Lead Generation & Email Marketing: A Match Made in Heaven

Tuesday, August 17, 2010 by Mike Sharkey

Imagine you have two email marketing campaigns deployed for your dealer customer. In campaign #1 the creative has excellent graphics, content and layout with a wonderful message about the product. In campaign #2 you have the same features; however, there is a hyperlink for the prospect to provide personal information to receive special new car sales or service offers as well as learn more about the product via the dealer's website.

While both campaigns have the ability to perform well wouldn’t it be great to have hot leads flowing into your inbox at the dealership? This can happen and does happen when a campaign is setup using method number two. 

Lead Generation and Email Marketing are not new forms of gaining business, however utilizing a combination of the two methods allows the dealer to have leads generated and distributed to them using the technology of the Internet. This is a very powerful medium as automotive marketing agencies are now required to justify marketing spend for their dealer clients and track how well a campaign is performing. 

The combination method in which to do this is relatively simple and can be developed with a backend landing page. Once the consumer clicks on the link the system can redirect them to the landing page or to a social media site where they are able to complete an online request or information form. Tech savvy companies are also setting up pop-up information boxes in which the individual submits information prior to getting to the landing page. 

The benefits to using this type of methodology include:

  • Allows for follow-up and relationship building with the prospect
  • Allows for ownership of the prospect email information which follows CAN-SPAM regulations
  • Conversion rates on leads received often have a higher conversion success rate than cold contacts because the prospect is prequalified
  • Provides valuable metrics for the dealer about who is clicking through the pages. This helps to better budget the return on investment based on the lead conversion rate

Whether or not dealers embrace this type of methodology remains to be seen; however, if this combination shows success and can engage customers and increase customer loyalty in a relevant way, I see no reason why it won't continue to grow in popularity. 

Please let me know your thoughts on this topic and perhaps the next evolution of lead generation: social media and mobile.

Posted by Mike Sharkey, Account Manager, Automotive Retail Solutions, Polk (08.17.2010)

GMAC Name Change - No Biggie to the Consumer

Thursday, July 15, 2010 by Lonnie Miller
GMAC is now Ally. For car buyers getting auto loans at their dealership, the paper their loan is written on will have a different name on it. While some dealers, particularly those in the GM network, may miss the "GM" part of "GMAC", consumers really just want the best interest rate and loan terms they can get. There's probably not a big affinity to the bank underwriting the loan, per se. I'm curious if there really is much brand equity with a captive finance company.

This last point makes me think about something our OEM customers try to figure out: what degree of customer retention does their brand get by securing repeat sales to the captive finance company? In other words, does having another sale "funded" by BMW Financial Services or Nissan Motor Acceptance Corporation really help overall loyalty to BMW or Nissan? The dilemma with this is assuming the auto buyer walks into a dealership seeking a loan with that specific captive finance organization. Which isn't the case. You and I know that we want the product at the best deal/price we can get.  Let the dealer worry about (in most cases) who they use to help me secure a loan. Unless I already did the legwork and secured my loan at my personal bank or credit union, I don't really care who underwrites the auto loan. 

So instead of asking whether there is "captive or non-captive finance loyalty," a better question is "do aspects of my financing process and the interactions that finance organizations have with the end-consumer help my brand?" Have you heard of the stories of unpleasant suprises when someone turns in a leased vehicle only to be shocked at the fees they get for unknown "damages"? Or the finance company continues to call the customer for payment after the vehicle was turned in months ago when the lease expired.  THESE situations matter more to the consumer and THESE types of issues will erode customer loyalty.  

GMAC...Ally...Bank of Joe...won't matter to the general auto buyer. Make the experience strong, relevant and ensure the customer feels they get the best deal possible. 

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.15.2010)

Customer Loyalty - Don't Burn Your Bridges

Tuesday, July 13, 2010 by Lonnie Miller

I'll spare you the details as you can see more in our latest analysis on Toyota's recall challenges from earlier this year. But if I asked you to simply vote whether the U.S. recalls significantly hurt Toyota's customer loyalty, what would you say? I'll suggest you think twice about your answer. 

