Delivering Results in Automotive Direct Marketing

Transcription

1 DIRECT MARKETING New Rules of Engagement Delivering Results in Automotive Direct Marketing A white paper by Carlson Marketing a division of Carlson Marketing Worldwide

2 New Rules of Engagement: Delivering Results in Automotive Direct Marketing Contents: Overview Saturn VUE: New Entry in Crowded Market...4 International Truck Takes Customer Relationships to the Next Level...6 Subaru Moves into Premium Brand Territory...8 Conclusion...10 D id you know that, according to a recent Vertis study, 73% of adults who plan to buy a new vehicle respond to automotive direct mail? For this reason, direct mail remains a critical marketing tool for the automotive industry. And, with increasing global competition, it s more important than ever to know your prospects and to segment them by needs in order to develop personalized communications programs. But customer touch points are changing. Two thirds of adults who plan to make a new vehicle purchase now do research online. And so, part of the challenge for direct marketing professionals in the automotive industry is to find the right media mix through which to deliver their message. What may be effective with one customer group may not work with another. This white paper examines three Carlson Marketing case studies that illustrate best practices in automotive direct marketing. In the first case, Saturn needed a campaign to launch its Saturn VUE, a new entry in the crowded small SUV market. And so, a lengthy dialogue marketing campaign was launched via direct mail and supplemented by and In Brief a dedicated Web site. Using a curriculum Learn about best practices in automotive direct marketing through these three cases: approach consisting of phased communications and avoiding rigid cut-off dates for campaign is used to launch a new entry in Saturn VUE A lengthy dialogue marketing the crowded small SUV market. prospects responses, this campaign resulted in significant sales. captures valuable customer data used International Truck A pilot program In the second case, International Truck to create an on-going, personalized communications program wanted to better understand its private carrier owners in order to build an ongoing, launched using sophisticated customer Subaru A redesigned line is successfully segmentation and the right incentives. personalized communications program with this customer group. In response, a direct mail pilot program was launched. This consisted of a survey to be submitted online or by mail, a prototype newsletter, and a test incentive for a portion of the target audience. This campaign had a 5.82% response rate and became the foundation for ongoing communications with this customer group. In the third case, Subaru wanted to announce its redesigned Outback and Legacy lines to current owners and prospective buyers. Using sophisticated analytics to segment prospects by needs and behaviors, a multiple version direct mail campaign was developed to drive traffic into dealerships. The campaign resulted in 11,569 owner test drives and 3,042 prospect test drives. Almost 12% of the owners who took a test drive purchased a vehicle and 5.1% of test driving prospects made a purchase. Subaru realized significant sales from this campaign. In each of these cases, the right offer had to be made to the right segment of prospects or customers through the right communications channels. And, the value proposition was personalized based on customer intelligence. The result was effective engagement. 2

