Mazda get some Zoom Zoom from data

Mazda’s customer dialogue service is reaping real results with a reported increase of 10% for first services – this at a time when having your car serviced is viewed by some as an unnecessary luxury with 15% of people indicating they had deferred their last service.

So what has Mazda done to buck this trend and actually increase the number of people coming back to them.  Well in part it’s through the use of a retention programme with a combination of tried and tested timely communications coupled with some interesting “sticky” features.

However the first real innovation in the Mazda programme was not communications or features – instead it was the more mundane requirement of data collection.

If there is one thing many car manufactures don’t have it’s up to date, clean customer data.  An outcome that arises from historically very manual processes – like paper log books – and a channel based sales network meaning that the manufacturer has little or no customer details.  Compounding this is that due to second hand car sales and customer movements, even the best dealer database struggles to stay up to date between the long buying cycles.

The solution then for Mazda was DSR or its Digital Service Record, described as “an innovative electronic service booklet, which replaces the traditional booklet that you used to get stamped following a vehicle service”.  More importantly though is that the “vehicle's service history is stored digitally on a central Mazda database”

It’s this centralised storage of vehicle (and customer) details which has allowed Mazda to build it’s retention programme

When DSR was first launched to dealers back in 2005 it was well received with dealers recognising the potential benefits for customers over and above the operational aspects of servicing a car.  One dealer in the UK was quoted at the time as saying

"It is an ideal asset for nurturing customer retention with its tracking capability. The critical time comes after a car is three years old. It will highlight for dealers how much business they retain or lose from the network and should help keep more customers within Mazda’s orbit."

Mazda are making good use of this database, using it to target customers due for a service with both service notification mailings as well as “missed service” reminders – all of which generate extra business for dealers.  They are also targeting customers of older cars to come back in to Mazda – generating additional footfall and opportunities.

All of this is only possible with good, up to date data and there is always a price for getting customers to provide it – the trick is doing this at the least cost and then extracting the most long term return.

A retail loyalty programme giving points for spend is essentially paying customers to swipe their card – to identify themselves on their transaction.  This data has then been paid for through the issuance of points – how you use this data to extract additional value is your return. 

What Mazda did was indentify an opportunity to collect data whilst providing a win-win for all stakeholders.  For the customer they have a secure, maintained service record, ensuring maximum future sales value – this in turn creates value for the dealer as customers will want to ensure this is maintained and so will return.

Whether you’re an automotive company, a restaurant or retailer, knowing who your customers are and what they do is an important first step in building a relationship with them – essentially creating a retention programme. 

Only when you have sight of this information can you create timely and relevant communications which maintain or change behaviour as Mazda have done.

The trick is to find the opportunities to collect this information at the lowest possible cost whilst gaining the greatest overall return.  Collecting data and not getting a return from it is just as bad as not making the investment to collect it in the first place.

Want to add a little Zoom Zoom into your customer relationships?  It might be worth thinking about what data you could collect and/or make work harder which is currently ignored, lost or only held locally?

A new beginning for automotive?

I’ve spent the last few weeks looking around for a new car.

This is actually quite difficult for me as I’m one of those people who makes snap decisions and if I walk into a dealership I’ll walk out with a car. 

So knowing that, I’ve been researching cars online and it has been an eye-opening experience just how bad and how backward the automotive industry is.

The problem is that my expectations have been set by other industries.  If I was looking for training shoes I could completely personalise them from style to colour and have these custom manufactured and delivered to my home.  If I was buying music I could order the CD, download the track or listen to it on demand.  If I was buying a book I could order it online, preview it online or download it immediately to my e-reader. 

So why is it when I start looking for a car the experience is so different.  Here’s what I’m trying to do - I want to design the car I like, then price it, then work out ways to finance it and then I want to know if they have a used model with same spec.  I want to compare the car with a loan, with Personal Contract Plan, with difference deposits.  When I get stuck, I’d like to ask someone a question – no strings attached – and get an honest and accurate answer.

In short – when buying anything, I want to play with all the options, in real time, in my time and online.

The first hurdle though is just finding information on it.  Take Mazda for example - on their website I can request a brochure, find my dealer and arrange a test drive.  All very last century.  Oh, and I can see some glossy photographs (and download a wall paper) and a view videos.  What I can’t do is build my own car and have it priced. (So that's the RX-8 out!)

Then I want to understand how much it costs.  Now I could only find Audi willing to show me finance options online – everyone else wants me to speak to the finance team at the dealer.  Not even my bank expects me to have to go into a branch these days.  In fact I don’t have a bank branch, I don’t have a post office and I don’t want a dealer – I just want answers and I want them at 11pm on a Saturday night.

When I want to ask questions there are few options available as you basically have to go through dealers and that can be experience in itself. 

I sent emails to 4 different dealers asking for finance options on a number of different cars.  Honda was the only one to come back to me quickly and accurately.  Two different Audi dealers either failed to respond at all, or responded to only part of my query and incorrectly (so no TT!). 

In one email where I had explicitly said that I didn’t want to chat on the phone and to only communicate via email, I was surprised when within seconds my phone rang with a salesman on the line.  Top marks for being on the ball - but they completely failed to deal with me on the channel I wanted.  If I’d wanted to speak on the phone, I’d have picked up the phone.

So is it me – am I expecting too much?  Well it seems not as Wired.com recently had an article discussing this exact issue.  They put it succinctly when they said

“in the age of Amazon, it seems almost quaint that there’s no way for you to choose your options for a new car on a manufacturer’s site and push a “buy” button”

Some of the issues are the way that the automotive sales channel is structured.  Car manufactures in many cases cannot sell direct to consumers and individual dealers don’t have resources to create the online experience required. 

