build customer loyalty- bmw case study

8/3/2019 Build Customer Loyalty- BMW Case Study

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Integrating All Direct Marketing Channels to

Build Customer Loyalty

A BMW Case Study

Prof. Rushen Chahal

Prof. Rushen Chahal



How brand marketing has evolved

1950 - 2000 Brands built by mass advertising

1985 - 2000 Database Marketing arrived, but

not integrated with mass advertising. 1996 - 2000 The Internet arrived, but not

integrated with DBM or mass advertising

2001 BMW brings them all together

2Prof. Rushen Chahal



BMW Buyers Not Necessarily Driven

by Price BMW customers want:

± A realization of the brand promise

Performance, safety, technology, innovation

± Recognition

± Service

± Information

± Convenience

± Helpfulness




How BMW Buyers Make Purchase

Decisions

Personal Profit from Purchase =

a (usefulness of product)+b (perceived brand value)

- c (money cost)

- d (time or inconvenience)




Two kinds of database marketing

people Constructors

People who build databases

Merge/Purge, Hardware, Software Creators

People who understand strategy

Build loyalty and repeat sales You need both kinds!




Situation Analysis

In 2000, BMW built a robust customer and

prospect database designed to:

± Provide a comprehensive view of the automotiveand financial services BMW customer

± Deliver short term, incremental revenue through

opportunistic marketing programs

± Increase customer loyalty through understanding

and ability to deliver relevant, timely

communication

± Secure BMWs place in its customers lives by

identifying which households are good targets for6Prof. Rushen Chahal



BMW Situation II

BMW now has a central system of measurement ± The BMW Report Center monitors communications

and response from prospects and customers Measurement includes cost per response and cost per

sale BMW now has the ability to view prospects as

well customers in its universe ± This allows BMW to view the full shopper-owner

cycle from first point of contact, through sale andcross sale

The new marketing database contains a broadrange of information on the BMW consumer ± Campaign, response, and financial service data

± 190 appended individual and household data points




BMW Situation III

Allowing a full view of the BMW customerdelivers smarter targeting and profit-generatingup sell and cross sell opportunities

± Which vehicle owners are best targets for creditcards?

± How can BMW card owners increase the lifetimevalue of the vehicle owners?

± Where are the pockets of our most profitablecustomers?

± Which customers will deliver additional revenuethrough financial services products after they havedisposed of their BMW?




BMW Database Marketing Goals

Improve the effectiveness of marketing

programs in the years 2001 2003 in

order to: ± Return to BMW the cost of the database build

± Pay for database maintenance going forward

± Increase the revenue per customer over time

± Increase the profit per customer

± Increase the lifetime value of the combined

BMW automobile and financial services

customer9Prof. Rushen Chahal



How BMW measures return on

investment

Consistent measurement and enhancement

of BMW marketing programs

Ability to prioritize prospects and customers

based on their likelihood to buy

Identification of low hanging fruit

programs that can be quickly implementedto generate revenue in the short term

Refinement of customer communications Testing results against Control Groups




Controls and Measurement

Control groups measure the effectiveness of

each program

± Non-mailed groups that are measured against the

mailed groups

Reports on the BMW Report Center provide a

consistent form of measurement

± Cost per lead, response and sale measurement

± Cross-penetration of product purchases




Benefits to BMW

Increased communication effectiveness

± Integrated database used by all groups

Increased efficiency The right information to the right customer at the right time

Reduced communication expense

± Fewer pieces mailed with higher effectiveness

Increased customer participation

Increased customer satisfaction

Increased corporate and center profits

A higher level of data from and about BMW customers




Relationship Marketing Strategy




The Database

All programs are built on a state-of-the-art

customer relationship management database

which provides:

± More information on owners and prospects than

BMW has ever assembled before

± Powerful tools to support BMW loyalty and

prospect conversion programs ± Automated communication that supports the

Owner Experience




2001 Database Marketing Goals

Increase customer loyalty

Increase prospect conversion to sales ratio

Increase vehicle sales through existing customers Maintain existing BMW household records

Keep communication costs down while increasing

effectiveness

Develop a consistent process of program

measurement




BMW Relationship Marketing

Objectives

Use the marketing database to realize acommunications dialogue with both ourprospects and our customers

Systematic use of customized information toattract and retain customers

Facilitate mutually beneficial and relevantinformation exchanges

Increase owner loyalty and customer acquisitionrates

Strengthen BMW brand perception at theindividual customer level




Core Communications Program

Consumer Communications

± Welcome Kit

± Loyalty Communications

± Prospect Prioritization/Extending the Dialogue ± BMW Magazine Enhancements

± BMW Owners Circle

± Financial Services Programs

Credit Card & Banking Customer Acquisition

Cross Sell and Up Sell Marketing

± Opportunistic Quick Win Programs




The old welcome kit was:

