying the scars of delivering hugely challenging ambitions within a very complex and multi-layered industry.

Indeed, my colleagues and I at changemaker have written numerous articles and presented a number of keynotes on the subject. Whether it be the electrification of powertrains, increasing connectivity and autonomous capabilities, digitalisation across all parts of the industry, or the fundamental changes of business models adapting to changing consumer demands, the automotive sector is clearly going through its biggest transformation since… well, the invention of the automobile itself! 

changemaker has been supporting clients in a number of these transformations, particularly helping organisations at the crossroads of this transition by connecting new disruptive players with well-established Original Equipment Manufacturers (OEMs) who are trying to disrupt each other to ensure they stay relevant for the next 100 years. Building trusted relationships, via professional and seasoned consultants, has allowed changemaker to work closely with several organisations for extended periods, helping them to maximise their potential and position themselves competitively in this highly disruptive arena.  

Nothing brings this story to life quite like the significant commercial transformation changemaker has been involved with at Volvo Cars. 

Volvo 1

How the XC40 kickstarted the change for Volvo Cars 

My personal journey started almost 7 years ago with the launch of the then brand-new small (for Volvo Cars) SUV, the XC40. It was clear from the outset that the XC40 was going to be a commercial success for the company. Built on a brand-new compact platform, designed to be used with a multitude of powertrains (traditional ICE, Mild-hybrid, Plug-in Hybrid, and full BEV), the XC40 was priced and positioned in a premium segment that was seeing fast expansion, at least across Europe and the US. 

But for a progressive brand, this alone was not enough. The then President and CEO, Hakan Samuelson, was clear that the XC40 had to be something more; it had to be the car to pave the way for a new business model, with new levels of connectivity. After all, this was a car that would appeal to a lower age demographic than the traditional Volvo Car consumer. 

The direction was clear 

And so, the early foundations of the ‘Care by Volvo’ subscription model were laid. The rumours from the Gothenburg HQ were that Hakan wanted others to experience his version of hassle-free driving. He could see that in many other sectors, consumer behaviours were shifting significantly, moving away from the aspiration to own and possess things to being able to access and use things and services when required. A shift from buying to subscribing. It was this concept that gave birth to ‘Care by Volvo’. 

changemaker worked with the UK & EMEA market teams and their digital organisations to help kickstart the transformation by defining a ‘proof of concept’ across a number of European markets. This initial validation helped support Volvo Cars to identify what key differentiators a subscription model needed to have, and what the differences and similarities were across several of the important sales markets in Europe, not just in terms of customer and market behaviours and preferences, but what this would look like from a commercial product perspective. 

Getting ‘Care by Volvo’ motoring 

Volvo Cars then realised that to accelerate the development of this new commercial model, the next step was to create a new organisation that could both tap into the wider resources of the Volvo Car group, but act as a stand-alone entity to be able to make decisions and ultimately fail fast. This new business model would also ensure that Volvo Cars was the beneficiary of the subscription revenues through Care by Volvo AB. 

By the 2nd half of 2018, less than 9 months after the XC40 had gone on sale globally, a new company had been launched with its first subsidiary in Germany. This wasn’t just about a new pricing model. Volvo Cars had created the ability for consumers to digitally configure and order a new Volvo on a Care by Volvo subscription and have it prepared and delivered by their chosen retailer. An order management, fleet management, and financial management solution was built to facilitate this capability, together with a customer service team ready to support any customer questions during the ordering process, as well as dealing with any order fulfilment, payment and invoicing issues once an order had been placed. 

The strategic vision of the Volvo Cars board was becoming clearer. Care by Volvo wasn’t just about a new all-inclusive ‘offer’ for customers. It was about creating direct relationships and connecting with customers, as well as creating additional revenue streams rather than just the initial sale through an indirect wholesale model – the historic mainstay of the passenger car global market. 

Rolling out the carpet in Europe 

Having been involved in some of the early proof of concept work, changemaker was engaged to help accelerate the expansion and rollout of this new business model and capability across several other European markets. The focus was once again on where some of the market deviations existed as well as what components of the ‘product’ could and should remain the same.

Some of this early work helped to identify which digital products would need the ability to scale as the business model was launched in new markets. As we learned more and more alongside the market teams and other external partners we were working with, we were able to tap into which digital products would need continual development or iteration. 

At this time, what had also become clear, following the successful launch in Germany, was the pace and rate of growth the senior leadership team was looking for, and soon our attention and engagement effort turned to how we could structure and ultimately accelerate multi-market implementation. 

Common questions at the time were:   

With each of these questions, we had to ensure that a good enough level of quality and capability would be delivered to not undermine the ‘premium’ experience and values Volvo Cars and its customers placed at its core. This MVP (minimal viable product) concept is well understood now, but at the time, getting all stakeholders on board with the iterative concept was a major communication activity.  