However, another issue is how the sales staff are remunerated.  As many of them are bonused, anything which might take away sales - such as online purchases  - or might not result in immediate sales - such as an email question - doesn’t get priority.

In fact when the salesman who rang me found out that I didn’t want to setup an appointment that weekend, he basically just put the phone down – so there’s another one off my list.

This culture wasn’t just limited to automotive, but other industries have seen the writing on the wall and are changing.

Both Carphone Warehouse and Comet have recently announced changes to how sales staff are compensated so that there is less focus on the sale and more focus on the customer.  When trialled by Carphone Warehouse, contrary to expectation, staff retention actually went up and the trial has been deemed a success. 

Staff are now rewarded not on sales but on net promoter score post sale – essentially on how the customer found the whole process and whether they would recommend them to someone else. 

It is reported that promoters are nearly 10 times more likely than detractors to repurchase or lease a vehicle of the same make or brand as their current one.

Given the recent reports on customer expectations for service overall and their willingness to drop any brand not meeting them and the strong link between customer experience and loyalty, this is not an area any industry can afford to underperform in – especially one in such dire straits as automotive.

On the upside, it is expected that as automotive companies emerge from this crisis, especially in the US there could be be changes to the buying processing.  Craig Cather, CEO of forecasting firm CSM Worldwide says "A lot of new business models could emerge,  we could see some crazy things in the next few years."

In the article in Wired, they put forth their vision for an automotive customer experience saying:-

“What would a car industry without dealerships look like? In our dreams, they’d be a lean network of showrooms offering hands-on experience with a range of vehicles from a variety of manufacturers and help from salaried employees who won’t lose a commission if you walk.”

That sounds like a vision I’d like and if they could just integrate the offline with the online I may actually enjoy looking for a new car. 

Until then I will continue to be underwhelmed by the search, uncomfortable with the negotiation and ultimately feel like I’ve been ripped off when I actually own it – but I’m happy to be proved wrong.

Make the easy things easy and the hard things possible

I was reading a recent post from the blog brandgym about blyk, the new mobile phone operator who provides a "free" mobile service to 16-24 year olds, funded by advertising revenue. Although this is an interesting proposition and I have to admit, one I thought would fail quite quickly when I first heard of its launch, what struck me most was how it came about. Apparently the founder of blyk, Antti Ohrling got the idea from the free morning newspaper, Metro and thought if it can work for papers why can't it work for mobile.

The mobile sector is however well known for commercial innovation – from the creation of pre-pay mobile in the mid-90's to the emergence of mobile virtual network operators (MVNO) like Virgin Mobile.

Looking at the recent headlines I thought how this contrasted with the automotive industry which is obviously struggling at the moment in the wake of people pulling in on their purse strings, with new car sales down almost 40% - the commercial model for selling cars seems to have changed little over the years with car dealerships affiliated with a car manufacturers.

Whatever the business, one of the fundamental aspects of gaining a sale is to make the purchase process as simple as possible – removing or reducing any barriers that may exist. When purchasing a new car there are a number of "barriers" to overcome. The most obvious is liquidity – does the customer have the cash or access to the cash to purchase the vehicle - if the customer can't raise the funds then there is little possibility of a sale. Increasingly though another barrier is depreciation – with new cars typically losing 40% of their value in the first 3 years and up to 25% of their value when driven off the forecourt, the decision of new car versus used car is increasingly difficult.

Buying a new car is essentially an emotional decision – it makes no sense rationally as the only advantage over a used car is the "factory fresh smell" and the knowledge that no one else has driven it. In the current economic climate, emotional decisions are going to be much harder to come by with customers instead thinking about every pound they spend. What is interesting though is that odds are someone working today will still be working when the current slowdown is over – so money isn't really the issue – for many people it's the commitment. Not knowing what may happen in the next 12 months means people will be less likely to want to commit themselves financially.

So if car manufactures want to sell cars they need to address two issues – managing depreciation - so new cars don't look so irrational when compared to used cars – and facilitating purchase. I'm not suggesting these are necessarily easy things to answer (or the only things) and obviously car leasing and loans help to address the issue of having upfront cash. However they do little to address depreciation or commitment issues and finance brings its own issue; anyone who has insured a newly financed car will have thought about "gap insurance" – that product which covers the shortfall between what you owe for your car and what the insurance company actually pays out.

There is however some recent commercial innovation in the car industry. Hertz announced this week that it was entering into the car sharing market in London; providing cars for as little as £4 per hour – it isn't the first to do this, but it is probably one of the biggest brands. For many, this can be a great way of having access to a car without the cost or hassle of owning it. In fact physically "owning" things is becoming increasingly less of a requirement – whether its on-demand services like BT Vision for films or Napster for music, people are getting used to having access to something rather than actually owning it and websites like Zilok are now making it possible to rent things when you actually want them, from drills to drums. Car sharing may not be practical for many people but the ability to simply have access to a vehicle with minimum commitment and no associated ownership issues like depreciation could be offered through more flexible forms of financing.

So what has all this got to do with retaining customers? Well over the last decade or so, for many industries retaining customers has consisted of providing better services than your competitor – the customer was always going to buy, they just needed help in deciding from whom. Now things have changed however - the customer may not be buying at all!

For many companies what's required is a review of how you go to market to ensure that you make it as easy as possible for customers to do business with you – both existing and new - looking outside of your own industry could be a great place to start; who knows, the morning news paper could just provide that inspiration.