Mass marketing is clearly at a crossroads, as companies recoil from the inefficiencies they perceive in conventional media spending. Magazine advertising pages declined by 11.7 percent last year, the steepest plunge in a quarter century. Merrill Lynch & Company Inc. is predicting a 4 percent decline in U.S. television advertising spending this year, following a similar fall last year.
|“Embraceable CRM starts with a simple premise: The most important part of the database isn’t the base; it’s the data.”|
But marketing executives are beginning to discover that CRM system implementation — in which simple database consolidation can run from $20 million to $30 million — is not an easy fix to the problem of communicating to, wooing, and retaining customers. The problem stems from a lack of connection between companies and customers that no information technology system alone can solve. The automotive industry is a classic example of this disconnect. On average, interaction between an auto company and a customer occurs 1.2 times per year. That simply does not provide enough data to answer such crucial questions as, Which people should get what offer on which product at what time?
Companies need an approach to CRM that marketers — and customers — can embrace. Embraceable CRM starts with a simple premise: The most important part of the database isn’t the base; it’s the data. To gain the information necessary to embrace the customer, relationship programs must be based on two principles:
- First, they cannot wait until the first purchase is consummated to begin to understand consumer interests, concerns, desires, and habits. The key to unlocking value is to recognize that different customers follow different purchase paths. Effective CRM systems must dive deep into the purchase decision before the purchase is made. Call this purchase-cycle intimacy.
- Second, because different customers follow different ownership paths, effective CRM systems must link deeply and broadly to the individual’s ownership experience — the consumer’s relationship with the car throughout the ownership cycle.
Acting on these two principles requires companies to bring otherwise separate technology programs together in complementary ways. For example, Internet-enabled communication systems make it increasingly possible to capture valuable insights about consumers in the middle of the purchase process. Interactive kiosks in dealerships — or in alternative sales venues, such as malls — are proving to be excellent tools to begin to engage consumers in dialogue. Online activity at home or in the office represents another vital opportunity to achieve purchase-cycle intimacy. The bursting of the e-commerce bubble should not obscure the fact that some 70 percent of consumers in the U.S. use the Internet at some point during the automotive purchase process.
Now consider what happens to a company’s ability to achieve and use purchase-cycle intimacy when these tailored consumer engagements move from the Internet into home entertainment centers. With personal video recorders (PVRs) like TiVo being built into set-top boxes, assisted sales processes will occur in the lean-back comfort of the family-room sofa. Although PVR penetration today is low — about 280,000 TiVos have been sold in the past two years — Forrester Research Inc. predicts more than half of U.S. households will have interactive TV capability by 2005.
|“Interactive kiosks in dealerships — or in alternative sales venues, such as malls — are proving to be excellent tools to begin to engage consumers in dialogue.”|
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.”|
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).