Vehicle Relationship Management (written in 2001)

The following is an article I wrote in 2001, just before the Dot Com crash. 

In our headlong charge to become ‘customer-centric’, aren’t we risking being presumptive about what customers might really want? I examine how the car industry might use the product itself to offer a meaningful Vehicle Relationship Marketing (VRM) opportunity for relationship management.

  

“The more you know about your customers, the more you can relate to their needs, and the more they will want to buy from you”, or so the CRM mantra urges us to believe. Well I don’t have a problem with that, but I don’t believe it goes far enough into the relationship opportunities.

My first concern is one of definition for the word ‘customer’. Customers are people who have already adopted your brand. People who are considering buying something are prospects, who might indeed already be customers. We need to distinguish very carefully between the two since the strategy required to persuade someone to adopt a brand can be very different from one required to keep someone loyal or to become a repeat purchaser.

I believe that all successful businesses need to have two central objectives around which all other activities can be planned – 1) to ensure that their brands are rigorously policed to present the optimum impression to both prospects and existing customers, and 2) to ensure that customer retention is maximised. In other words, keep the customers you’ve already won constantly reassured about their decision to adopt your brand in the first place, so that they not only come back for more, but recommend their friends to do likewise.

Perhaps somewhat controversially, I also believe most customers and prospects actually don’t want relationships with their suppliers of goods and services! What they want is to be left alone within the social environment they have crafted around themselves and for the suppliers of those selected goods and services to simply make sure that everything is working perfectly – no interference!

Indeed I would go even further to suggest that we use the internet and other remote communication devices to protect our anonymity. Emails have all but replaced phone calls in business today. Why? Not because they are more efficient – in fact a telephone conversation can convey far more meaning between participants, and far faster than email ping-pong – but because they offer personal convenience and, more importantly, power.

We, the consumers, can command enterprises to perform our bidding with total self-confidence. We can be rude, blunt, demanding, presumptive and ultimately instantly curtail a relationship simply by not replying. We even create Hotmail accounts to avoid being traced and to filter unwanted approaches.

Having been involved in the forefront of the online ‘evolution’ (please, not ‘revolution’) since the mid-eighties, it is clear to most people that the ‘online’ world provides substantial opportunities for maximising convenience and efficiency. It also provides, as I have argued, one other vital suite of benefits –at the heart of my ‘product-centric’ philosophy – invisibility.

But before we analyse this claim in more detail, let’s wind the clock back and consider how former cash-rich, time-poor communities dealt with CRM. In short, they used slaves – either human equivalents of machines to be bought, used and discarded, or forelock-tugging service providers who might ply their businesses through tradesmen’s entrances or deal invisibly with servant intermediaries. The ‘masters’ would not entertain the idea of having a ‘relationship’ with tradesmen or servants, and certainly not with a slave – who likewise would ‘know their place’. These functionaries allowed masters to maintain their lifestyles without having to concern themselves about how they would satisfy their needs – the enterprises around them did that as automatically and as predictively as they could. If they failed, they were replaced – no fuss, no drama, new slaves were purchased, new suppliers appointed.

Today the online world makes us all masters. We don’t buy books from Amazon. We buy books from the net – it so happens many of us type in the address www.amazon.com because we believe this enterprise slave will send us what we want more cheaply and faster than other slaves we can select. The second Amazon displeases, we will use Bol or whoever. Indeed I own the URL cheaper-than-amazon.com.

So do we really want relationships with online enterprises, or do we want to hide behind the screen? My phone seldom rings these days, but I process around 100 emails per day. Why do we prefer emails? Because they allow us to communicate precisely, without interruption, at a point in time that is convenient to ourselves, and as boldly or as meekly as we feel like being. We can pretend to be who we like. We have confidence to exert power – because we can hide behind a screen. And it’s the screen itself with which we are having this relationship – not the people or enterprises behind the sites we use.

Which means rather than an enterprise seeking to ‘relate more closely with my needs’, I would much rather that enterprise simply did what it was told and not get too smart about thinking up new ways of assessing or resolving my needs – let me be the decider of what my relationship needs to be, not the slave.

The car industry is a complex multi-layered business linking factories who build components, to factories who assemble them into cars, call them something, and then sell them to national sales centres (NSCs). NSCs typically then have responsibility for local marketing, appointment of franchised dealerships, product distribution and support. Importantly they are also the guardians of the brand – providing prospect and customer brand experiences which increase the likelihood of a sale and ideally a repeat purchase – for the least cost. During this process, a car buyer (who is typically also already a car owner) potentially comes into contact with more people and businesses than any other transaction on the planet.

