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CARS PUT NEW FAITH IN RELATIONSHIPS;INTEREST INCREASES IN NON-MEDIA EFFORTS FOSTERING CUSTOMER LOYALTY

By Published on .

Relationship marketing, where companies leverage data from customers to increase loyalty and profits, is gaining momentum in the auto industry.

New technologies, more product equality and fickle consumers have sparked its growth among carmakers, experts say.

Rich Hebert has observed the growth first hand at Sky Alland Marketing, a relationship marketing consultancy where he is president. Mr. Hebert said his roster of automakers has grown from the first car client, Mitsubishi Motor Sales of America in 1989, to eight.

SPENDING ON THE RISE

Carmakers' relationship marketing spending has risen since 1993, he said, noting, "They're starting to divert some significant dollars from the mass-media budgets to these one-on-one marketing efforts."

Auto clients are shifting up to 10% of their annual media budgets to relationship marketing, Mr. Hebert said.

That translates to some beefy budgets for relationship marketing, considering it's not unusual for an automaker to spend $100 million to $200 million annually on measured media.

But even as the dollars pour, there's some difference of opinion about the definition of relationship marketing.

According to David Schmittlein, chairman of the marketing department at the University of Pennsylvania's Wharton School, relationship marketing is the eliciting of information from existing customers on an ongoing basis, and using the data to improve customer service and build meaningful relationships.

However, Sky Alland's Mr. Hebert considers prospective buyers part of the relationship marketing mix.

CHEAPER TO KEEP CUSTOMER

Auto marketing executives and consultants agree a prime motivation for relationship marketing is that it's cheaper to keep an existing customer than find a new one.

Auto consultant David Kalmus, who heads market researcher Questar's new Los Angeles office, estimates a carmaker spends $1,500 to $2,000 to attract a new buyer vs. a couple of hundred dollars to keep one.

New technology is giving marketers access to more specific customer data than traditionally was available, Mr. Schmittlein said.

"The car manufacturers are catching up with initiatives tried by service companies and financial service providers, in particular, to maximize the use of the information they have," he said.

He cited Chrysler Corp.'s Jeep brand and General Motors Corp.'s Saturn among the best examples of auto relationship marketing.

JEEP WEEKENDS

Jeep, for example, in 1995 started an annual weekend event for owners in Colorado called Camp Jeep. On-site events included an off-road four-wheeling expedition, classes in four-wheel driving, live entertainment and talks with engineers, said Lou Bitonti, direct marketing executive at Jeep.

Customer input has convinced Jeep next year to add children's activities and environmental speakers.

When attendees register at any Jeep events, they are given questionnaires, allowing Jeep to create a database.

"The events are opportunities to meet the corporation one-on-one and put a face behind the world of Chrysler," Mr. Bitonti said.

One of the most common responses of Camp Jeep attendees, he said, is "they can't believe a company would spend the time and money to send engineers and people out there to talk to them."

ADDING VALUE

A vital part of relationship marketing is adding value for the customer, said Richard Barlow, president of Frequency Marketing. "Then the customer is willing to volunteer all kinds of information," he said.

But customer news-letters have been over-used by carmakers and other companies, Mr. Barlow added.

A "plain vanilla newsletter" isn't effective, he warned, "unless you give owners ways to interact with you."

Mercedes-Benz of North America gets owners to interact by giving them cameras. A 5-month-old program welcomes new owners by sending them a camera and asking them for photos of their car and its involvement in their lifestyles, said Al Weiss, director of national marketing communications.

Mercedes then develops the film free for them and, with permission, keeps some photos.

"You'll start to see these photos in our relationship marketing pieces to show there is a Mercedes lifestyle," Mr. Weiss said.

In the past, the carmakers left relationship-building to their dealers, Mr. Kalmus said.

"The car companies never did it before because they never wanted to deal with the customer," he said. "Now, they realize they can profit by it, so they're paying attention to it."

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