Creating groundbreaking loyalty programs
Blog: Capgemini CTO Blog
In our first blog post, we highlighted the current status quo of CRM and took a glance into the future that will be characterized by a central unit within global CRM hubs, called the CRM Service Hub. Our second post investigated the combination of vehicle and customer data to create a true 360-degree customer view and our third article focused on the introduction of new sales models that disrupt the classical CRM.
The unfaithful customer
Car manufacturers are used to relying on a large and loyal customer base that often stays with their brand for many years. However, the dynamics in the automotive industry make customer loyalty an increasingly rare commodity for OEMs. Programs for securing loyalty must be rethought. Changing consumer preferences away from ownership to usage are served by new, alternative mobility models, such as subscription or sharing, as we have discussed in our previous article on the impact of new sales models on CRM. The global market size of subscription models is expected to grow with a CAGR of more than 40% until 2026. This will have a direct effect on customer loyalty rates. Automotive customers will be able to switch models and brands easily, which we expect to further raise customer churn. Car manufacturers are urged to leave their comfort zones and start to fight the battle for customer loyalty with new concepts that exceed any expectation. At Capgemini Invent, we believe:
Phygital and community-oriented loyalty programs are the key to leveraging customer lifetime value in light of the fragile user relationship.
Rethink loyalty programs – Implications for CRM
A seemingly obvious solution for retaining customers is launching loyalty programs. However, the old scheme of rewarding one-time purchases with impersonal monetary benefits like discounts and free services is interchangeable and may not be viable by 2030. An HBR survey among senior executives of different industries revealed that only 42% consider their loyalty program to be effective, while 72% rate customer loyalty as a top 5 priority of their organization. In order to truly build a sustainable and lasting relationship with customers, OEMs must rethink loyalty programs and align these with tomorrow’s mobility needs and consumer preferences. Creating and steering these programs will become an integral part of each OEM’s customer relationship management (CRM).
In this part of our blog series Future of CRM, we outline some of the decisive factors on how to design loyalty programs that provide lasting and value-adding experiences that leverage the customer lifecycle even in times of fragile relationships.
- Superior loyalty programs are phygital and playful
Future-ready loyalty programs need to be offered digitally. Real-life experiences such as driving, sport and hospitality events must be accompanied by digital touchpoints. This can be achieved by an integration with existing smartphone and in-car apps, which are already offered by most OEMs. Members could thus sign in for events, receive preliminary information and provide feedback afterwards. OEMs are thereby enabled to drive targeted communication and smart data capturing as well as increase the conversion through physical events.
Furthermore, a digital platform could provide members an additional interaction channel with the brand. Accordingly, OEMs are enabled to easily embed loyalty programs within the existing CRM landscape in order to distribute campaigns, capture leads and resolve cases via this digital touchpoint.
A further crucial factor to ensure loyalty with digital applications is their gamification. Several automakers are recruiting game developers to create easy and playful user journeys for their mobile apps and infotainment systems. This should also be taken into account for any loyalty application.
- Address the right topics
Since the demands of automotive customers will be changing dramatically between now and 2030, the content of loyalty programs should adjust as well. Consequently, OEMs need to build loyalty programs around the topics that move the automotive customers of the future.
According to the findings of the Capgemini Research Institute, 79% of consumers make purchasing decisions based on sustainability. For the automotive customer, this clearly underlines the importance of emission-free mobility. Additionally, one-time car purchases are dropping in relevance while subscription and sharing options as well as functions on demand (FoD) for automated driver assistance systems are raising the customer’s awareness.
For designing powerful loyalty programs this indicates new potential use cases such as inviting VIP customers to sustainability-related events, like Formula E and Extreme E, and rewarding heavy usage of autonomous driving functions with upgrades on their subscription model.
- Establish Communities to retain and connect customers
Having established a digital platform for a loyalty program, OEMs have the opportunity to provide customer communities as an exclusive environment for their program members, where these can interact with each other and OEM representatives on mobility related topics.
This enables automakers to a achieve a much closer and more intimate customer relationship which makes communities highly valuable for CRM. By keeping an ear to customers’ needs, campaigns can be tailored much more closely to user preferences and sales opportunities can be detected for the Lead Management process. Case Management is likely to benefit significantly, since through these close customer interactions, potential requests and complaints can be captured and processed to be resolved quickly.
In our previous blog posts on the future of CRM we have introduced the CRM Service Hub concept, that centrally bundles CRM operations on behalf of NSCs and dealers to increase efficiency and ensure consistency. With regard to loyalty programs, the CRM Service Hub could become the central entity for steering and moderating customer communities across brands and markets. Potential tasks are providing adequate content for the members, moderating communication and further processing arising opportunities and requests.
Building the next generation loyalty journey
Having discussed several priorities for future-ready loyalty programs, which use cases could OEMs bring to life to sustainably excite and retain customers even in 2030?
Define the target group: Community-based loyalty programs have to ensure that members of one community have shared interests and preferences. Customers of electric hypercars might be more enthusiastic about performance and motorsport, while buyers and subscribers of vehicles with level 5 automated driving and new emission-free drivetrain solutions are likely to have a high affinity for sustainability and advanced vehicle technologies. Consequently, they could become part of a community based on the chosen model.
Set-up an exclusive environment: The loyalty program offers members a digital platform to where they can share expectations and experiences before and after the vehicle delivery. OEMs moderate the communication and provide corresponding content. In case program members complain about software breakdowns, the issue can be processed to case agents. Likewise, if users express the desire to have more advanced autonomous functions, this can be identified as an opportunity to offer an additional FoD.
Engage your members: The loyalty journey should also be enriched by a purpose-driven and playful benefit system. Thus, community members can participate in challenges for the most sustainable driving behavior, e.g., through charging the car from renewable energy sources and achieving the lowest energy consumption, which is rewarded with free charging. Communities also provide the opportunity for cooperative initiatives, where all members jointly aim for a certain driven distance to contribute to green projects, such as reforestation, ocean cleanups or building solar parks in development regions.
These exemplary use cases indicate how member-centric loyalty programs can realize value-adding and diverse experiences with vivid customer communities and joyful gamification.
Laying the foundation early is key to success:
In order to build groundbreaking loyalty programs, we recommend that you start putting the basic building blocks in place today.
ONE DIGITAL PLATFORM: Build the loyalty program around a unified digital touchpoint that is integrated in existing in-car or mobile apps thereby embedded into the surrounding CRM landscape.
COMMUNITIES: Provide an exclusive (digital) environment to get closer to your customers to better target campaigns, directly capture leads and quickly solve cases.
GAMIFICATION: Invest in competencies that know how to design playful user experiences throughout the entire loyalty journey.
CRM SERVICE HUB: Establish a CRM Service Hub to manage the entire background process from the initial content development, over community management to continuously reporting on the program performance. This also enables OEMs to host programs for different brands and different markets.
What is your view on the future of loyalty programs? Which priorities and which additional use cases do you see? We are looking forward to hearing your thoughts!
This blog has been co-authored by Thomas Ulbrich, Malte Völkoi and Steffen Schmelzeisen. Please get in touch if you have questions or need further information. We look forward to exchanging ideas on this particularly current topic.
Director, Customer Transformation, Capgemini Invent
Manager, Customer Transformation, Capgemini Invent
Consultant, Customer Transformation, Capgemini Invent