3 2002 Saturn VUE: New Entry in Crowded Market The Challenge of the Long Lead Campaign This campaign had three primary objectives: Generate 100,000 hand raisers Qualify 20,000 serious prospects Drive serious prospects to dealerships as product becomes available. The goal of the campaign would be to provide vehicle product information in phases in order to sustain the interest of the hand raisers until the VUE arrived at dealerships. Saturn faced two major challenges when it introduced the 2002 Saturn VUE. First, the small SUV category was very crowded and competitive. Second, this was Saturn s first entry in this category. As a result, Saturn knew that it needed to launch a sustained campaign prior to the VUE s introduction that would generate excitement and interest in its new product. Saturn turned to Carlson Marketing for help with this challenge. Prospects began hand raising in 2000 for product information on a vehicle that would not be available until fall And so, it was decided that this situation required a long lead program to keep prospects in the purchase funnel until the VUE was available. A dialogue campaign would be developed starting with the 15,000 hand raisers who expressed an interest via Web or through BRCs (Business Reply Cards) at events. No list rentals would be involved. As new hand raisers expressed an interest in the VUE, they would be contacted. The goal of the campaign would be to provide vehicle product information in phases in order to sustain the interest of the hand raisers until the VUE arrived at dealerships. Direct mail pieces that served as the core of the campaign would be supported with , depending on customer preference, and updates via the Saturn.com Web site. This long lead campaign would start in November 2000 and end in April The challenge of engaging prospects over this lengthy period of time could not be underestimated. The VUE story would have to be relayed in a compelling and carefully orchestrated manner. The VUE Story Unfolds in Stages The campaign started with the vehicle name announcement in November The goal was to communicate the name of the VUE to all existing hand raisers and internal Saturn team members. The name was selected in part to emphasize that this mini SUV was designed with the customers point of view in mind. This initial mailing consisted of a 4 paneled piece outlining the four content buckets that would be used to tell the story of the VUE in greater detail throughout the campaign: Inside (interior features), Outside (exterior features), Safeside (safety features) and Funside (performance related features). The mailing featured three dimensional photos of the vehicle and the name, VUE. The use of 3D supported the VUE theme A new perspective on the SUV. The creative of this piece was designed to set the tone for the pending campaign. The name announcement was followed by the core four-part campaign in which each part described in detail one of the four content buckets mentioned above. Given the need to engage prospects over a substantial period of time, the creative elements of this campaign would play a crucial role. Each piece in this dialogue campaign was designed in consistent format (same look and feel, paper stock and high print quality) and would include an engaging interactive component. The look and feel of the direct mail pieces was mirrored at Saturn.com, demonstrating creative integration in all media. As noted above, 3

4 The direct mail pieces were supported by (where was a communications preference) and Web updates. the direct mail pieces were supported by (where was a communications preference) and Web updates. There was a minimum of three weeks between contacts. The first piece, a 4-panel brochure titled On the Outside, started mailing in February This described the vehicle s exterior features including available paint colors. A personalized letter from the Saturn VUE launch team was included. This also included an interactive component consisting of a pull out card containing paint chips with the available exterior colors. Prospects were asked to visit Saturn.com for updates. This first phase of the core campaign continued for the next 12 months. As new hand raisers were identified, they were mailed this first piece and added to the hand raiser database to receive subsequent pieces. The second phase of the campaign, On the Inside, began in May 2001 and continued through February This consisted of a 6-panel brochure designed to communicate the interior features of the VUE. It included a lenticular card to demonstrate the interior cargo and seating features. Once again, a personalized letter directing prospects to visit the Saturn Web site for future updates was included. VUE product information was communicated in phases to sustain interest. The third phase of the campaign, On the Safeside, took place from August 2001 through February This continued the customer dialogue by providing hand raisers with an overview of the VUE s safety features. Remaining true to the overall creative strategy, the brochure included a pullout acetate sheet that revealed a crash test dummy with safety feature captions. As in the previous mailings, prospects were directed to Saturn.com for updates. The fourth phase, On the Funside, began in November 2001 and continued through February This focused on the performance features of the VUE engines, powertrains and all-wheel drive. This included a 6-panel brochure and a replica Saturn lightship inflatable toy. While the three prior mailings drove prospects back to Saturn.com and did not capture any further lead information, the fourth mailing included a personalized letter in the 4