Consider the process of buying a car. Firstly, owners typically have to decide when, how and for how much to sell their current car. This may require remedial work to be done on the car as well as consideration of its probable value, advertising, giving demonstrations to potential purchasers, negotiating trade part exchanges, paying off outstanding finance, getting MOTs and services up to date, etc. And all this needs to happen before looking at the next car. If the buyer is looking for a used car, does one buy privately or from a trader. Private purchases are usually cheaper, but they are also risky and often mean a hassle travelling to view cars, as well as receiving heavily partisan advice from the vendor – not to mention no assistance with part exchanges or finance? The trader will offer a wider choice and will make the process easier, but it will cost more. It will also be less risky since warranties are typically bundled with the car. The choice about using a franchised or non-franchised dealer is typically down to price (and usually the age of the car – franchised dealers sell newer used cars than non-franchised dealers). Indeed buyers might even take courage in both hands and find the cheapest deals of all at auction. But the risks of not making it home from the auction don’t always justify the financial economies. Traders know how to minimise their risks when buying from trade sources. The ‘punter’ is at considerable risk.

So lesson one for a consumer who wants to ‘save a few bob’ buying a car online, is that the source of the car is all important – but this can be heavily disguised to the unwary. So in short, the online industry is almost exclusively used by the public to find information about cars – including their location – but very rarely used to complete a transaction. Less than 3% of new cars are now estimated to be purchased entirely online – and even fewer used cars.

To buy a new car, there are several other factors to be considered. A glance at a brochure will generally be sufficient to have most buyers seeking human guidance to unravel the model / variant / standard and optional equipment combinations. Then there’s the colour and interior trim to choose, followed by the computation of the OTR (on the road price) including various taxes, discounts, number plates, delivery charges etc. Finally there’s the finance charges and the probable wait while the car you want is sourced from stock somewhere or built especially for you.

During all this confusing activity, we agonise over the question “who owns the customer?”. Is it the dealer? Is it the car manufacturer? Is it the finance house? Is it even the newspaper in which the private buyer met private seller? Is it the auction house? Is it the website who referred the sales lead?

All wrong in my view! The customer owns their own relationship with all these entities. They are the masters. They want control. But the essential part of any relationship which each customer is fully prepared to allow to be ‘owned’, or at least impinged upon, revolves around the car itself – the one they currently own and need to sell, and the one they are considering buying, either virtual (a new car), or physical (a used car - although a new car can transpire to be physical if the buyer’s requirements can be met from stock).

So to the point of this article. If we are to use the internet or other enterprise touch points to offer convenience and efficiency, then we need to let the customer control the relationship, to play ‘master’ to our slave. And the only thing the customer wants us, the suppliers, to concern ourselves about is the item they have already bought, they are trying to sell, or they are interested in buying.

At 2^nd Byte, we redefine CRM as Vehicle Relationship Marketing - VRM. But the principle can be adapted for any non-consumable item – a camera, a house, a PC etc. Consequently we are inventing systems which follow the lifecycle of the car itself, and not the customer. Other customer-centric Siebel, SAP etc systems will store, manipulate and re-present data about customers. The car owner, as already explained has many relationships surrounding their past and present cars, so data about them will be jealously guarded by each ownership contact point - dealers, finance houses, car manufacturers and anyone else who impinges on the relationship. As a result, the ‘view of the customer’ is rarely shared by these often competing interests.

However the view of the product, the car, is readily shared by all ‘customer-ownership’ participants. The product itself now has relationships – ‘forwards’ to the current owner, ‘backwards’ to the organisations who support it, and ‘sideways’ to information sources like valuations, traffic alerts, route-planners etc.

What does a ‘product-centric’ relationship system offer both the customer and the supplying enterprise?

Benefits to the customer:

1. Time sensitive information. Eg servicing and MOT reminders
2. Ownership experience enhancement information. Eg. HTML owners’ manuals, accessory availability etc
3. Valuation information. An estimate of a car’s ‘residual value’ is based on a computation which adjusts prices currently being achieved in the marketplace for mileage, age and general condition of the car.
4. Special offers. Eg. insurance premium renewals, free MOT tests etc
5. Non-personalisation! “Just concentrate on looking after my car. I don’t want to be your friend!”

Benefits to the suppliers:

1. Continuity of contact with owner between purchases
2. Direct targeting of products and services without intruding into the customers’ ‘space’ (offers are left on product’s web page, not necessarily included in emails (at owner’s option).
3. Route for proactive selling of next car. In the car industry, one of the prime motivations to change a car is when finance repayments can be continued at the present level with the owner simply stepping into a newer car. Waiting any longer will mean that the current car will contribute less and less to the cost of change – necessitating either a higher monthly finance payment, a cash injection or a lengthening of the agreement. e-CRM enables the supplier to monitor the value of the current car and to advise the owner proactively when that point has been reached.

So by using the car as the relationship interface, not only do manufacturers and dealers happily co-exist as a ‘service’ partnership for their shared customers, but the customers themselves have built an e-wall behind which they can exert their mastery of all the relationships which impinge on their property.