Overall, Toyota seems to have weathered the storm due to a long-standing and strong product reputation. This, coupled with the way they managed individual service visits when customers came in to have the acceleration problem fixed, appears to have saved some of their customer retention concerns. All of this despite the media spotlight thrown onto them in early 2010.



There is one telling fact worth noting: a higher level of first-time Toyota buyers shied away from the brand between Q3 2009 and Q1 2010 (a period of heavy international attention on this company). This tells you that newcomers to Toyota decided to delay their purchase of this brand more so than before. However, the consumer research on this one tells us their existing customer base bounced back nicely.

While part of their "owner bridge" may have had a few chunks of cement knocked out of it from the wide-spread recalls, Toyota appears to have built one tough bridge overall. Good for now.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.13.2010)


Hyundai's "iService"

Tuesday, July 6, 2010 by Lonnie Miller
Hyundai wants you to have an iPad and to stay home if your car breaks. I love it.

When the new Equus sedan comes out, a car representing Hyundai's continued march into the luxury market, owners will receive an Apple iPad. And on this iPad you will be able to use it for its basic purpose and for scheduling service visits. Plus, Hyundai wants to give Equus owners the royal treatment with their valet service whereby they will come to your home and pick up the sedan and take it to the dealership. 

I think this is a good formula. In the luxury market for autos, technology and convenience rule. Look at BMW and other luxury brands. For anyone paying north of $55k-$60k for a vehicle, convenience almost comes as an entitlement. Let's say an obliged perk. And for a Korean automaker who's done very nicely to reinvent its brand, a one-two punch of valet service supported by an iPad app will resonate with many who are considering the new Equus. Makes me wonder how many people will buy the car just to get an iPad (crazy, I know, but transferrable accessories often make a larger purchase seem reasonable).

The real test will be how many times these owners contact their Hyundai service advisor. Let's hope for some positive customer loyalty at the dealer network through these contact opportunities. And let's also hope the iPad service app doesn't get over-used beyond the need for basic maintenance.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.06.2010)

The Polk EuroCar Seminar – Marketing Questions & Answers

Thursday, February 4, 2010 by Guest Blogger
After the EuroCar Seminar on 20 January 2010, we posted the top ten questions asked by OEM and OES delegates in attendance. Today I will answer the three marketing questions. The remaining questions will be answered by Tanja Linken and Thomas Mawick.

1. If you could only do one thing with respect to marketing in this environment, what would it be or in what area would you focus?

We must optimize automotive marketing both for new vehicle sales and aftersales. That said, aftersales marketing has been an area that in my opinion has not received an appropriate level of attention. There are numerous opportunities to better communicate effectively with customers during their ownership period. These efforts have strong impacts on the customer experience at both a OE and dealer brand level.

2. You have covered a great deal of ground, what type of automotive marketing has been most effective/impactful?


Programmes that focus on customer loyalty and retention with demonstrable ROI are perhaps the most effective marketing initiatives given the efficient use of precious marketing resources. In a difficult sales environment, long term loyalty really matters.

3. Are there any other marketing challenges that ‘keep you awake at night’?

One marketing challenge that keeps me awake at night is the reliance on incentives in order to sell new vehicles. This poses a dilemma when incentives aren't always available yet sales targets need to be met. By and large, OEMs recognize this challenge, yet many struggle with breaking the cycle of providing generous incentives.

I hope this answers your questions. Feel free to comment on this blog if you have anymore questions or insights. Watch the blog for the upcoming responses to the network planning and hybrid related questions in the next few days.

Posted by Norm Marks, Vice President, Sales & Client Services; Managing Director Northern Europe, Polk (02.04.10)


Customer Loyalty - It's a Close Race

Monday, January 18, 2010 by Lonnie Miller

Last week we recognized winners of Polk's annual Automotive Loyalty Awards. One category that gets a lot of attention by our customers is the overall "Make Loyalty" category which basically recognizes superior customer loyalty to an OEM's brand. Since many of the automakers have multiple divisions (i.e., makes or brands), they like to see how consumers react to these separate entities due to the unique position they try to create in the marketplace. This year, Honda won for the U.S. market. But by how much? And how many more repeat sales would have been needed by other brands to beat this year's winner? The point of these questions is an estimation process can be used by automotive marketing managers to figure out what the sales mix needs to be in order to help them predict how they'll help their companies reach their overall sales targets.