5 Saturn VUE campaign exceeds expectations The campaign generated 158,000 leads or hand raisers, 58% over goal 13% serious prospects 13% of VUE dialogue leads identified themselves as serious prospects by requesting retailer contact. 6.26% buy rate form of a BRC. The BRC allowed hand raisers to further qualify themselves as serious VUE prospects by requesting more information and/or a retailer contact. Prospects mailed the BRCs back to program headquarters. It was determined in August 2001 that the goal of 100,000 leads would be exceeded. As a result of the number of overflow BRCs, a combination mailing was planned and took place from December 2001 through February This included a 4-panel brochure that included a high level overview of the Saturn VUE content buckets. This piece reflected the same creative theme and print quality as the prior pieces. This also contained a BRC that hand raisers could mail back to program headquarters to request more information and/or a dealer contact. The final phase of the VUE dialogue campaign consisted of a package mailed out to all handraisers who further qualified themselves by returning a BRC. The package contained a Saturn VUE brochure, price sheets and the location of their nearest dealer. The contents were in a custom designed folder that matched the overall creative theme of the Saturn VUE dialogue campaign. The personalized cover letter was addressed from the local dealership and invited prospects in for a VUE test-drive. During the final phase, hand raisers that did not qualify themselves as serious prospects by completing a BRC received a jumbo postcard. This served as the final mailing announcing the arrival of the VUE at retail facilities and inviting prospects for a test drive. Again the creative mirrored that of the overall campaign. Sustained Dialogue Turns Prospects into Customers Of the 62,966 new Saturn VUEs sold in the first year, the dialogue universe generated 3,940 sales or a 6.26% buy rate. BEST PRACTICE TIPS from the Saturn VUE Campaign Communicate through preferred customer channels Implement a curriculum approach whereby staged communications engage prospects over time Avoid rigid cut-off dates for responses. A collapsed cadence allows prospects to respond at any point in a campaign. The 2002 Saturn VUE marketing campaign exceeded expectations. The campaign generated 158,000 leads or hand raisers 58% over goal. Thirteen percent of VUE dialogue leads identified themselves as serious prospects by requesting retailer contact. Of the 62,966 new Saturn VUEs sold in the first year, the dialogue universe generated 3,940 vehicle purchases or 6.26% buy rate. This dialogue marketing campaign included several best practice elements. First, it took a curriculum approach whereby communications occurred in stages and used a consistent approach and design. Each communication built on the information that preceded it. The interactive component accompanying each piece reinforced the key message of a given mailing in a compelling manner. The combination of the phased communications and interactive element engaged prospects and made them anticipate the next communications. Secondly, prospects were asked if they would like to receive updates via or the Web. And so, these communications could be based on customer preference. Thirdly, the campaign employed a collapsed cadence whereby a prospect could respond at any point during the campaign and receive some type of communications. Because there were no rigid cut-off dates during the course of the campaign, it is less likely that prospects were missed. This type of responsiveness to varying customer situations is the hallmark of a truly customer-centric approach. It underscores the importance of selling to one customer at a time. And in the case of the 2002 Saturn VUE campaign, this approach led to an overwhelming success. 5

6 International Truck Takes Customer Relationships to the Next Level Laying a Foundation for Improved Customer Communications This direct mail program had three primary objectives: To increase customer engagement in order to build brand loyalty To capture customer information in order to create an ongoing, personalized communications curriculum To test a $50 incentive offer to complete the survey vs. a non incentive offer. The direct mail pilot program was developed to improve the dialogue with customers and to capture information about their needs and preferences. In 2004, International Truck and Engine Corporation sought to better understand the needs of its valued customers in the private carrier market. These customers were owners of small to medium size trucking companies. International Truck wanted to build loyalty among this group of customers in order to be viewed as a trusted supplier. But, it was lacking the customer information needed to sustain an on-going and personalized communications program. And so, International Truck turned to Carlson Marketing to develop a direct mail pilot program in order to improve its dialogue with these customers and to capture information about their needs and preferences. To facilitate this, Carlson Marketing developed a 70-question survey that would be mailed to these customers. The survey was accompanied by a preview of a new customer newsletter covering trucking industry trends and special offers from International Truck. Customers had the option of completing the survey online. A follow-up reminder postcard was to be mailed two weeks after the survey mailing. The object was to see if an incentive would yield a higher response rate among this group of customers. There were several challenges to be met in this campaign. First, given the mass of business to business communications that inundates the desks of fleet owners on a daily basis, the outside packaging would need to be compelling in order to get the customer s attention. Secondly, once the mailing was opened, the customers needed to be quickly convinced that the survey would not take long to complete and more importantly that they, as well as International Truck, would derive value from completing the survey. Designing a Survey That Engages The campaign was centered on the comprehensive fleet owner questionnaire. This 70-question survey was designed to be completed in 10 minutes. Customers were asked to provide information on a range of topics including their industry and fleet specifics, business needs and preferences, overall experience with International Truck, and personal communication preferences. The survey was printed on a 3-panel BRM (Business Reply Mail) card. Customers who opted to complete the survey online were directed to a dedicated Web site. The survey was mailed to 2,800 fleet owners in the medium/heavy duty classification in December It was inserted in a 9x12 black envelope with nothing on the outside except for a large International Truck logo and the personal message Your Opinion Counts. The size of the official looking envelope would make it easily stand out among other pieces of mail. Along with the questionnaire, customers received a short, personalized letter and a preview of a customer newsletter focusing on technology, operations and legislative 6

