Strategic review in automotive wholesale

Sub-Part 3

CRM

Intellectual Capital
June 2007

Author(s):
Delete if Document Shared with Client

Armin Landgraf Jos Leijnse

Bas Hazelzet Hans-Christian Kühn

Bernard Hernandez Matthias Matt

Emmanuel Lenaerts Pieter Norga

Content

 Engagement Summary

 Approach & basic results

 Material/Methodologies for re-use

A.T. Kearney X/03.2007/26178d 2

Engagement summary

A.T. Kearney X/03.2007/26178d 3

 Engagement summary

Due to the independence of the topics we split the IC in

separate documents

Available IC documents & content : current document

Trends in the automotive wholesale and retail

26723d_Strategic review in automotive wholesale.ppt

Retail Business CRM Franchise

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Awareness Information Pu pha
phase phase
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• Designed framework for • Process review of • CRM framework • Understanding of

closed loop performance
management system
towards dealers
• Quick scan assessment
tool
26724d_Strategic review in
automotive wholesale_retail
excellence_final.ppt
marketing, pricing and
retail network
management
• FTE-Ratios for functions
within automotive
wholesaler
26725d_Strategic review in
automotive
wholesale_business
excellence_final.ppt
franchise definitions
• CRM Assessment tool
• Development of a
franchise framework for
the automotive industry
• Analysis of the
automotive value chain
dynamics to determine
feasibility
26726d_Strategic review in 26727d_Strategic review in
automotive automotive
wholesale_CRM_ wholesale_franchise_
final.ppt final.ppt
A.T. Kearney X/03.2007/26178d 4
 Engagement Summary

For a national car importer we developed optimization

opportunities towards business excellence

Automotive wholesale CRM review

Client Situation Approaches/Tools

• National car importer of around 120.000 units,
generating net revenues of around 2.5 bn. €
revenues and employing around 500 FTE
• No overall CRM strategy existed to guide
customer related activities and improvement
efforts
• Project management showed improvement
potential
• Current CRM capabilities were very limited. Only
~25% of the investigated capabilities are
currently in place
• To develop a new CRM strategy we performed
an intensive assessment of the CRM
capabilities
• Inventory generation of current CRM related
projects
• Assessment of current CRM capabilities
with CRM assessment framework
• Definition of CRM vision and strategy for a
state-of-the art CRM considering customer
needs and business requirements

Results
• Detailed description and analysis of current CRM capabilities
• CRM vision and strategy for a state-of-the-art CRM
• Improvement opportunities and concept to leverage
• Implementation roadmap

: Merchandise Management System A.T. Kearney X/03.2007/26178d 5

 Engagement Summary

The most challenging part of the project was the identifi-

cation and alignment of all relevant CRM stakeholders

Lessons learned

Client Client Industry Consulting Process

• CRM was rather under-
developed at client due to high
availability of customer data in
past
• CRM is a core competence in
automotive wholesale
• Data ownership decision
between dealer, importer and
OEM still to be made
• Very detailed bottom-up
assessment of CRM was time
consuming but proved right to
align all involved stakeholders
and to gain full picture of CRM
among different business units
• Knowledge of CRM concept in
automotive was not very well
developed within A.T. Kearney

A.T. Kearney X/03.2007/26178d 6

Approach & basic results

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 Approach & basic results

Customer relationship management covers the entire

dialog with individual customers

CRM management process

(CRM strategy, planning & budget)
Customer retention Customer care
• Loyalty program • Complaint management
• Recontact scheduling • Aftersales management

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• Routine communication

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Lead generation & Sales support

management e
h as • Lead follow-up process
• Lead generation sep
Awareness ha • Customer contact
Information rc
• Lead qualification phase phase Pu management
• Lead distribution

CRM supporting processes

(Customer data management and analytics, dealer training and support)

A.T. Kearney X/03.2007/26178d 8

 Approach & basic results

The guiding principal for all CRM initiatives is commercial

success

Connecting CRM to the bottom line

High
Increase customer
lifetime value
• Increase sales
• Increase loyalty
Bottom line impact

