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(originally published by Booz & Company)


How the Auto Industry Should Embrace CRM

Advanced automotive marketers are already experimenting with cross-platform marketing, using PVRs as the central control device. Toyota helped launch the Lexus ES-300 earlier this year with a TiVo cross-promotion sweepstakes that uploaded commercials into the box; invited sampling of other commercials programmed into NBC network shows; and asked contestants to register for the contest on the Web. Imagine the opportunities when these platforms — television, PVRs, and the Web; entertainment, brand advertising, and interactive direct marketing — converge on a single screen.

PVRs are not the only new communications technology automotive executives must explore. Other technologies are equally important, including peer-to-peer (P2P) and instant messaging (IM). P2P systems such as Napster, LimeWire, and Morpheus are not passing fads, nor is America Online’s instant messaging service. Kids spend hours using these services everyday, kids who are tomorrow’s automotive customers.

Rise of Telematics
Postpurchase, another interactive technology — vehicle-based telematics — can help automotive marketers comprehend the intricacies of the ownership experience. Telematics are the wireless devices that seamlessly capture and communicate vehicle data, enabling the automotive marketer to understand the driver’s usage requirements, influence downstream services, and facilitate remarketing. Telematics, whose use is growing, allow vehicle relationship management to buttress customer relationship management.

“Telematics applications like GM’s OnStar system return vehicle and customer data to companies, which enable them to shape concierge and maintenance services for individual customers.”
Already, the OnStar system and “black box” programs innovated by companies like GM and Peugeot are returning vehicle and customer data to companies, which enable them, in turn, to shape concierge services and maintenance programs for individual customers. A Booz Allen Hamilton analysis projects telematics revenues of $20 billion to $40 billion within the next 10 years.

Adapting to telematics will not be easy for automakers. There is the ongoing difficulty of shifting from marketing that is built on the concept of mass advertising to marketing that is premised on intimate customer understanding. Auto companies also need to overcome their historical “slow follower” habits relative to technology. And the strategic plays around telematics can be complex, requiring both defensive postures, to protect existing business territory, and offensive maneuvering, to create value beyond the existing business.

The greatest challenge for the manufacturers and the dealers is to partner around this intimate customer information, so that the data can flow seamlessly up and down the chain. Only through such partnerships will the average salesperson be able to craft plans relevant to consumers walking into the dealership, offering each potential buyer excitement shaped by the right value proposition.

That, indeed, is the essence of embraceable CRM — for companies to offer value to individual customers, and to receive leveragable value in return.

Steven Wheeler, [email protected]
Steven Wheeler is a senior vice president with Booz Allen Hamilton in Munich and Cleveland, Ohio. He has 17 years of experience in the automotive industry, focusing on downstream issues such as lifecycle, customer and vehicle management, and distribution channels. He is coauthor, with Evan Hirsh, of Channel Champions: How Leading Companies Build New Strategies to Serve Customers (Jossey-Bass Inc., 1999).
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  1. “The Co-Creation Connection,” By C.K. Prahalad and Venkatram Ramaswamy, s+b, 2Q 2002 Click here.
  2. “Seize the Occasion! The Seven-Segment System for Online Marketing,” by Horacio D. Rozanski, Gerry Bollman, and Martin Lipman, s+b, 3Q 2001 Click here.
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