paul kavanagh & elke neuteboom
TRANSCRIPT
BUILDING LOYALTY & LASTING CUSTOMER RELATIONSHIPS
What’s driving the changes in loyalty in the Automotive industry?
Paul KavanaghElke Neuteboom
What we’ll cover
• Key factors in declining levels of loyalty in the automotive market
• Loyalty in other industries – how do these compare to the Automotive Industry
• Approaches for driving customer loyalty
Car purchase decision making
What do consumers say?
Factors influencing LoyaltyRational thinking
Factors influencing LoyaltyExperiences: Both Good and Bad WOM/Recommendation/Detraction:
Friends, Family, Colleagues
Reliability
Brand experience & Customer Service
Dealership ServiceOEM owned vs. Independent
Advertising
Reviews:Magazines, TV, Social Media
EventsCustomer Journey
Warranty claim handling
Factors influencing LoyaltyEmotional
Status
Brand connection
Colour!
Perception
Family influence
Factors influencing LoyaltyCultural/Global differences
Country of Manufacture
Local macro environment
Availability
Peer pressure
Dealer locationProfile of consumers
Practicality
Status
Changes in the Automotive industry
Changes since the 1940’s…1940’s 1950’s 1960’s 1970’s 1980’s 1990’s 2000’s 2010’s
WWW August 1991Facebook - February 2004You Tube - February 2005Gocompare - Nov 2006
First PC’s1975
First computers1940’s
Reduced differentiation/greater convergence?
Choice: model range expansion
ReliabilityTechnologyEfficiencyPower…
Improvements
Globalisation Brand Mergers
Company Car Fleets Car allowances/ Personal lease
More information
Loyalty in other industries
Loyalty in Insurance and Utilities
Conditioned switchers / Experimenters (23%)
Perceive switching to be easy and tend to tend to find time to make the switch
Neutral / Unengaged (27%)Do not display any extreme views towards switching/loyalty – appear to neither agree nor disagree to majority of statements
Time-poor / Lazy/ Passive loyalists (30%)
Possibly time poor - tend to be more likely than the other groups to be persuaded to switch but less likely to do if off their own back (may not get around to doing it)
Loyalists (19%)Close the door to competitors –entrenched with current suppliers and do not tend to shop around
Very unlikely to search for offers
Very likely to search for offers
Very unlikely to switch Very likely to switch
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2
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Study amongst 2,024 nationally representative UK consumers in conjunction with Panelbase.com
What’s happening in the automotive industry?
When replacing their car, 44% of new
car owners bought same brand as
current car
35% say their next car is going to be
the same brand. 46% don’t know
Loyalty to car brand
Study amongst 2,024 nationally representative UK consumers in conjunction with Panelbase.com
Factors influencing brand/model purchase decisions
Study amongst 2,024 nationally representative UK consumers in conjunction with Panelbase.com
Loyalty in Insurance and Utilities
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Conditioned switchers / Experimenters (23%)
Perceive switching to be easy and tend to tend to find time to make the switch
Neutral / Unengaged (27%)Do not display any extreme views towards switching/loyalty – appear to neither agree nor disagree to majority of statements
Time-poor / Lazy/ Passive loyalists (31%)
Possibly time poor - tend to be more likely than the other groups to be persuaded to switch but less likely to do if off their own back (may not get around to doing it)
Very unlikely to search for offers
Very likely to search for offers
Very unlikely to switch Very likely to switch
1
2
3
Study amongst 2,024 nationally representative UK consumers in conjunction with Panelbase.com
Loyalists (19%)Close the door to competitors –entrenched with current suppliers and do not tend to shop around
4
Loyalty in Automotive
Study amongst 1,000 UK new car owners in conjunction with Panelbase.com
Conditioned switchers / Experimenters (18%)
Perceive switching to be easy and tend to tend to find time to make the switch
Neutral / Unengaged (29%)Do not display any extreme views towards switching/loyalty – appear to neither agree nor disagree to majority of statements
Time-poor / Lazy/ Passive loyalists (36%)
Possibly time poor - tend to be more likely than the other groups to be persuaded to switch but less likely to do if off their own back (may not get around to doing it)
Loyalists (17%)Close the door to competitors –entrenched with current suppliers and do not tend to shop around
1
2
3
4
Very unlikely to search for offers
Very likely to search for offers
Very unlikely to switchCar brand
Very likely to switchCar brand
Loyalty in Automotive
Study amongst 1,000 UK new car owners in conjunction with Panelbase.com
Conditioned switchers / Experimenters (18%)
Neutral / Unengaged (29%)
Time-poor / Lazy/ Passive loyalists (36%)
Loyalists (17%)
1
2
3
4
Very unlikely to search for offers
Very likely to search for offers
Very unlikely to switchCar brand
Very likely to switchCar brand
Conditioned Switchers are most likely to use car review websites (44%), or dealer outlets (39%) or dealer websites when finding out more information before buying a car.