Individualize • Increase share of wallet

customer dialog
• Minimize cost associated with
• Turn information into knowledge customer dialog
• Allow customers to choose
360 degree view channel
of customers
• Personalize outbound
• Capture all relevant data in communication
customer dialog
• Create a central 360 degree
view of the customer

Low
Basic CRM capabilities State of
the art
Enablers

Strategy Processes Organization Tools/ICT

A.T. Kearney X/03.2007/26178d 9

 Approach & basic results

Based on an capability assessment the CRM strategy has

been developed throughout a series of workshops

CRM strategy development: Approach

Workshop 1
I Customer
Business
CRM capability matrix Needs
Perspective
Analysis
adjustment

II CRM Strategic
Workshop 2 topic
Capability
Broad segmentation and Assessment
customer needs analysis Strategic
topic

Workshop 3 Strategic
Business requirements and topic
general strategic directions
III
Workshop 4
CRM dream formulation Gap Analysis CRM Strategy Priority 1 Priority 2 Priority 3
and definition of strategic
elements

A.T. Kearney X/03.2007/26178d 10

 Approach & basic results

During the first workshop, the CRM assessment tool was

used to assess the CRM capabilities
I CRM evaluation framework Detailed tool in appendix

CRM assessment templates Categories Examples

Lead Generation & Qualification (1/4) Dept. 1 Dept. 2 Dept. 3 Dept. 4
Internet
Lead Generation & Qualification (1/4)
Internet
Allow lead generation on the internet site of the brand
Dept. 1 Dept. 2 Dept. 3 Dept. 4
Functionality • Allow brochure request on brands internet site
Allow lead generation on the internet site of the brand
Test drive +/- +/- ++ --
Test drive
Brochure request
+/-
+/-
+/-
+/-
++
++
--
--
• Functionality to enter showroom leads in LMS
Brochure
Transfer request
internet leads in LMS from testdrive or brochure request +/- -- +/- -- ++ ++ -- --

Transfer internet
Actively leads
identify in LMSonfrom
prospects
click stream analysis)
the testdrive or brochure
brand's internet request
site (hits into leads, --
--
--
+/-
++
--
--
-- • Functionality for re-contact scheduling for lost
sales
Actively identify prospects on the brand's internet site (hits into leads, -- +/- -- --
click streaminternet
Transfer analysis)
leads in LMS from hits into leads -- ++ -- --
Transfer internet
Capture leads
of model of in LMS from
interest hits into leads
information -- +/- ++ ++ -- ++ -- +/-
Capture
Capture of buying
of model windowinformation
of interest information +/- -- ++ -- ++ -- +/- --
Capture
Capture of current
of buying car information
window information(model, age) -- +/- -- +/- -- +/- -- +/-
Pass on
Capture lead qualification
of current information
car information (model,toage)
sales person/LMS (Model of +/- -- +/- -- +/- ++ +/- --
interest, buying window, current car and age)
Pass on lead qualification information to sales person/LMS (Model of
Pass on
interest, leadwindow,
buying qualification information
current into central customer DB (Model
car and age) -- -- ++ --
-- -- -- --
• Showroom leads actually entered in LMS
of interest, buying window, current car and age)
Pass on lead qualification information into central customer DB (Model
Full functionality
of interest, of car configurator
buying window, current car and age) -- -- -- -- -- -- -- ++ Execution
FullPass
functionality of car configurator
on car configurator information to sales person/LMS -- -- -- -- -- -- ++ --
Pass on on
Pass carcar
configurator information
configurator to sales
information person/LMS
to central customer DB
Pass on car configurator information to central customer DB
-- --

--
-- --

--
-- --

--
-- --

--
• Monitoring and reporting of conversion rate of
leads
Pass on channel preference to sales person/LMS -- -- -- --

