Wednesday, April 28, 2010

Service Marketing in the 20th Century

I asked Jim Moloney for a proper name for “e-Fulfillment” and he came up with “service marketing.” The guy is a genius, so I’m not complaining.

Our business models are being torn apart and reborn in our marketing hatcheries. Things are about to change. Let me peer into the crystal ball and take a peek at what’s in store for us.

Where’s B2C going? If we look backwards a few years, we remember Hyundai’s experiment with B2C – selling parts on the internet. They were going after dwindling counter sales (DIY) with an ecommerce strategy that was perfect for the pre-bust internet revolution. It did not stand the test of time – maybe it was simply too far ahead of its time. We walked away from that lesson pretty sure that B2C was not a goldmine of opportunity. That was 10 years ago. Now there’s a lot happening in B2C across all our segments, and we are hopeful that we will see more success than we saw 10 years ago. For auto, B2C follows the path of modern consumer buying preference (via the internet) and the hope is that B2C will be additive. This goes for Heavy Truck as well. CE/Ag is more complex. B2C certainly will be additive in lawn & turf, but be more “industrial” in the CE and Ag sub-segments. It is probably here to stay.

How do you price B2C? One option is to create a dealer-centric strategy and let them price and compete. The laws of economic efficiency should take over, accelerated by the speed of the internet, and we will see the OEM market converge on a more price competitive position vs. the IAM. The main risk, though, is that we could spook a lot of customers as the market rationalizes. Another solution that would help customers and speed up market evolution would be to make price-shopping across multiple sellers easy, a la Amazon (but dealers, of course, wouldn’t go for this). Another option, already pursued by some, is to let dealers set prices, but also show the MSRP. This preserves dealer autonomy and provides customers assurance; it’s probably the most balanced approach.

B2B and how to reach dealer wholesale accounts? Simple, use established technology platforms and reach wholesale accounts and counter-sales customers with a single site. Once a wholesale account is established, dealer-centric (actually, customer-centric) pricing fits here, as do the laws of economics. Easy. No hand-wringing.

What about service retention and “traditional” service marketing? You need to embrace GM’s simple strategic building blocks of Capture, Connect, Close. Capture is relatively straight forward – brilliantly using branded search terms gets you to the first page of a Google search. Unbranded search terms are another matter – e.g., I type in “brake repair” in Google and who shows up on the top page? Mostly the independents, both in the organic results and the paid ads. GM and one of the Heavy Truck OEMs are going another direction and are able to get unbranded "captures" on the first page of a Google search via paid ads. Connecting is easy once you’ve captured – you take the web-searcher to a competent web page. Now, there’s a lot of art and science involved here, but the issues are now beyond finesse. The issues are all about transforming a lead into a sale. The offering must be attractive and the close must be seamless. OK, the big problem is the close. To close on the “lead” the dealer has to be a seamless partner. This is the desired “future state.” It is all about scheduling an appointment with as few clicks as possible. Ford’s Owner Center is a great benchmark for what an attractive selling environment needs to look like; VW is another great example. GM has gone down another path – a brilliant finesse. If you don’t have a world class Owners Center to bring customers to, then focus on connecting “leads” directly to the service providers … dealers. This is an additive strategy that really conforms to customers’ internet buying preferences – e.g., it would be additive to whatever benefits you could get from a Ford-like Owner Center. That’s what makes it brilliant.

The Owner Center is the equivalent of an aftersales shopping mall – here you can buy parts, schedule service, purchase extended service contracts/warranties, and get information (parts catalog, owner manual, Telematics report). Just go to the Ford Owner Center and take a look – this is what I’m talking about. This “shopping mall” is applicable to all our segments. If I have a tractor, I’d like to go to my OEM Owner Center to buy an extended warranty. And, maybe, some attachments and accessories. What about wearables? How about placing a parts order on my dealer, or scheduling remote service? What about making sure I get my annual maintenance kit for the lawn mower?

The Owner Center is a shopping mall concept that is applicable to all of our segments. It is – when properly executed – the promised land. All this will redefine how parts are sold, shipped, and delivered. All this will redefine our ship-from points, modal strategies, returns policies, and Ts&Cs. All this will redefine our inventory planning strategies and rules of inventory ownership. All this is coming at a breathtaking speed. Hold on for the ride.

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