Twenty years ago the business of selling cars was relatively straightforward. Traditional wisdom said: advertise and they will come. There were fewer makes and models to choose from, special deals and customer offers were modest and the indigenous brands – Vauxhall, Rover et al – enjoyed substantial import quota protections, which constrained the development of competitive dealer representation – a huge barrier to entry.
As a consequence, car manufacturers and their dealer networks had total control and consumers were compliant and grateful. Sales staff simply took orders and service staff were surly and unhelpful. The notion of the customer as king and the concept of customer relationship marketing (CRM) were embryonic.
Today’s modern automotive purchasing landscape is completely different. Despite sterling efforts by many manufacturers, the underlying dealer sales and service experience remains basically the same but everything else is unrecognisable.
The market itself is open and consumers can choose from more than 30 brands, most of which have sufficient depth of physical representation to be a realistic purchase option. Product innovation has created huge consumer choice based around lifestyle/lifestage considerations and most marques have offerings across the spectrum.
How people make their product purchasing decisions is also fundamentally different. A greater reliance on the advice of family and friends, the concept of wider but accessible trusted communities (code for internet utility) and a belief that all vehicles nowadays are well made, have all contributed to the significant erosion of the power of brand advertising.
Models that seek to understand how the car buying process works have had to be redrawn. Consumers might be able to recall marque and model brand advertising on television but they are equally clear that this form of communication alone has little effect, short- or long-term, on their likely purchase intention.
A constant bombardment of purchase incentive messages has taught consumers that it pays to be promiscuous and to delay definitive selection until a few weeks, or even days, before the point of vehicle change.
The internet has totally changed both the access to and democratisation of information. Looking at car websites is, for many, a part of their monthly surfing repertoire. Potential buyers use the internet as the information driver of the entire transaction. So, in this brave new world, how does a car brand keep its customers loyal?The answer is a renewed focus on CRM programmes because, other than the experience of the product itself, the quality of the relationship is pretty much the only thing that a car manufacturer can control.
Furthermore, with service intervals lengthening and ever-increasing product reliability, finding opportunities to talk to customers on topics such as vehicle warranty and service reminders, is becoming increasingly challenging. But, under the CRM banner, the customer feels they have given you permission to make contact.
There are three guiding principles to any properly functioning CRM programme: openness, value exchange and two-way. Openness means providing clarity and honesty about your intentions; value exchange is giving customers value from the relationship; and two-way is creating an environment where customers feel they can talk and contribute as well as listen and receive.
At the heart of any CRM programme is the loyalty magazine. This is your front window – the most intense and meaningful dialogue you can actually control. Peugeot’s customer magazine, for example, is a powerful and emotional driver of loyalty. The temptation is to be seduced by digital media, but research shows consumers tend to keep communications from trusted partners by the loo or the bed to dip into; it is worth remembering how cumbersome even the smallest laptop can be by comparison.
The winners in 2008 in the retail car market will be those players who started investing in CRM over four or five years ago. Most car marketers are disappointingly short-term in outlook but in reality, if you are a car brand looking to change your fortunes from 2011 onwards in a sustainable way, the time to act is now.
Mike Moran, managing director,The Automotive Partnership