CRM analysis results

Pass on on
Pass channel preference
channel to sales
preference person/LMS
to central customer DB -- -- -- -- -- -- -- --

Pass
Maponprospect
channel to
preference to central
existing dataset customer
in LMS (avoidDB
double entries) -- -- -- -- -- -- -- --
Map
Map prospect
prospect
entries)
to existing
to existing dataset
dataset in central
in LMS (avoidcustomer DB (avoid double
double entries)
Map prospect to existing dataset in central customer DB (avoid double
-- -- -- -- -- -- -- --
• Defined process/standards for dealer lead
-- -- -- --
entries) Dept.
1
Dept.
2
Dept.
3
… Dept.
#
follow-up

Functionality
Connectivity • Transfer of internet leads in lead management
system
Execution

• Pass on car configurator information to sales

person/LMS
Connectivity
• Connect new lead to existing customer data in
central customer DB

Lead management system; DB: Database A.T. Kearney X/03.2007/26178d 11

 Approach & basic results

The customer needs workshop identified the need for a

segmentation of at least three different customer groups
II Customer needs workshop

The results of the customer needs workshop provide a good basis for the strategy
development process but should be verified by market research during the
implementation planning phase

A.T. Kearney X/03.2007/26178d 12


Customer needs vary substantially across customer
groups
II Customer needs workshop: results
Private customer
• I only want to express my needs
once and I want to choose the
channel
• In any dialog, know me as a good
customer of the brand and reward
me accordingly (across channels,
dealers and even borders)
– Know cars I bought
– Know service I do
– Know complaints I had in the
past
• Only contact me with information
that is relevant to me and my
situation
• Advise me based on my personal
profile and needs (Area of living,
financial situation, etc)
Source: Customer needs workshop 31st May 2007
Lease car driver
• Treat me like a private customer
• Maximum comfort for service
appointments
– Fast service and quick
appointments
– Car drop off and pick up at any
time
– Low number of dealer visits due
to anticipating service &
maintenance
• Consult me on tax implications and
benefits
• Help me to optimize my car policy
agreement
• Better replacement car than my
own
Approach & basic results
Workshop results
Business owner/
Fleet manager
• Minimize the number of people I
have contact with (one person to
handle everything)
• Supply me with tools to manage my
fleet
• Inform me on total cost of ownership
of my fleet
• Make offers and grant discounts
based on total fleet or growth of
fleet
• Treat me as a good customer not
only the driver (e.g. invite me to big
events)
• Ensure drivers get car related
information from you instead of
asking me
• Make drivers stick to the rules I set
A.T. Kearney X/03.2007/26178d 13
 Approach & basic results

A customer centric view on profitability allows to identify

profitable growth areas and to tailor offerings
III Example: Create transparency on individual customer profitability

Most attractive by
Customer 1 sales profitability

Most attractive
by customer
New car Used car Financial Aftersales Accessories Customer
value
services value
er
t om e
s s
Cu ba

Customer 2

New car Used car Financial Aftersales Accessories Customer

services value

A.T. Kearney X/03.2007/26178d 14

 Approach & basic results

Customer value related topics cover all different parts of

the customer value concept
III Example: Create transparency on individual customer profitability
• Increase customer loyalty (No churn) (2x)
• Follow the customer over all phases

Increase loyalty/
Increase average revenue Grow size of Private new cars
reduce churn
per customer (3x) customer
base Conquest new
customers Used cars
Increase
Increase customer revenue Financial service
Fleet sales
value sales
Grow
business with Aftersales
Value of existing base
customer
base1) Shorten purchase • Make an offer to every
cycle customer in the
Netherlands (new and
Optimize channel used) (2x)
• Reduce the operational cost mix • Increase lead quality
per car sold and volume
• Reduce cost in the pre sales Reduce cost Improve targeting
phase (conversion rate)
Improve
Increase procurement
margin
Upsell
Increase price
Reduce discount