Luxury car brands have a smaller proportion of Conditioned Switchers (13% vs 25%)
Luxury car brands have a largerproportion of Lazy Loyalists (40% vs 26%)
Neutrals are less likely to have one or more social media accounts than the other groups
Other research findings (in the US)The 10 brands that
earned the most
return business:
Ford – 44% Toyota – 43%Kia – 40%Hyundai – 39%Honda – 38%Chevrolet – 38%Subaru – 36%Nissan – 35%Mercedes – 35%Lexus – 34%
Experian's Loyalty and Trends Market Report (2014)http://www.thestreet.com/story/12861722/1/10-car-brands-with-the-most-loyal-buyers.html
Longer term owners are less loyal than
newer owners: Long-term owners (those who have held onto their existing vehicles for at least a 12 years) only exhibit 34% brand loyalty when they finally trade them in compared to 57% of shorter-term owners (those owning up to 12 months)
Experian Automotive http://www.forbes.com/sites/jimgorzelany/2014/11/04/the-longest-term-car-owners-are-also-the-least-brand-loyal-buyers/
Brand loyalty among car buyers is dying a
slow death:• 79% percent of car shoppers research vehicles online• 50% are open to any auto brand (54% in Millennials) • Purchasers are no longer considering one or two select
brands, they review the market• Greater information (online) means Millennials are looking
at the full range of options
JD Power's 2013 New Autoshopper Studyhttp://www.thecarconnection.com/news/1086885_j-d-power-confirms-brand-loyalty-is-dead-especially-among-millennials
Brand loyalty is
fading among
car buyers: The main reasons for this are:
• We are buying cars less frequently
• We shop around constantly, even in the dealership
• The industry is changing rapidly—and so are auto brands
Experian 2012 http://business.time.com/2012/10/30/why-brand-loyalty-is-fading-among-car-buyers/
What can brands do to drive customer loyalty?
View from pole position on the grid 18.04.2013 Bahrain Grand Prix / XPB
Brands start from Pole Position…“it’s your customer to lose…”
Every touchpoint in the customer journey is important
We love brand X
Dealer Experience
WoMPurchase/ Service
Warranty &
Breakdown
Social Media
Brand Experience
Product & design
features
Advertising & Reviews
Rational
Emotional
Experience
Some approaches to influence customer loyalty
Addressing the Rational, Emotional and Experience needs:
• Optimising Digital & Social Media strategyo Most important amongst ‘Conditioned Switchers’ and Millennials
• Enhancing the emotional link to the brando More effective brand/dealer communication after purchaseo Loyal customers want to be treated differently to a ‘new
customer’ – “hug them like they are family”o Loyalty schemes
• Customer experienceo Know customers in detail and their historyo Differentiation and consistency of service at every touchpoint
Rational
Emotional
Experience
An example of how communication does not always enhance a relationship…
Although a well meaning and intentioned dealer communication, there are issues…1) Personalisation displays a complete lack of knowledge of
the customer
2) Why was the letter sent? The vehicle owned is 10 years old!
What communications like this say is we don’t know who you are…• Is this a dealership issue or a brand’s issue?• Will communications like this enhance customer loyalty?• How often does this happen in your brand?
Thanks to…