How Close Was Each Brand to Beating Honda's Make Loyalty Rate in 2009?

For the 2009 model year, the average make loyalty rate was 44.53%. Honda's make loyalty rate was 54.86%. Toyota missed beating this rate by 0.15 percentage points and Ford missed it by 0.74 percentage points. If I look at the brands, including Honda, that had an above average industry make loyalty rate, there are a total of 10 of them.

But here's what's intriguing to me: is there an "efficiency thing" going on for some brands? Meaning, what dynamic allows a relatively few more sales from past customers to make some brands "win" while other brands need far more sales from past customers to get the same outcome?

Take Subaru, for instance. They missed beating Honda by 6.03 percentage points. But they only needed another 3,914 sales from past customers to exceed Honda's make loyalty of 54.86%. Now if you're Subaru and you only sell just north of 200,000 units in the U.S., yielding another 3,900 units isn't an easy task. But it's worth noting what sales volume deficits exist in order to possibly reach a loyalty target. Now a brand like Chevrolet needed 27,781 additional past customer sales to make them win, yet Chevrolet's overall gap (5.10 percentage points) from beating Honda was smaller than Subaru's (6.03 percentage points). Cross-town rival, Toyota, missed getting the top spot by 849 sales from past customers. In these examples, we have two large volume OEMs and one relatively small volume OEM. So it's not always a size issue that creates the disparities I'm highlighting.

The point is that when companies set targets for sales, much of this will come from past customers. And if there are specific loyalty targets established, managers can conduct a sensitivity analysis to estimate "what's needed" to hit the number. Awards are something to be proud of, but more importantly, hitting sales targets that are built on a bit of science with the use of consumer research and knowing industry trends can make hitting targets a more plausible effort. Here's to 2010... may the best, and most efficient, brand win.

Posted by Lonnie Miller, Director, Industry Analysis, Polk (01.18.2010)

Congratulations to the Polk Automotive Loyalty Award Winners

Thursday, January 14, 2010 by Stephen Polk

It was my honor to present the 14th Annual Polk Automotive Loyalty Awards at the Automotive News World Congress this week. We’ve discovered over the years that the more you know about customer loyalty, and the more you focus on it, the better. And I can tell you first-hand that we’re seeing more and more of our customers taking their loyalty objectives very seriously. Our 2009 Model Year winners are no exception!

Every year Polk recognizes automotive manufacturers for their superior performance in customer retention. Our Loyalty Awards are based on actual model year purchase and lease activity. This year, we analyzed over 4.5 million household records to determine our winners. In these days of struggling sales and overall automotive industry challenges, the winners this year are a testimony to those OEMs who recognized the importance of spending their resources wisely, and focusing on areas with bottom-line impact like customer retention; which we view as a “must” for automakers hoping to compete.

In our white paper, "Managing Customer Loyalty in the Auto Industry," we share three strategic tips automakers should consider when developing their plans to manage and build their owner loyalty. I hope you find it interesting.

In closing, and on behalf of R. L. Polk & Co., I want to congratulate all of the 2009 model year winners. I hope to see you all again next year at the 15th Annual Polk Automotive Loyalty Awards. Until then, continued success in your customer loyalty efforts!

Posted by Stephen Polk, Chairman/CEO, Polk (01.14.2010)

Challenging European Market Dynamics – 2010 and Beyond

Wednesday, January 13, 2010 by Guest Blogger

There has been much recent news and comment with respect to Europe and the sales environment looking ahead. We know from our own experience that the introduction of scrappage incentives can have positive influence whilst in effect, but can also have negative impacts on future vehicle sales. Further, our own analysis has identified unforeseen side effects relative to these programmes with reductions in loyalty rates. Once these programmes ended the loyalty rates returned to normal – demonstrating just how sensitive repeat buyers can be to these types of programmes.

With scrappage programmes coming to an end in Europe, and market-specific influences such as the VAT increase in the UK – it begs the question as to what we can expect in the years ahead.