A static kit

Information on

±

BMW, the Brand ± BMW, the Company

± BMW, the Products

It welcomed people to the brand, but offered

no real taste of the BMW Experience




The new BMW welcome kit

A personal welcome kit that owners realize was created just for them

It arrives within the first 30 days

It is a dialogue opener, an invitation to the BMW experience that extends over a full year

Each of the kit pieces enhance your perception of the BMW Brand and the Experience

Multiple calls to action which lead you deeper into the Experience

It inherently fosters the collection of information needed for further relationship dialogue




The Database Supports the Welcome

Kit

Weekly feed of new owners from the database

Rapid record cleanup for mailing

Weekly fulfillment of corrected names, addressesand data to the welcome kit program

Monthly maintenance of the database which

supports all owner

and prospect

communications




Welcome Kit Fulfillment Process

Task: Provide individual customer data forpersonalized welcome kit fulfillment

Strategy:

± Provide new owner personalized fulfillmentinformation on a weekly basis

± Recover key information requested

± Maintain owner files based on collected information

for future programs ± Identify customers by model, financial status, and

preparatory segmentation (i.e. loyalty, activity, etc.)




The Loyalty Situation

BMW customers are fiercely loyal to their brand

Loyalty can be measured: it is the repurchase rate

Successful loyalty is a two way street

Customer loyalty can be strengthened by relevantpersonal communications

BMW Loyalty initiatives cover the entire ownershipexperience ± Welcome Kit, Newsletters, BMW Magazine, Multiple

Vehicle Owner programs




Owner Communication Goals

Increase BMW profits through:

± Increased repurchase by existing owners

± Increasing the number of BMWs per household

± Increased sales of BMW previously owned vehicles ± Increased use/purchase of BMW FS products

Each program effectiveness measured by controlgroups:

± Control Group: Owners who are not sent thecommunications

± Test Group: Owners who get the communications




Loyalty Building Newsletters

General Goals:

± Immersion in the BMW Experience

± Promotion of Owners Circle

± Purchase of BMW accessories

To 3 and 4 year BMW owners. Goals:

±

Increase the repurchase rate ± Multiple BMWs in each household

± Widespread use of BMW Financial Services products

To new BMW owners, Goals:

± Purchase BMW financial services products

± Capture information about their preferences, lifestyles, automobile interests, etc. useful for further

dialog




Newsletter Strategy

Ongoing collection of news and information of interest to BMW owners

Owner surveys to determine preferences for:

± News, information, and topics

± Communication Channel (email or print)

± Frequency

Begin with a printed newsletter to gather email addresses ± Move to email newsletters as quickly as possible

Multiple offers to generate owner response

Promote the use of Owners Circle




Newsletter Content

New products

BMW awards

Sports stars that drive BMWs

Ratings by leading car magazines

Why the BMW engines are superior

The history of BMW

Event calendar

Magazine reprints

Sponsorships

BMW Brand Values

Roadside Assistance

Servicing requirements

BMW Insurance

BMW credit cards

BMW Accessories

Driving Events

BMW trade in prices

BMW Owner Clubs

Owners Circle

World news featuring BMW




BMW Magazine Strategy - Before

BMW publishes a high-value magazine

to its owners in the first two years after

their purchase Because of its universal distribution, the

magazine can be more than a magazine

±

It can be a data collection tool for furtherpersonalized communications




Magazine Strategy Today

Capture additional information on customers

± Email Addresses

± Purchase Intentions: owners identifying themselves as entering the purchase cycle

Allow BMW owners to purchase merchandise

± Provide direction to BMW Online Store for purchase

Push registration on Owners Circle

Each program effectiveness measured by control groups:

± Control Group: Owners who are not sent the communications

± Test Group: Owners who get the communications




Goals of the Prospect Management

System Increase prospect conversion to sell more

BMW automobiles

Provide a steady flow of qualified leads toBMW Centers

Make communications interactive

Continually improve the conversion rates bybetter prospecting

± Measure the conversion rate by Center, Region,

Prospect Lifestyle, Income




Automated Database Processes

Prospects developed from all contact sources:

± Telephone, Direct Mail, Auto Shows, Events,

Internet

Rapidly qualified and scored

Centers receive qualified leads electronically

within 48 hours of receipt

Prospects get BMW message within 48 hours

Every lead tracked electronically, with daily,

weekly, & monthly reports for BMW

management on the web30Prof. Rushen Chahal



Testing and Implementation

Strategy Scoring models for incoming prospect requests determine priority

± Focus on priority A & B prospects

± Moving to lower priorities as the systems proves itself

Fully integrated creative implementation in both electronic and paper media as well as

events

Test scoring models against anticipated response and adjust as needed Utilize a 5% control group for a period of one year for reporting comparisons




