Changing Gears
Americans bought a record-breaking 16.9 million cars in 1999, according to information from
U.S. Business Reporter. The buying boom beat the previous record of 16 million new sales in 1986. With purchase rates like that--and with something like 30 different foreign and domestic car manufacturers offering their wares--it's no wonder car retailers are scrambling to be first on the list when the average Joe gears up to head out to his neighborhood car dealership.
But in the car sales game, it isn't enough to put new customers behind the wheel of the latest model. A large part of the challenge facing car manufacturers is keeping a steady stream of loyal customers who are faithful to the brand. With the average American buying a new car about every eight years, the repeat customer can add a significant boost to brand sales. The race to recapture repeat customers has taken on added significance to Nissan North America in the past year. With repurchase rates that lagged behind those of its two main competitors, Nissan knew the time had come to take action.
"Just looking brand-to-brand, our repurchase rates are about 30 percent," says Ted Ross, Nissan's manager of customer loyalty. "Repurchase rates for our major competitors, Toyota and Honda, are closer to 40 percent."
In theory, Ross knew what had to be done in order to change Nissan's rates: "The strategy for changing that is developing better relationships with every customer and communicating with them more," he says. In practice, however, Ross and the small group of Nissan IT professionals tasked with better managing Nissan's customer relationships were murky on the details of how to go about making it happen.
They knew what they wanted and what the company needed: a way to take vast amounts of customer data stored in a variety of databases and integrate it into a single data warehouse environment where it could be easily accessed and managed. At first, Ross and the IT team thought they'd have to install four separate data management applications. But that, as they say, was then. This is now: Nissan is armed with one cohesive suite of software applications that coordinates information from various data sources and customer touchpoints and presents it in one easy-to-access system.
In July 1999, Nissan North America, which encompasses some 1,300 Nissan and Infiniti car retailers in the United states, implemented E.piphany E.4, a Web-based solution that collects and analyzes customer information and enables real-time personalized interactions.
"The first time I saw it, I was literally excited, and not many things excite me," says Tim Chaney, Nissan's manager of database marketing. "The drudgery in past years of having to do all the marketing development through outside vendors was a very tedious, time-consuming and expensive proposition. So the ability for us to sit down at our desktop and analyze data is very exciting."
Putting It All Together
The problem has never been that Nissan didn't have enough customer information, Ross says. The problem stemmed from the fact that customer information was gathered on a variety of different sources, and those sources used disparate data environments. "In the automotive industry," he says, "there are lots of different ways for the customer to communicate with us, and there are lots of ways for us to communicate with the customer."
Just consider the vast number of disciplines within Nissan that had customer contact: Individual dealers maintain information on customers who contact them for service or sales. Then, Ross says, Nissan also deploys a customer satisfaction and research team that surveys customers at the time of sale. Add to that a service merchandising group that might send service coupons or other perks to customers through the mail; a market research group that contacts customers for focus groups; a database marketing group; a customer call center; Nissan and Infiniti Web sites; and several others.
"We had lots of channels at Nissan," Ross says, "all of which had their own mini-infrastructure to support their individual business needs, but none of which were standardized in any way. So we were never able to make any holistic approach to customer management."
That, Ross knew, wasn't cutting it.
"Nissan wanted to capitalize on customers who had a high degree of affinity for our brand and improve repurchase and loyalty," he says. "It takes a lot less to retain customers than it does to conquest a new one."
Nissan saw its market share slip from 1995 through 1998, according to information from the National Automobile Dealers Association. In 1995, Nissan controlled 5.23 percent market share, versus 4 percent in 1998. By comparison, in 1998 Honda and Toyota had 8.76 percent and 6.5 percent of the market, respectively. Nissan sales did increase in 1999, however, with calendar year sales last year showing an 8.4 percent increase over calendar year 1998.