Maintaining a focus on quality 

The next 3 years would see changemaker successfully support the launch of the Care by Volvo business model in the Netherlands, Norway, UK and Sweden. Additional product features and capabilities that were rolled out along the way included: 

With this amount of change, maintaining the quality and availability of the digital systems was one of changemaker’s focus areas. This saw us support and scale the End-to-End testing and test automation capabilities, implement new digital capabilities into the markets, and act as the voice of the customer and markets. This meant driving continual improvement back into the newly formed product teams to enhance and improve the experience for every customer - not dissimilar at all from the approach that was already hard-wired in the organisation with its physical car products and traditional go-to market channels. 

Managing change and challenges 

Our success brought further challenges, and our involvement expanded to support the Care by Volvo UK team in their setup of financial regulatory requirements operating with additional licenced permissions. This involved several big challenges, with lots of organisational change as Volvo Cars continued to evolve and balance priorities across many different teams, including maintaining the BAU wholesale business volumes and deliveries, especially during global new car launches. 

These challenges continued generating additional learning for us at changemaker and the wider Volvo Cars organisation around how we could communicate faster, remain competitive in the market, and balance tactical, commercial pricing decisions with longer-term strategic capability – all whilst operating in a highly regulated world. 

Looking back, this might have been frustrating and repetitive, going over the same ground several times with different markets and individuals, but it was fundamental to success, as it laid the foundations for transacting online. 

Turning the first complete market from Wholesale to direct 

With all the work that had been done previously, the biggest part of this transformation was about to come: turning the first complete market from the traditional Wholesale mode to a Direct (or Agency) model approach, with the UK agreeing to be the first ‘guinea pig’ market. 

The UK market was a great choice thanks largely to the market's consumer behaviour, the number of digital/online sales players already in the market, the capability and experience of the UK market team and the appetite of the retailer network to be part of the future rather than be left behind wondering what happened. 

But let’s not underestimate the task at hand; this was a monumental challenge for the entire organisation, the UK market and the Global Product teams, not just in building new digital experiences to enable all available financing options and offers to work seamlessly in a true omnichannel way, but the commercial, legal, financial and operational capabilities that had to sit behind it.  

Once again, changemaker’s primary focus was to add some (electrified) horsepower to the last mile implementation of capabilities into the UK, a continual balance between critically aligned timing, the quality of the customer experience, regulatory demands and operational efficiency across multiple teams. In reality, this meant driving a huge amount of E2E testing for all the new direct commercial offers, including their complex integrations with financing partners and order fulfilment capabilities. It involved prioritising the functionality and features that were critical to success in the market and negotiating where things could be de-scoped to keep the timeline on track. That often meant having to sacrifice some internal process efficiencies in the short term and ensuring the shopping and ordering journey was as smooth as possible for the customer. Managing and communicating with multiple stakeholder groups resulted in the difficult decision to move the go-live date to ensure we had this balance right, but eventually, everything new and ‘direct’ was enabled on June 13th (no, we weren’t superstitious), and the following day the entire UK retailer network became ‘agents’ of the direct business. 

Being based in the UK has also helped changemaker support Volvo Cars with numerous market ‘dry runs’ both acting as individual private consumers as well as being a business customer. This helped the team at Volvo Cars validate not only the online/digital experiences (of which we were part of the testing process), but also the financial and physical ones (often less easy to test). We were able to highlight things that had gone smoothly along with those that had been a bit bumpy or potentially confusing to the consumer - and continue to do that being a paying business customer running a car subscription

Reflecting on this evolving journey 

Speaking on behalf of my changemaker colleagues, the whole journey has been immensely rewarding. 

Collectively, we’ve brought a lot of experience to help support, guide and shape some of the outcomes, as well as being part of a much bigger transformation, and one that has led the way, not just in the UK Automotive sector, but globally, in terms of the commercial transformations of a traditional Automotive OEM. 

Consultancy organisations are known to make bold statements suggesting they were critical to the successful outcome the client achieved - our DNA ensures we would never be so bullish as to suggest that - but from feedback received from across a very wide organisation, it's clear that our contribution has been invaluable. 

I also don’t feel ashamed to admit that we learnt a lot together. It wasn’t just a case of, “follow this, it will work”. No other traditional automotive OEM has achieved this level of transformation before. This was a first, so there was no playbook to follow.  

Now that we’re out the other side, we’re more than happy to share what we feel have been critical success factors:  

Having learnt these lessons, our challenge now turns to how we can support Volvo Cars to scale this fully Direct to Customer model to many more markets at speed - and also ensure all the enabling capabilities allow the markets to operate efficiently. How can they do things in parallel? How can they continue to fail fast? How do they continue to execute with quality, even if the landscape, including consumer, retailers, financial and market regulations are complex? 

We can’t guarantee what the future looks like, but in my opinion - one that’s shared by many at changemaker - Volvo Cars is leading the way. Sometimes when you are in the middle of the tornado, you don’t see how far you have come, but in looking at the traditional market, we are proud to say that Volvo Cars is setting the pace. With many other traditional OEMS only dreaming of being able to follow, they have done an impressive job of ensuring they will be a big part of that future landscape. 

Let’s connect 

Follow us on LinkedIn to keep up with our latest news and updates.