Experience shows that this concept provides crucial insights to guide CRM activities but a
practical approach is needed. Suggestion: “Get the basics right and slice the elephant!”
1) Sum of the lifetime values of the current and potential new customers. The customer lifetime value is the profitability of
an individual customer across business units such as new car sales, aftersales, financial services.
A.T. Kearney X/03.2007/26178d 15
Material for re-use

A.T. Kearney X/03.2007/26178d 16

 Material for re-use

The CRM assessment tool can be used to identify the

current status of CRM activities

CRM assessment templates

Lead Generation & Qualification (1/4)  Assessment categories

Internet
Dept. 1 Dept. 2  Dept. 3  Dept. 4 

Allow lead generation on the internet site of the brand        

 Lead Generation & Qualification
Test drive +/- +/- ++ --
 Lead Follow-up and Sales
Brochure request +/- +/- ++ -- Process
Transfer internet leads in LMS from testdrive or brochure request -- -- ++ --
Actively identify prospects on the brand's internet site (hits into leads,  Lost Sales Management
click stream analysis) -- +/- -- --

Transfer internet leads in LMS from hits into leads -- ++ -- --

 Delivery
Capture of model of interest information +/- ++ ++ +/-
Capture of buying window information -- -- -- --
 Complaint Management
Capture of current car information (model, age) +/- +/- +/- +/-
Pass on lead qualification information to sales person/LMS (Model of -- -- ++ --
interest, buying window, current car and age)  Loyalty Program
Pass on lead qualification information into central customer DB (Model -- -- -- --
of interest, buying window, current car and age)
Full functionality of car configurator -- -- -- ++  Routine Communication
Pass on car configurator information to sales person/LMS -- -- -- --

Pass on car configurator information to central customer DB -- -- -- --  After-sales

Pass on channel preference to sales person/LMS -- -- -- --

Pass on channel preference to central customer DB -- -- -- --  General Customer Analytics and

Map prospect to existing dataset in LMS (avoid double entries) -- -- -- -- Controlling
Map prospect to existing dataset in central customer DB (avoid double -- -- -- --
entries)

A.T. Kearney X/03.2007/26178d 17

 Material for re-use

The CRM capabilities are evaluated by functionality,

execution and connectivity

CRM analysis results Client example

Dept. Dept. Dept. … Dept. Key Findings

1 2 3 #
Functionality:
• While quite some CRM related
functionality is available the systems
Functionality are far from state of the art
Execution:
• The actual usage of the available
functionality is low. The most
important reason is the lack of
Execution defined processes and supporting
monitoring capabilities
Connectivity:
• Isolated improvements of specific
problems have lead to a grown
Connectivity structure of island solutions,
preventing a comprehensive view of
the customer and low acceptance on
dealer level

In place today (++) Improvement currently planned (At least +/-)

A.T. Kearney X/03.2007/26178d 18

 Material for re-use

CRM assessment tool (1/5)

Evaluation criteria
Lead Generation & Qualification (1/4)  Lead Generation & Qualification (2/4)
Internet
Allow lead generation on the internet site of the brand
Test drive
Brochure request
Transfer internet leads in LMS from testdrive or brochure request
Actively identify prospects on the brand's internet site (hits into leads, click stream
analysis)
Transfer internet leads in LMS from hits into leads
Capture of model of interest information
Capture of buying window information
Capture of current car information (model, age)
Pass on lead qualification information to sales person/LMS (Model of interest, buying
window, current car and age)
Pass on lead qualification information into central customer DB (Model of interest, buying
window, current car and age)
Full functionality of car configurator
Pass on car configurator information to sales person/LMS
Pass on car configurator information to central customer DB
Pass on channel preference to sales person/LMS
Pass on channel preference to central customer DB
Map prospect to existing dataset in LMS (avoid double entries)
Map prospect to existing dataset in central customer DB (avoid double entries)
Functionality to monitor conversion rates of internet leads
Actual monitoring and reporting of individual conversion rates of internet leads
Use of leading edge banner advertising for lead generation
Use of viral marketing, web specials etc. for lead generation
Sufficient lead qualification of internet leads transferred to dealer
Used car market on the internet
Allow used car lead generation on internet
Pass on used car lead to sales person/LMS
 