Measurements of the Prospect

Program

Sales

Response

±

To electronic vs. paper ± Predetermined vs. Relational

± Offers and incentives

Modeling success

% prospect conversion (historical)

Media preference automated system

Cost of program




Measuring success through the

dealers

Scored leads sent to each dealer

Conversions are measured monthly

Each dealer conversation ratio calculated Program success measured by comparing

dealer to dealer conversion ratio

Dealer, Market, Region and National averageconversion ratios create measurable

benchmarks

Above average dealers manage their leads33Prof. Rushen Chahal



Prospect Program Communications

Strategy Direct Mail and E-mail integrated communication plan

± Alternating content delivery mediums

± Each reinforcing the one that came before it

Use of database information to drive customization and relevance Each communication introducing a new piece of the BMW Experience

All communications tie in to web activities

Integration with off-line and online marketing activities

Prospects given the opportunity to opt-out at any point

Prospects removed from program if they purchase a vehicle




Program Communications

Objectives Immerse and invite the prospect into the BMW Experience

Reinforce the initial contact with BMW

Educate as to the depth of the Brand

± Products and Services Point the prospect towards a test drive and the dealer Reinforce core marketing communication objectives about:

± Brand Values

± Brand Heritage

± Product attributes

± The BMW Ownership Experience




Program Content Objectives

New products

BMW in the News

BMW Technology and Innovation

BMW Safety

The history of BMW and BMW Brand Values

Event invitations

Test drive incentives

BMW gifts

Magazine reprints

BMW Financial Services products




Prospect System Benefits

Sell more cars by: ± Immediate Scoring of Prospects

± Immediate electronic Center notification of

leads

± Immediate communications with the prospect

± Continually engage the customer in the

Experience

±Provide more information on the depth of theBrand

Reduce the cost per car sold

Provide Management with accurate &37Prof. Rushen Chahal



Quick Wins: X Factor Situation

The BMW Database offers a huge opportunity

to utilize information to refine BMW programs

X Factor programs are built on data mining,and deliver:

± Highly effective marketing programs

± Incremental revenue opportunities

± Low cost per sale

± Increased customer/prospect contact and

satisfaction




X Factor Initiatives

The Loyalty and Prospect Programs, combined with the database, offer great potential for

creative, interactive X factor programs:

± Contests

± Programs for Women/Minorities

± Special Events

± Referral Programs

± Certified Previously Owned Cars

± Second BMWs in every home

± Lifestyle Programs

± Congratulatory Mailings to 3+ BMW Owners




X Factor: something new every

quarter

40

Q1 Q2 Q3 Q4

CPO Program

Owner Referral

Car Birthday

Launch

Plus improved reporting, query

development

and a half dozen new ideas

to be developed and implemented during

the year

Prof. Rushen Chahal



X1 Womens Program

Identify ways to build relationships with

female owners:

± Bring them to the Brand, and keep them

longer

± Appeal to their unique needs

± Recognize the purchasing power and

influence that automotive marketerstypically ignore

Provide tools that reduce pre-dealer visit

anxiety




X2: Certified Previously Owned

Program

Identify households that are prime

prospects to purchase a second BMW

±Analyze multiple purchase households

± Target groups most likely to purchase a CPO

vehicle

Households with teenagers or young adults

Identify seasonality graduation, etc.

Test the program on current BMW owners,

then roll out to prospects




X3: Series 7 Launch

Identify those current owners who aremost likely to purchase a new 7 Series

BMW

Invite these special people to be amonga small group who are allowed to

preview the new 7 series

± Appeal to their appreciation of inclusion by

asking for their feedback and opinion

± Allow them to be among the first to test

drive

±

Notify them periodically of the status of the43Prof. Rushen Chahal



X4: Mini Launch

Identify those current owners who aremost likely to purchase the MINI

Create a unique lifestyle message to these

owners ± Appeal to the early adapter

± Focus on active lifestyles

± Get them to preview on the web and opt in

to marketing messages




X5: Birthday Cards

Develop a program that uniquely appealsto the BMW owner

± Communicate the personality of the brand

±

Reinforce the relationship that the BMWowner has with their car

At the anniversary of purchase, send an

e-card to owners

± Direct them to a micro site to get an e-

birthday gift




Summary: BMW has put it all

together

Database provides the central focus for:

± Owner loyalty communication programs

± Prospect communications

± Opportunistic Quick Win Programs

± Measurement of success

± Building BMW Brand Loyalty




Thank You


build customer loyalty- bmw case study

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