7 issues that affect the private fleet industry. Customers were told that if they completed 125 respondents mailed completed surveys and another 38 completed the survey online. This clearly shows that this group of customers prefers printed surveys. the questionnaire, they would automatically be registered to receive a free copy of future newsletters. Half of the target customers received a second version of the mailing with an offer of a $50 gift card that could be redeemed at Barnes and Noble, The Home Depot or Staples. Therefore, customers completing the second version of the survey would receive this gift card in addition to the free newsletter. Each survey was assigned a unique tracking number so that survey results could be compiled by version. Customers completing the survey online were required to input their tracking number in order to access the survey Web site. Surveys were to be completed by January 21, A reminder postcard was sent out two weeks after the initial mailing to remind customers to complete the previously sent survey. As By the Numbers There was a 298% lift for the incentive mailing vs. the mailing with no monetary incentive. with the first mailing, there were two versions of the postcard one with the $50 incentive and one without. Once the surveys were received, a personalized thank you letter Target Audience Quantity Survey Response with a surprise $100 International Truck Dealer gift certificate was Mailed Redemptions Rate mailed to all respondents. This conveyed, yet again, to respondents Total Mailing Owners with 2, overall 5.82% that they were highly valued customers. $50 Incentive 1, % Valued Customers Respond Owners without $50 Incentive 1, % BEST PRACTICE TIPS from the International Truck Campaign Use incentives to motivate customers to respond to surveys Reward customer engagement Communicate through customers preferred communications channels This campaign had a stellar 5.82% response rate (both mail and Web). Of the 163 respondents, 125 mailed completed surveys and another 38 completed the survey online. This clearly shows that this group of customers prefers traditional printed surveys. The version of the survey with the $50 incentive had the best response rate: 122 respondents had received the incentive offer and 41 had not. Thus, there was a 298% lift for the incentive mailing vs. the mailing with no monetary incentive. And so, what are the best practice takeaways from this campaign? First, multiple incentives were used to motivate customers to complete the survey. Everyone who completed the survey was automatically signed up to receive International Truck s newsletter. In addition, a unique customer number was assigned to each survey in order to test a monetary incentive with half of the target group. And, International Truck learned that monetary incentives are effective with this group. Second, customer engagement was rewarded customers who completed surveys received an unexpected $100 thank you gift certificate. This also served to continue the customer dialogue. Third, customers were given the choice of completing the survey in the format that they preferred electronic or hard copy. As a result, International Truck learned that this group overwhelming prefers to complete hard copy questionnaires. Due to these best practice elements, the direct mail pilot program was a resounding success. And, International Truck secured the customer information required to develop an on-going, personalized communications program for its valued customers in the private carrier market. Knowing the needs of a firm s most valued customers is the key to developing a customer-centric, 1to1 organization. 7