Call center
Allow lead generation
Testdrive
Brochure
Identify customers in call center (inbound, NAW)
Transfer call center leads from testdrive request in LMS
Transfer call center leads from brochure request in LMS
Active use of call center for lead generation (outbound)
Active use of call center for qualification (outbound)
Capture model of interest information
Capture buying window information
Capture of current car information (model, age)
Pass on lead qualification information to sales person/LMS (Model of interest, buying
window, current car and age)
Pass on lead qualification information into central customer DB (Model of interest, buying
window, current car and age)
Pass on channel preference to LMS
Pass on channel preference to sales person/LMS
Pass on channel preference to central customer DB
Map prospect to existing dataset in LMS/DB (avoid double entries)
Functionality to monitor conversion rates of call center leads
Actual monitoring and reporting of individual conversion rates of call center leads

A.T. Kearney X/03.2007/26178d 19

 Material for re-use

CRM assessment tool (2/5)

Evaluation criteria
Lead Generation & Qualification (3/4)  Lead Generation & Qualification (4/4) 
Direct Mail and Events Other Sources: Captive Financial Services
Identify prospects in direct mailing campaigns Identify potential leads from expiry of financial services contract(leasing/financing
Transfer direct mail leads in LMS contract information)
Secure model of interest information is captured Identify potential leads from insurance information ("Totalschaden")
Secure buying window information is captured Transfer leads generated from financial services in LMS
Secure current car information is captured (model, age) Pass on contract information from financial services sales person
Pass on lead qualification information to sales person/LMS (Model of interest, buying Pass on of contract information to central customer DB
window, current car and age) Map prospect to existing dataset in DB (avoid double entries)
Pass on lead qualification information to central customer DB (Model of interest, buying Monitoring and reporting of conversion rate of financial service leads by VW Bank
window, current car and age) Monitoring and reporting of conversion rate of financial service in general
Map prospect to existing dataset in LMS (avoid double entries) Identify leads for importer's insurance package among drivers
Map prospect to existing dataset in central customer DB (avoid double entries) Transfer insurance package leads to LMS
Functionality to monitor conversion rates of direct mail leads
Actual monitoring and reporting of individual conversion rates of direct mail leads
Coordination of importer's communication plan across products
Coordination of importer's and dealer communication plan across products
Coordination of communication plan with importer's aftersales
Coordination of communication plan with dealer aftersales communication
Exclusion of currently active leads from campaign mailing
Defined success evaluation process after campaign (closed loop learning)
Availability of contact history for direct mailing campaigns information
Capture of contact history in central customer DB