We will be reviewing our most recent global automotive forecasts, with a detailed view on European Car Demand at a Polk EuroCar Seminar in the UK upcoming on 20 January 2010. For those attending, we look forward to reviewing these forecasts with you, and for those who cannot attend – we hope you will follow Polk’s Forecasting Dashboards or engage with us directly.

The current and projected sales trends have caused many vehicle manufacturers and dealers to increase their focus and attention on customer retention and related programmes. Customer loyalty and optimal aftersales programmes drive positive customer behaviours, and ultimately dealer and manufacturer profitability – key in the difficult sales environment. We will explore some of the best practices we have seen at the seminar, including such areas as predictive targeting and multi-channel integrated communications. Aftersales and service matter, and there are opportunities to succeed and drive results.

And whilst there is no doubting the impact of customer loyalty and retention, no brand can excel in these times without converting the highest percentage of active prospects. There are proven approaches to prioritising focus that generate demonstrable results in increasing conversion rates – and particularly with respect to internet leads. We will discuss our experience in this area at the seminar, and the broader effects the internet and social media are having on the industry.

These are indeed interesting times, but there remain opportunities for the taking.

Posted by Norm Marks, Vice President & Managing Director, Northern Europe, Polk (01.13.2010)

Managing Customer Loyalty

Wednesday, January 13, 2010 by Dan Zetu

Are you curious what impact the Cash for Clunkers program had on customer loyalty to OEMs? Are you interested in some strategic tips for managing customer loyalty? Do you think that understanding what drives customers' decision to repurchase is critical to building loyalty? Have you ever wondered about the financial impact of loyalty on the OEM bottom line?

If your answer to any of these questions is yes, then you may be interested in the white paper that Lonnie Miller and I have put together and released this week. Click here to get your own copy of the white paper.

Posted by Dan Zetu, Analytic Consultant, Polk (01.13.2010)

Has GM Turned the Corner?

Wednesday, January 13, 2010 by James Dimond

My major take-away from last night's World Congress presentation was the sharp role reversal between guest speakers Yoshimi Inaba, President and COO of Toyota Motor North America, Inc., and Mark Reuss, President of GM North America.

Mr. Inaba spoke first about Toyota's recent successes and challenges. He calmly and confidently highlighted their current and future products, large R & D investment and employee charitable volunteer activities. The audience was left with an impression of a bright future for Toyota in North America.

Mr. Reuss then took the podium and explained the sense of urgency and renewed customer focus at GM. He noted the irony that the same government once concerned about GM controlling too much of the U.S. automotive market, now controls GM. Mr. Reuss covered current and future product and outlined the recovery steps already in place at GM.

It was interesting that GM, who once enjoyed over 50% of the U.S. market, is now behaving like a new entrant OEM by actions such as encouraging engineers to drive parts to stranded customers and having its president interface with the public via Facebook. Through various reasons such as insular management, quality issues and complacent dealers, GM basically handed their market share dominance to the imports over the years.

I was impressed with the passion and commitment of Mr. Reuss, but can't help but wonder if it's too little, too late for GM. They have some great new products and the new, customer focused attitude is refreshing; but will the North American consumer be drawn from their imports back into Chevy, Buick, Cadillac or GMC vehicles going forward? As you ponder that question, consider the fact that of the 16 Polk Automotive Loyalty Awards presented last night, import OEMs captured 13 categories, Ford 2, Chrysler 1 and General Motors 0.

Posted by James Dimond, Vice President of Global Network Planning, Polk (01.13.2010)

Automotive Customer Loyalty - What's Your Story?

Friday, December 11, 2009 by Guest Blogger

Are you loyal? I'm not talking about loyal to your job, your friends or your breakfast cereal. I'm talking about your car...or the manufacturer of that car. I'm asking because it's a subject we think a lot about at Polk. So much so, that on January 12, 2010, Polk will be presenting the 14th Annual Polk Automotive Loyalty Awards at the Automotive News World Congress. Winners of these awards are automotive manufacturers that have demonstrated the ability to bring customers back through positive owner experiences. That means they took action—they came back and purchased or leased another vehicle of the same model, make or manufacturer. So, have you been loyal?