8 Subaru Moves into Premium Brand Territory Launching an Enhanced Brand This campaign had three primary objectives: Create awareness for the redesigned Subaru line among current owners and targeted prospects through customized mailings Sustain ongoing dialogue via Web with in-market prospects researching a purchase Drive qualified showroom traffic to Subaru dealers to test drive and ultimately, purchase a vehicle Why 25? Carlson Marketing determined that $25 is enough of an incentive to get interested buyers to change their behavior. In their experience with dealer test drive incentives, if your incentive greatly exceeds $25 a number of people will simply bother the dealers for the freebie with little intention of purchasing a new car. In launching the redesigned Legacy and Outback in 2004, Subaru sought to move beyond its traditional base and to establish itself as a premium brand. The refined styling of the new design was intended to strengthen this brand long associated with high quality engineering but bland exteriors. Finally, design was on the same par as engineering. Subaru turned to Carlson Marketing to develop a direct marketing campaign that would create awareness for the redesigned product line among current owners and targeted prospects. The bottom-line objective of this campaign was to encourage owners and prospects to test drive and, ultimately purchase a new vehicle. An extensive direct mail campaign was planned that would be rolled out in different versions over a six week period. Conquest customers would be offered a $25 test drive incentive. Current owners would receive a special finance offer. Accompanying the direct mail campaign was a comprehensive dealer support program. Dealers would have to opt in to the program and commit to the cost of the test drive incentive. The challenges involved in this campaign were numerous. First, there needed to be careful selection of conquest lists based on a yet to be developed model of the most likely future Subaru customers. Secondly, it was determined that the test drive incentive needed to be supported by 75%-80% dealer participation. And so, a strong dealer solicitation and support program needed to be mounted. Thirdly, the Subaru Field Sales Force needed to be motivated and mobilized to help promote the incentive program to dealers. Right Offer, Right Prospects First, Engage Dealers and Field Sales Before prospects could be contacted, dealers had to opt in the program and commit to pay for the test drive incentives. Each dealer was mailed an enrollment kit consisting of a personalized letter outlining the program, a program overview brochure and an enrollment form. Once dealers enrolled in the program, they received a distribution manuscript that included name and contact information for the targeted prospects in their area. These also included follow-up postcards that dealers could personalize and send out based on the manuscript. Test drive activity would be tracked on an internal Web site. Finally, an 800 number was provided to handle dealer inquiries. It was important to enlist the aid of the field sales reps in promoting the direct mail program to dealers. And so, a special dealer enrollment contest was developed. The contest would run during the dealer sign-up period in February and March. Each sales region would compete for one grand prize. The winner in each region would be the team member who achieved the greatest percentage of dealer enrollments in a given territory. The grand prize was a four day/ three night ski vacation for two at Telluride in Colorado. 8

9 Know Your Prospects Subaru campaign yields strong results The dealer participation rate of 98% in the test drive was significantly higher than the 75-80% goal. 11.8% 11.8% of the owners who took a test drive purchased a vehicle. 5.1% 5.1% of test driving prospects bought a vehicle. BEST PRACTICE TIPS from the Subaru Campaign Develop different offers for different customers using customer segmentation Communicate through preferred customer channels Engage field sales and channel partners One of the most critical elements of this campaign was the selection of target prospects. A total of 1,860,564 prospects were targeted. Among current owners, 575,600 most likely to purchase prospects were selected using the Subaru owner database. That was the easy part. It would prove slightly more daunting to select the remaining prospects for the Legacy and Outback conquest lists. First, the existing Subaru owner database was used to build a profile of households likely to buy a Subaru. This was done using Personicx tools that segment households by life stages and buying behaviors. The Personicx model was then used to select prospects from Acxiom InfoBase, L.L. Bean Catalog buyer database, and nine Subaru affiliate lists including the Professional Ski Association, the National Ski Patrol, and the Mountain Bike Association. Added to this were prospects from the AutoBuyers Postal Masterfile who had expressed an interest in one of the vehicle models. The mailing included a personalized letter communicating model-specific features and benefits, an incentive, and a purchase offer. Current owners received a time-limited special finance rate as an incentive. There were two types of test drive incentives for prospects from the conquest lists. L.L.Bean customers received a $25 L.L.Bean gift certificate. In addition to driving traffic into showrooms, this served to strengthen the Subaru/L.L.Bean affinity. For the other prospects, a $25 co-branded Subaru/Visa stored value card was selected. Accompanying the letter was a test drive voucher on a BRC with a unique customer code used to validate the test drive at the dealership. In addition to the letter and test drive voucher, the mailing included a model-specific brochure that varied depending on the prospect s profile, and an insert offering a 3 year/36,000 mile free maintenance purchase incentive. The model-specific brochures featured high-end photography and different themes (outdoor activities, family lifestyle etc.) depending on the customer profile. Prospects still researching their purchase were directed to a special corner of Subaru.com containing exclusive articles and were offered the opportunity to opt in to future electronic or postal communications from Subaru. The mailing occurred in stages over a six week period starting in May 2004 and ending in June. Once the test drives got underway, a postcard reminder was sent to prospects who took a test drive but who did not purchase. This reinforced the 3-year/36,000 mile free maintenance purchase offer. Smart Customer Segmentation and High Dealer Participation Lead to Success The campaign to launch the re-designed 2005 Outback and Legacy lines yielded strong results. First, the dealer participation rate of 98% in the test drive was significantly higher than the 75-80% goal. Results from test drives were tracked using the tracking number on the test drive vouchers. The campaign resulted in 11,569 owner test drives and 3,042 prospect test drives. Almost 12% of the owners who took a test drive purchased a vehicle, and 5.1% of test driving prospects bought a vehicle. This program generated significant sales and ROI for Subaru of America. There is much to be learned from this case. The development of customer models and the use of segmentation tools to refine the conquest lists produced strong results. Different 9