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CRM assessment tool (3/5)
Evaluation criteria
Lead Follow-up and Sales Process (1/2)
Functionality to enter showroom leads in LMS
Showroom leads actually entered in LMS
Identification of double leads at same dealer and brand (e.g. same person from mail and
showroom)
Identification of double leads across dealers within brand
Identification of double leads across brands (e.g. VW and Skoda)
Connect new lead to existing customer data at dealer
Connect new lead to existing customer data in central customer DB
Functionality to capture current vehicle information of prospect in LMS
Current vehicle information of prospect actually entered in LMS
Functionality to capture current vehicle information of prospect in DMS
Prospect's current car information actually captured in DMS
Functionality to capture lessee information for lease cars (DMS)
Lessee information for lease cars actually entered (DMS)
Functionality to capture lessor information for lease cars (DMS)
Lessor information for lease cars actually entered (DMS)
Functionality to capture driver information for lease cars (DMS)
Driver information for lease cars actually entered (DMS)
Functionality to capture buying window information (confirm if supplied with lead)
Buying window information actually captured/confirmed
Capture contact history of leads
Pass prospect's NAW information on from LMS to DMS
Pass on prospect's NAW information to central customer DB
Material for re-use
Lead Follow-up and Sales Process (2/2)
Pass on prospect's current car information to central customer DB
Functionality to capture "car needs" information
"Car needs" information actually captured/entered
Pass on "car needs" information to central customer database
Functionality to capture demographic and household data (e.g. age, family, other cars)
Demographic and household data actually captured (e.g. age, family, other cars)
Pass on demographic and household data to central customer DB
Functionality to monitor LMS lead follow-up by importer's
Functionality to track cold/warm and hot leads seperately
Usage of monitoring capability for lead follow-up by importer's (regular reporting)
Defined process/standards for dealer lead follow-up
Capture quotes given to prospect
Pass on quote history from DMS to central customer DB (offers, discounts)
Capture contract offers given to prospect
Pass on contract offer history from DMS to central customer DB
Capture contract information (offer taken, discount on actual sale)
Pass on contract information from DMS to importer's (offers, discounts)
Pass on contract information from DMS to central customer DB (offers, discounts)
Capability to pass on prospects to other importer's brand if sale is highly unlikely
Prospects actually passed on to other importer's brand if sale is highly unlikely
Functionality to capture/measure decision time needed by customer (from lead to sale)
Pass on decision time needed to central customer DB
A.T. Kearney X/03.2007/26178d 21

CRM assessment tool (4/5)
Evaluation criteria
Lost Sales Management
Defined routine communication schedule for lost sales
Functionality for recontact scheduling for lost sales
Lost sales actually rescheduled
Delivery
Customer communication plan for delivery period
Welcome package
Satisfaction survey after delivery (e.g. after three month)
Ownership
Complaint Management at importer
Allow customers to submit complaint by phone
Allow customers to submit complaint by mail/letter
Allow customers to submit complaint by internet/email
Capture of complaint types/classes
Pass on complaint information to dealer
Pass on complaint information to DMS
Pass on complaint information to central customer DB
Defined dealer follow-up process/standards
Monitor dealer follow-up
Connect complaint to customer complaint history
Connect complaint to car complaint history
Material for re-use
Ownership
Complaint Management at dealer level
Capture of complaint types/classes
Pass on complaint information to importer
Pass on complaint information to central customer DB
Defined dealer follow-up process/standards
Connect complaint to customer complaint history
Connect complaint to car complaint history
Ownership
Loyalty Program
Defined loyalty program to support repurchase loyalty
Defined loyalty program to support aftersales loyalty
Defined loyalty program for used car owners
Defined targets on loyalty program participation
Defined dialog schedule for loyalty program
Monitoring and reporting of loyalty program performance
Functionality to allow closed loop learning on offerings
Actually translate customer needs form loyalty program to product offerings
Functionality to allow closed loop learning on campaign management
Actually translate information form loyalty program to campaign management
Ownership
Routine Communication
Defined triggers for routine communication (birthday wishes, expiry of guarantee, APK
etc.)
Segmentation based communication plan for routine communication (birthday wishes,
expiry of guarantee, APK etc.)
Brand magazine
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 Material for re-use

CRM assessment tool (5/5)

Evaluation criteria
Ownership
Aftersales
Allow maintenance/service appointment on the internet
Allow accessories sale on the internet
Lead management system for aftersales leads
Capture of sales history by customer
Pass on of sales history to importer
Pass on of sales history to central customer DB
Functionality to capture current vehicle information with aftersales orders
Current vehicle information actually captured with aftersales orders
Pass on current vehicle information to central customer DB
Aftersales communication plan (Winter tires, APK, etc.)
Defined customer segmentation based on customer's aftersales needs (e.g. private vs.
full service leasing)
Customized aftersales direct marketing (segmentation based)
Customer satisfaction measurement after repair/maintenance order
Defined follow-up process for unsatisfied customers

General Customer Analytics and Controlling

Defined segmentation of customers based on communication needs (e.g. private vs. fleet
car driver)
Defined customer lifetime value model
Monitoring of customer value development

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