I've been loyal. When my first child became of a more social age, I was thrust into a world of school, birthday parties and soccer games. This meant a life of carpooling other people’s kids and their runny noses, sticky fingers and muddy cleats. And, while hiding under a rock would have been my preferred method of dealing with this, it became very clear to me, thanks to my wife, that a minivan would be the proper solution.

And so began my ongoing relationship with the Chevrolet Venture. Other than oil changes, the first lease offered no problems in the way of maintenance. It was reliable and kept me a good distance from the invading children I was forced to transport. The second lease was an equally good relationship. So much so, that with 0% financing, I bought the third. The reliability of the Venture made me loyal. So that's my story, what's yours?

Are you loyal to a specific make or model? Are you a loyal owner? We want to hear your story.

Posted by Jeff Stone, Senior Marketing Specialist, Polk (12.11.2009)

Saturn Owners – Where Will They Go?

Monday, November 16, 2009 by Lonnie Miller

I wanted to analyze sales trends and look at the impact that GM's decision to discontinue the Saturn brand will have on customer loyalty. More specifically, have Saturn owners defected from GM at a higher rate this year? What are Saturn owners likely to purchase when they return to market for their next new vehicle purchase?

From January 2004 – December 2008 over 56% of Saturn owners were loyal to GM, with nearly 30% defecting to Asian brands. During this same time period Saturn maintained a make loyalty rate of 41%. Incidentally, the Saturn ION won a Polk Automotive Loyalty Award for 4 years straight for the 2004-2007 model years.

While Saturn owners have previously demonstrated strong loyalty towards both the brand and GM as a manufacturer, the story changed dramatically in the first 6 months of 2009. Defections to Asian brands are up 22% and loyalty to GM is down 16%, driven largely by a sharp decline in Saturn brand loyalty. Honda and Chevrolet occupied 3 of the top 10 defection destinations with the Honda Civic being the primary destination of Saturn owner defection.

If the results from the first six months of 2009 are any indication of what we can expect in the future, then less than 50% of current Saturn owners will remain loyal to GM and more than a third will defect to Asian imports with a significant percentage of them choosing Honda.

Posted by Lonnie Miller, Director of Industry Analysis, Polk (11.16.2009)

How Does Your Company "Integ-RATE"?

Monday, November 2, 2009 by Paula Skier

In September, I attended a session at the Interactive Advertising Bureau MIXX Conference entitled "The End of Digital Marketing." In his presentation, Google President Nikesh Arora opined that digital marketing is not a discipline unto itself, but simply a part of marketing in general. The same principle can be applied to online automotive marketing. I propose that the auto market as a whole consists of both online and offline elements, neither of which will do the job alone.

This was the theme of our presentation last week at the Polk Industry Outlook Summit 2009. I was fortunate to be joined at the podium by Julie Enzweiler, Automotive Research Director at the Nielsen Company. Our premise is simple: Automotive marketers must incorporate both online and offline research, targeting and measurement to form an effective overall marketing strategy. The pieces come together to form a complete puzzle, as illustrated below.

Take, for example, assessing the target audience and competitive set for a new vehicle being launched. We can measure the accuracy of the competitive group by examining online new vehicle shopping activity – who is shopping the vehicle, what are their demographics, and where are they located? Does this align with the intended target?

Further, what vehicles are being cross-shopped online, and does this correlate with offline conquesting & defection behavior? We took a look at the Honda Insight as an example and confirmed that there is, in fact, strong alignment between online and offline behavior.

*Source: Nielsen MegaPanel, Jan-Jul 2009;
**Polk Manufacturer Loyalty Excelerator™, Jan–Jul 2009

So, what does this mean for automotive marketers? Well, for starters, make sure to integrate online and offline intelligence to develop and refine your marketing plans throughout the vehicle lifecycle. There is still a tendency to create organizational silos that treat online and offline marketing as completely separate disciplines; this can severely impede your ability to leverage information across the organization.

In today's complex automotive market, we believe that companies that can break down organizational barriers and integrate information from all available sources, both online and offline, will be most successful.

