paul kavanagh & elke neuteboom

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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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


Factors influencing brand/model purchase decisions


Loyalty in Insurance and Utilities

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Very unlikely to switch Very likely to switch

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Loyalty in Automotive

Study amongst 1,000 UK new car owners in conjunction with Panelbase.com







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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


Neutral / Unengaged (29%)


Loyalists (17%)

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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…

paul kavanagh & elke neuteboom

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