THE TUG OF WAR FOR CUSTOMER LOYALTY IS intensifying. Dealers and manufacturers, traditional allies in that contest, face new challenges to their "ownership" of the customer. Those challenges come from on-line buying services (OBS) and consolidators in this wired, mega-store world. Each of the four has good reasons for wanting a bigger piece of not just market share, but mind share - brand loyalty. No one wants simply to sell a car anymore, because the relationship with a customer ends up being profitable in many other ways.
What's brand got to do with it? The eventual winners in this battle will be those who create the strongest brand. But whose brand is the consumer really buying? The manufacturer's? The dealership's? The on-line intermediary's?
Product parity is blurring any differences between products in consumers' minds. How much difference in quality is there between a Toyota Camry and a Honda Accord? Does one hold its re-sale at a significantly higher level? Not really. Consumers rate them as equals in most categories; therefore, they can't go wrong with either. Most automobiles are becoming commodities. It's a view promoted by the consolidators who say, "They're all good cars, take your pick."
Dealerships also are becoming indistinguishable from each other. If a prospect visited the three nearest dealerships selling the same makes, would she be able to recall easily which was which? Unfortunately, probably not. Dealerships are in danger of becoming commodities, too.
In this complex world, brands still simplify decision-making for consumers. And you can charge more for great brands. I don't buy the argument that Nikes are built better than Reboks; yet I and many others pay more for the "swoosh."
A great brand also is something consumers experience. It allows them to make an emotional connection to the product or service. Great brands often have the adjective "love" attached to them, as in, "I love staying at Ritz Carltons." It doesn't have to be a high-end product to have an emotional attachment. Remember the furor when Coca-Cola, a hall-of-fame brand, tried to change its patented formula?
Brand payoffs In the new world of automotive sales, however, the stakes go well beyond purchase decisions. Our four contenders want more than a sale.
* Dealers. Most dealers are hoping for organizational loyalty from their purchasers. They hope to retain post-purchase service work, which ultimately will lead to the next sale. Their brand is the name on the front of the building.
* Manufacturers. Manufacturers fight for product loyalty. The greater the product loyalty the less they need to spend on advertising and marketing. For years, Saturn epitomized product loyalty. The manufacturer also wants more customer ownership so they can gather more data on the end user. This data leads to everything from more efficient marketing and to better product designs. Brand protection is the big reason manufacturers are becoming more involved in how the vehicle is retailed. Customer treatment by the retailer is essential for manufacturers to pay off their brand promise - one reason the Lexus brand is so strong in the crowded luxury market.
* Consolidators. Consolidators try to control the consumer through "clusters," which are product-neutral. Consolidators don't care what product a consumer buys as long as it is one they offer. Clusters try to offer consistently superb customer treatment to obtain loyalty. They also offer amenities like frequent flyer points and money back guarantees to enhance loyalty.
* On-line Buying Services. The new kids on the block. They carry no baggage, so they have the best opportunity to establish clear brand promises. Most of them take the position of trusted intermediary with only the well-being of the consumer in mind. If they achieve this position of trust, what additional services can they then offer? The potential of having an extensive roster of customer services is where their brands will pay off. And let's not forget the value of customer data, and its potential sale, which is becoming a gold mine for Internet companies. In this wired world, understanding purchase behaviors could be as good as gold.
Let the games begin It is clear that each entity has a huge stake in taking ownership of the customer.
In essence, when the transaction ends, the relationship begins. How these diverse groups sort out the "whose customer is it?" conundrum is anybody's guess. New alliances are likely to emerge.
New battles are likely to be fought among contestants who will draw lines in the sand and defend territories.
Some will join the marketing wars, committing the resources needed to create a distinctive brand.
Others may opt out of those high-stakes battles and settle for being essentially the subsidiaries of those who join the fray - and hope they align themselves with a winner.
Dealers who are concerned only with a sale and not their brand have already opted out. Whatever the choice, be aware that the rules of marketing have not changed, but the stakes have.
Mark Rikess is president of The Rikess Group, an automotive training and consulting firm. To read his previous Ward's Dealer Business articles on-line go to www.rikessgroup.com.