On a scale of 1-10, with 1 meaning "completely separated, no integration" and 10 meaning "fully integrated, no silos," between the online and offline disciplines, how would you rate your company and why?

Inquiring minds want to know.

P.S. If you would like a copy of the presentation from our customer summit, send your company rating and contact information to me at paula_skier@polk.com.

Posted by Paula Skier, Polk, Director of Digital Product Strategy (11.2.2009)

C'mon Dealers - Drink the Kool-Aid!

Thursday, October 22, 2009 by Lonnie Miller

If you're a dealer, here's a tip for you: read the book by Chris Brogan and Julien Smith, "Trust Agents". If you're wondering about improving your company's image and how to influence customers via online methods, you will find it highly useful. This is not just theory-- it's a "meat and potatoes get-stuff-done" book! It's about building a better reputation with your constituents in the context of the web and social media tools.

Am I getting kick-backs on this book? Nope. It just stood out to me after co-presenting last week at the DrivingSales Executive Summit that there is so much auto retailers can do to build better relationships with their customers. Here's a compelling fact: In research done by our firm, U.S. auto brands representing over 52% of all personal sales only saw a combined dealer loyalty rate of 30% in 2008. That means 7 out of 10 owners at a dealership for these top brands went to another store. One area I see that baffles many of us is the lost sales in the service bays among dealers...in a time when owners are holding their vehicles for an average of 9 months longer (comparing the last 6 years). Can you say, "How can I get more parts and service revenue?"

Okay. I'm not trying to be a "Monday Morning Quarterback" but there are really some good digital marketing and social media ideas out there to help retail sales build momentum. Just read the book. You won't be sorry.

Posted by Lonnie Miller, Director of Industry Analysis, Polk (10.22.2009)

Why Buy the Same Auto Brand? Product is King.

Tuesday, October 6, 2009 by Dan Zetu

Recently, the importance of customer loyalty in automotive marketing has skyrocketed due to the increased proportion of loyalty sales among total industry sales. Beyond measuring customer loyalty, OEMs and dealers need to understand what drives consumers' decisions to repurchase the same brand. Here at Polk, we attempted to uncover some of the drivers of repurchase intentions through a consumer research study we carried out this past spring.

In this study, we asked consumers who bought a new vehicle during the past three years what the likelihood is that they will repurchase a vehicle of the same brand next time they return to market, based on their ownership experience. We also asked them how satisfied they were with a series of factors pertaining to their purchase and ownership experience that we considered as potential influencers behind their repurchase decision.

These influencing factors were grouped into three major categories:

  1. Product (brand affinity, product quality, performance, safety, fuel economy, workmanship, drive quality)
  2. Customer relations (sales process, customer communications)
  3. Monetary (purchase price, sales incentives, financing, cost of ownership)

Our analytical model revealed that product attributes are the most important drivers. Sales process and customer communications also emerged as highly influential, which reinforces the notion that a positive experience during the sales process has the potential to drive loyalty and also highlights the need for constant communication with customers.

Within the product category, fuel economy is a significant attribute that drives repurchase intention, though it is also directly related to the cost of ownership. Purchase price is perhaps less influential than we expected, although there are other monetary aspects that are important such as incentives, cost of ownership and indirectly, fuel economy. A diagram of the derived importance of repurchase drivers is shown below. More detailed study findings are forthcoming in a paper to be published shortly. Stay tuned.

  

Posted by Dan Zetu, Analytic Consultant, Polk (10.06.09)

What if an Import Brand Took Saturn?

Thursday, October 1, 2009 by Lonnie Miller

Yet another entry in the book of automotive industry challenges this year...talks with GM's Saturn and the Penske Automotive Group fell through. There have to be some very heart-broken dealers out there right now and it's discouraging to see a hopeful marriage fall apart before the bride and groom chose a date.

But let's speculate on a scenario: What if an OEM such as Toyota or Hyundai took the Saturn brand? What a clever, defensive move that would be. Recall that Saturn was to be GM's "import-killer" when they launched the brand in 1985. But this never blossomed. In fact, past conquest analyses from our company showed that most of the Saturn buyers were mainly from other GM divisions. That's not doing the job.