10 The high dealer participation in the test drive incentive stemmed from the comprehensive support program versions of the mailing went out to different prospect groups based on needs and behaviors. The high dealer participation in the test drive incentive stemmed from the comprehensive support program it was painless for dealers to participate - and from the engagement of field sales in support of this program. Lastly, prospects still researching their purchase, instead of being dismissed, were directed to a special section of Subaru.com with content tailored to move them towards a purchase decision and to facilitate future communications. All communications in this campaign were personalized to meet the needs of different prospect groups and delivered through preferred channels. This 1to1 strategy quickly turned highly targeted prospects into Subaru customers. Conclusion Engage the Individual not the Masses Regardless of the challenge, a deeper understanding of each individual customer was critical to the success of each of the above campaigns. This allowed the value proposition to be personalized, to varying degrees, based on customer needs. The results speak for themselves. Today, in order to get, keep and grow customers, direct marketers must ask themselves if they are engaging the individual or the masses. The answer may well determine the success or failure of your direct marketing programs. About Carlson Marketing Carlson Marketing is a recognized global leader in Relationship Strategy and Marketing, and has built a core set of employer offerings around building a culture of innovation. We understand that a company s employees and customers are smarter, more demanding and more expensive to engage and retain than ever before. It is the quality of the relationships built with employees and customers across all touchpoints that ultimately drives success or failure for a company. Carlson Marketing helps global Fortune 500 clients such as HP, Oracle, Coca- Cola and Bank of America solve their critical business challenges and increase Return on Customer SM. We design integrated strategies and programs that build better relationships with the audiences that clients depend on for their success: customers and prospects, employees and channel partners. We understand that in today s increasingly complex marketplace, one thing is clear: Relationships always drive business results. It is that insight which has led Carlson Marketing to develop a unique set of integrated capabilities with a global footprint: Training and Learning custom solutions that educate, drive behavior change and elevate the knowledge and expertise of employees and channel partners. Employee Engagement Programs to align the internal organization and its channel partners with the business goals and its external customers. Meetings and Events to deliver the differentiated experiences that motivate both employees and customers to create a true experiential event. Loyalty Marketing programs to drive repeat purchases, prevent lapse or increase life time value of customers, partners and employees. Decision Sciences to derive insight, segment, model, target and measure internal and external marketing program effectiveness. 1to1 Direct Marketing to acquire and manage the right kinds of customers through the lifecycle online and offline. Carlson Marketing is ranked by Advertising Age magazine as the largest marketing services agency in the US and the 10th largest marketing organization in the world. It is one of the major operating groups of Carlson Companies, a global leader in the marketing, travel and hospitality industries. Ranked among the largest privately held corporations in the United States, Carlson Companies is based in Minneapolis, Minnesota, USA. Carlsonrelated brands and services employ about 190,000 people in more than 145 countries. 10