The sharing economy is on the rise.
The popularity of services such as Uber, Airbnb and Zipcar is a clear demonstration that our attitudes to ownership are evolving.
Younger generations – millennials and Gen Z - appear to be less concerned with owning something for owning’s sake, and more with utility.
Owning a car is no longer a given.
The culture of ownership is shifting among younger consumers, who value flexibility and function over brand and status.
The proliferation of car sharing schemes mean that – for people living in urban areas, at least – car companies will have to work to persuade people that car ownership is the right choice.
This means that car manufacturers can’t rely on a quality product and a good price alone to guarantee sales.
There’s a reason that car brands are among the highest-spending on marketing and advertising. Customer loyalty is harder won than ever before.
While luxury car manufacturers often have the hook of desirability, other brands might distinguish themselves through utility or price. None of those are enough to buy loyalty from a customer.
Loyalty to a car brand is based in large part on our experience with that brand, not just with the car itself.
That starts (but doesn’t end) in the showroom.
The initial greeting, the physical environment (even the coffee), and the collection service – the complete experience of buying a car should be a positive one.
The experience doesn’t end there. Aftersales support and contact is every bit as important.
Even as a dealership is completing a car sale to a customer, they should be thinking about how to make sure the customer comes back for the next purchase, even though that might be years down the line.
Past purchase is an important factor in future buying choices. That means taking care of the customer after the sale.
Taking the hassle out of car ownership is an obvious step.
Aftercare programs, benefits such as free oil checks, a year’s tax or breakdown cover are fairly standard offers these days.
They’re perks that people have come to expect as part of the deal.
Telsa, for example, has an “informaloyalty” program, where it uses the data generated by drivers and the cars they use to provide bespoke upgrades to its cars.
It’s a largely silent process, but it makes the driver’s life easier by creating an experience that meets their needs.
They’re a good start, but there’s a fundamental flaw - they focus on supporting when your car goes wrong, rather than on building loyalty to the brand.
They don’t sell the dream, the aspiration of an ad campaign.
Loyalty programs on the other hand should make your customers feel part of an exclusive club, and that they made the right choice in buying the car.
They should help sell that dream.
That might be reinforced through aftersales experiences or driving days, by giving them access to an owners’ club with a benefits package that relates to driving, or inspiring them with ideas for a driving holiday.
Creating a program of multiple contacts with customers should make them feel that their car is a pleasurable place to be, rather than just a functional necessity.
The airline industry has successfully built loyalty programs through points, air miles and collaboration with other related brands, to turn air travel into something that isn’t just functional, but can be rewarding.
While the purchase patterns for buying cars are very different from air travel, there are lessons to be learned here. The brand experience matters.
Regular contact matters so that when a customer is ready to trade up or buy a new car, they return to your brand.
Creating a loyalty ecosystem so that they are invested in the brand has huge value. If you’re a regular traveler with BA, you don’t want to lose all your points and benefits by switching. The same principle can be applied to car brands and rental companies.
Enterprise, for example, re-launched its programme using technology tailored to its industry but based on the functionalities used by frequent flyer programmes. It saw significant results by keeping the new programme simple.
Points can be applied against free rental days on any vehicle in the network, there are no blackout dates and points don’t expire. By keeping it simple and integrating all channels, Enterprise has seen a 24% increase in rentals and a 25% increase in revenues.
While renting is an option for many, especially when away from home, car manufacturers are facing a different challenge.
The benefits of car ownership must outweigh the negatives.
Loyalty programs should focus on positive lifestyle choices, rather than on support when things go wrong. And car brands should embrace new opportunities. Perhaps there are even opportunities in the sharing economy through branded car clubs, refunded parking fees in cities or other benefits?
They key here getting into the head of a new generation of customers.
What is the lifestyle they aspire to, and which of their dreams can you make a reality?
Author: Julian Bonnett, business development management, Comarch