There’s an interesting experiment taking hold with some luxury brands. Far-thinking manufacturers like Mercedes-Benz, Porsche, and Cadillac are introducing programs that essentially allow drivers to “subscribe” to a vehicle line.
For a flat fee, Mercedes-Benz Flexperience users will soon be able to pick a segment (A, C, E, and S class) and switch 12 times within that segment over the course of a year. A subscriber could try a convertible for a sporty weekend getaway, switch back to a wagon for weekly shopping and school runs, and scale up to all-wheel drive when the weather turns nasty.
Although this may seem like a niche experiment, it could be the future of the mass market.
Younger consumers (millennials and Generation Z, post-millennials) have a different expectation of ownership. They’ve been weaned on iPhones to expect running updates and the latest technology on demand, and to subscribe rather than own.
As they come of ownership age, these drivers aspire to express themselves through their vehicle of choice. They want the same ability to have the latest and greatest vehicle at will, however, or even the option to have a particular body style or functionality like AWD.
The danger for dealers and manufacturers is that these younger consumers also learned from Spotify, Airbnb, and Zipcar that on-demand access means an inventory that isn’t tied to a single supplier.
Zipcar isn’t there yet, but it’s not hard to imagine some enterprising entrepreneur will find a way to offer multiple makes and models for a flat fee. Think of this as Zipcar 2.0, with a much broader range of offerings and flexibility.
For manufacturers and dealers, this could represent a major upheaval in the relationship with consumers. My belief is that growing brand affinity and preserving customer loyalty now is crucial to making auto buying less transactional, and laying the groundwork for future success as these market shifts take hold.
Behavioral data tells us that one-third of all consumers have a strong bias toward a specific brand name from the onset, even before entering the conscious stage of buying a new car. One in four of them will purchase that favored brand, regardless of what they experience while actively seeking out a new car.
This “priming stage” bias is important because it significantly influences what a consumer does next in the purchase journey. We are in a period where buyers have been so well-trained to look for the best deal that the traditional cushion of a model being new to market (provided it’s well-reviewed) no longer applies.
The first step begins by getting out of the traditional transactional model the industry overwhelmingly favors. For many brands and dealers, the messaging that exists in the marketplace is a mish-mash of brand value, model attributes, and transaction details (especially in this price-conscious market).
As such, marketers have become blinded by short-term metrics such as impressions, views, and clicks at the expense of more long-term ambitions such as loyalty and love.
Look at Honda’s new Accord, for example. It seems to have everything going for it: brand-new from stem to stern, great reviews, and seamless design details, plus it’s from a brand that consistently leads J.D. Power ratings in quality.
On paper, you may suspect all that’s needed to advertise this vehicle is a four-color, full-page ad, and then the car would fly out of dealerships. In reality, dealers are cutting back on orders and Honda will likely slow down production due to oversupply.
When I talk to dealers, they say that the real issue is incentives, or, to be specific, the lack of them. Toyota’s new Camry comes with many of the advantages that Honda’s Accord does, but the primary differentiator is cash on the hood.
As the car market slows down from three years of 17 million-plus annual sales, the pressure to go to market with most of the marketing budget aimed at in-market buyers will only increase. There are a number of external triggers that send someone into the active stage of purchasing (i.e., “I need a new car to suit my new job” or “my current car is no longer reliable”), but people are spending less than 7% of the total purchase cycle in the active decision stage of purchasing.
Although messaging that drives customers to dealers and highlights offers will continue to be important, it’s critical brands understand how to become part of that “strong bias” mindset. (One may argue it can only be developed through a strong and resonant brand message driven by big-reach media—digital and TV.)
Ultimately, it’s a shift that requires manufacturers and dealers to work even more closely together to create a sequential set of messaging that brings different audiences: from building an emotional connection in that priming stage, through models and features being highlighted as buyers cross over into being active and, finally, making sure that local dollars close the deal with location and transaction messaging.
Underneath the hood, it also means a commitment to pass through data at each stage to ensure unified messaging and accurate measurement.
While this is a recipe for weathering an already-slowing market (Autodata showed a 10.9% sales decline in 2017), it’s also a smart way to build the brand love and affinity to prepare for the even more profound shifts that are sure to come.
When younger consumers feel connected to a brand, they are less likely to feel the need to go to an all-you-can-eat, “any brand” subscription service. In the long run, that’s good for dealers and manufacturers.
Noah Mallin is the head of experience, content and sponsorship, at Wavemaker US. He leads a robust team dedicated to uniting social and experience design to create purposeful content for owned, earned, and paid channels. Part of the leadership team, Noah excels at a data-driven approach to helping clients like L’Oreal and IKEA reach consumers through compelling storytelling and nontraditional discovery.0