While the Saturn retail model was refreshing and unique (hassle-free and highly customer-centric...recall their tagline? "A different kind of car company"), the product line got stale and investment in Saturn from GM waffled. However, there have been many people talking about what a great opportunity Saturn represented to give US domestic auto owners a taste of an import experience. I think many domestic "loyalists" would come running if they knew another established and growing import manufacturer took the helm. Particularly one with a strong brand image and talent for growth.

Or...would a Chinese entrant seeking to capitalize on an existing North American retail network want to pick up the tab? Is there something here?

Being in the auto industry, this is tough to watch. I feel for the Saturn retail network and their raised spirits which are likely falling today. Let's hope GM can find ways to nurture current Saturn owners and not erode customer loyalty through this brand elimination. GM put good product on the road with Saturn. Let's hope more can be done.

Posted by Lonnie Miller, Director of Industry Analysis, Polk (10.01.09)

Correlating Service Events to Future Service / Repurchase Behavior

Tuesday, September 1, 2009 by Brad Smith

Over the last several years, I have spent a considerable amount of time analyzing automotive repair data. Most of these analyses were very specific to reporting dealer performance or optimizing service reminder business rules. However, while conducting these analyses I began to wonder if there was a cause-and-effect relationship between vehicle service events and the likelihood of an owner to return to the dealer for service or ultimately repurchase the brand.

I recently had the opportunity to explore this cause-and-effect relationship, initially seeking to quantify the impact “expensive” repairs have on subsequent service and vehicle repurchase behavior. In conducting the study, my colleague Dan Zetu and I discovered that while "expensive" repairs were statistically significant, other metrics like the days elapsed since an "expensive" repair were more predictive of both service and repurchase customer loyalty. For OEMs and dealers alike, understanding this cause-and-effect relationship can provide the opportunity for targeted incentives for future service visits and an opportunity to re-win the business prior to defection actually taking place.

We have documented our findings in a newly released white paper titled "Mining a 'Hidden Asset' to Increase Brand Loyalty and Sales" that stresses the importance of leveraging data assets, specifically repair order data, to better understand and predict owner behavior and customer loyalty. It is my belief that by incorporating findings like those detailed in the white paper into strategically targeted marketing communications and incentives, automotive marketers will generate a significant lift in their marketing campaigns and much higher return on their marketing investment.

Posted by Brad Smith, Product Manager, Polk (09.01.2009)

Why Are You Loyal to an Automotive Brand?

Monday, August 10, 2009 by Lonnie Miller

What makes us buy the same car or truck again? What makes us even consider the same brand when most consumers have in excess of 300 models to choose from when buying a car or truck?

Monthly payments...design of the vehicle..."cool factor"...great dealer service...it's a hybrid...? The list is endless. But the question is: what matters to you the most? From your perspective, which factor creates customer loyalty?

Here's a proposition for you: Tell me your reasons for customer loyalty in the auto sector and we can see where your reasons stack up to other views. I have my reasons for staying loyal to a particular automotive brand - I'd love to hear your thoughts on this matter. It's a timeless debate.

Posted by Lonnie Miller, Director of Industry Analysis, Polk (08.10.2009)

Luxury Cars and Trucks - Is it all about Customer Loyalty and Leasing?

Thursday, July 30, 2009 by Rick Vicedomini

There's been a lot of talk and media attention to the weak state of the auto industry, so I decided to take a look at a segment of the market that doesn't get covered quite as much: the luxury market. Surprisingly, we’re still not seeing the drop in luxury vehicle sales this year that might have been expected considering the current economic and automotive industry challenges.

Sales Trends

Industry trends are showing that luxury vehicle sales have declined 34% year-to-date compared to 2008, less of a decline than the 35.1% drop experienced by the overall category of cars and light trucks. Looking strictly at cars (not trucks), we see a drop of 35.8% from last year...still lower than the year-over-year 38.6% drop for non-luxury cars. We have noticed a slight shift to lower-priced luxury cars, with greater sales declines seen in the higher-end flagship cars such as the Mercedes-Benz S-Class, the BMW 7 Series, and the Lexus LS.
 