Building a Better System
When Ross and Nissan's IT team sat down to try to improve customer loyalty, they hadn't even heard of customer relationship management (CRM). "This was kind of a marketing-driven project," he says. "We were in the process of trying to identify the best campaign management tool, and we tripped over the whole space called CRM. CRM was exactly what we needed. It's not just about the campaign, but also about support."
The decision to choose E.piphany as the CRM provider wasn't a hard one, Ross says.
"Only one company at that time met our definition of what CRM is," he says. "With E.piphany, their strength is that their data center can be used as a data server. Their data engine has some proprietary information that allows you to identify and pull data through various applications. On top of that, there is a wide range of different application tools and different modules you can pick and choose from to make sure your version of E.piphany conforms to your version of CRM."
Nissan initially selected E.piphany's sales and reporting and analytic module and its cross-sell/up-sell module. Implementation took seven weeks, and both Ross and Chaney give E.piphany high marks for knowledge and helpfulness during the process.
"The E.piphany team was very committed," Chaney says. "A lot of different employees of E.piphany were down here on a regular basis demoing the product and training user groups who would work with it."
The E.piphany suite brings together and offers multiple views of information gathered from Nissan's data sources and customer touchpoints. Nissan can segment customers according to demographics, responses to marketing campaigns and other criteria to provide a correlated analysis of all transactions.
"What we're doing is bringing together all customer information, then giving marketing people--as well as others throughout the organization--the ability to know how to plan to best interact with customers," says Paul Rodwick, E.piphany's vice president of product marketing and strategy. "Then the client can actually turn that knowledge into action at various touchpoints. Nissan was classic in this respect. They had lots of data, but in lots of different places. They knew how many cars were sold, but they didn't have much insight into what kinds of customers were buying what. Because of that, they didn't know how to attract the next customer or retain the customers they already had."
Payoff
With E.piphany, Nissan now has the ability to gain a "true complexion of people buying our product," Ross says. Nissan can model the demographics of customers who buy certain models and can use it to validate marketing plans.
"We spent about a half a million dollars (on E.piphany), but we probably saved $1 million in campaign costs," Ross says. He explains that Nissan saved money by paring down the number of people it had originally targeted or by being able to rely on the existing database instead of going to an outside vendor.
But more than that, E.piphany has helped Nissan change its whole outlook on CRM, Ross says.
"In the process of tripping over CRM and learning more about it, we've begun to refine what our business requirements are as a company," he says. "We've embraced the whole CRM practice, both from the business as well as the infrastructure point of view."
Nissan currently holds licenses for 30 seats, Ross says, and expects to add another 30 users by the end of May. By the end of the year, as many as 100 users are expected to be on the E.piphany system.
Ross says it's a little too soon to tell if E.piphany's software has had any effect on customer loyalty. Results of the first major campaign launched using E.piphany won't be available until April or May 2001, according to Ross. Nonetheless, he says, "we get results (from E.piphany) on a daily basis when we take a look at customer behavior and profiles, when we look at trends and changes by model and can relate it to marketing and media planning. We're getting daily results if you consider that."
Adds Chaney, "There are incredible benefits to our company. We are opening some eyes already with simple things such as profiles of some of the people who are buying our models."
Take Nissan's Xterra SUV, for instance, with its early advertising and strategic planning aimed at a youthful, "Generation X" type audience who couldn't afford a luxury SUV, Chaney says. The new E.piphany database showed the actual buyers are often women and an older audience with a higher household income than originally anticipated.
"It kind of validates some of the thoughts that went into the advertising position, but it also opened some eyes," Chaney says.
But Nissan isn't stopping there. Over the next two years, the organization plans to add more of E.piphany's power to its CRM analytics, Ross says, including using the software to analyze Web site usage and to track customer relations. In the future, Nissan expects to be able to project customers' likely purchase cycles.
"We're just touching the tip of the iceberg," Chaney says. "As exciting as it is, there's much more we can do. We're just gearing ourselves up internally and with the marketing agency to leverage it as much as possible. It was primarily developed for marketing, but our next steps are to broaden its usage."