 

The sales trend is better for trucks, although the segment still experienced a decline. Sales of luxury trucks are down 30.4% year-over-year compared to a 31.9% drop for non-luxury trucks. And some brands are increasing market share and sales. The Lexus RX is the luxury truck leader, and has increased its share of the luxury truck market by four percentage points over last year. The new Audi Q5 and Mercedes-Benz GLK-Class have added almost 12,000 units this year through May.

Customer Loyalty

Tracking customer loyalty and competitive financing programs will help identify keys ways to increase share as the industry struggles to recover.

The luxury auto makers still have to contend with declining loyalty. Polk’s most recent loyalty study shows serious declines for Lexus, Infiniti, and Volvo. BMW, Porsche, and Jaguar have all improved their loyalty for Q1 2009, but loyalty in the luxury segment overall is down 1.5 points from the prior quarter.

Leasing

While leasing for luxury cars and trucks has declined from last year, it’s probably not the great leasing deals that are causing defections. Luxury truck leasing is down 47.8% from last year and leasing of luxury cars has dropped 44% since 2008. Leasing penetration is off for most makes, but as credit conditions ease, manufacturers with the best financing programs will increase both loyalty and conquest.

Careful management of customer retention to increase loyalty and implementation of competitive financing programs will be the key to increasing market share until the segment rebounds.

Posted by Rick Vicedomini, PolkInsight Advisor, Polk (07.30.2009)

Cash for Clunkers - Clarity Counts

Monday, July 13, 2009 by Lonnie Miller

I was on a web panel last week that addressed how dealers can market to customers and leverage the U.S. "Cash for Clunker" program starting later this month. It's amazing how many questions surfaced about the implementation of this program and the questions that remain in the minds of dealers about what to expect once customers start calling them. The folks at NHTSA (National Highway Traffic Safety Administration) have no small chore to get everyone running a dealership up to speed on this program.

From an automotive marketing view, here are some things dealers can do to prepare and capitalize on the showroom traffic the Cash for Clunkers program will hopefully create:

  1. Check in on your past customer base. The $3,500 - $4,500 incentives tied to the Cash for Clunkers program give dealers a perfect reason to reconnect with their past clientele in hopes of building further customer loyalty.
  2. Look at the vehicle mix in your local market. Find out what the dominant vehicle age and vehicle segments (e.g., minivan, SUV, small car) are that define your trade area.  And be highly conscious of the domestic and import brand mix in your area. A lot of the qualifying vehicles will be domestic nameplates. 
  3. Buy outside marketing lists. At my company, we provide analytically-based targeting tools that help marketers (dealers, OEMs, ad agencies) spend less money on targeting campaigns by using information that's refined to hit the audience they wish to reach. This week, we just launched a targeting model to help find households likely to own a "clunker." 
  4. Don't use the word "scrappage" when describing this program to the public in your advertising. The phrase "cash for clunkers" is more common and will result in better web hits from prospective customers. "Scrappage" has been used widely in Europe to describe similar programs, but it doesn't seem to be descriptive enough for the U.S.
  5. Make sure you have inventory in stock to enable someone to buy the type of car that fits this Cash for Clunker program. And if you're a dealer who doesn't want to order new units right now (due to inventory and carrying cost concerns), start looking for relevant dealer trades with other stores.
  6. Dealers should talk to the OEM marketing reps. I'm aware of several national programs that the automakers are working on to help drive traffic to their dealer network. Find out what is coming, if anything. 
  7. Don't forget to integrate deals from other incentives/promotions with the Cash for Clunker incentive. 
  8. Lastly, use what's fundamentally worked in the past to draw in people who are likely to buy a new vehicle. Remember, this is still about selling a new car or truck, so some of the proven marketing messages and techniques should still be considered when getting the attention of the "clunker" audience. 
The results of this government-sponsored program should be interesting to watch. My hope is it not only gets people into the dealer showrooms, but it also gives the average citizen a strong message that there's commitment from the government to rebuild our economy. This is one way to get the economy back on its feet while also helping the automotive industry.

Posted by Lonnie Miller, Director of Industry Analysis, Polk (07.13.2009)