Tracking the Right Data to Make Informed Decisions
AMA with Erica Alfonzetti, Head of Operations and Offers, VOLVO
As you and your team continue to accelerate the subscription-based digital transformation, we want to focus on discussing proven and adaptable acquisition and onboarding strategies that not only drive growth, but ultimately lead to a better full-journey subscriber experience and an increased customer lifetime value. Our goal was to deliver actionable insights and provide connections for your continued success.
Erica Alfonzetti, Head of Operations and Offers, VOLVO
“Regardless of the platform, the most important data pieces that you can collect are those that give you a 360 view of the customer. You need to know where they came from, their ownership experience, if you can retain them and if not where do they go.”
Full Transcript
*Questions submitted by community members
Please join me in welcoming today's AMA speaker, Erica Alfonzetti. Erica is currently the Head of Operations and Offers for Volvo’s subscription ownership model, Care by Volvo. She received her undergrad degree from the University of South Carolina and went on to complete her MBA at Villanova University. She’s passionate disruptive business models and driving change within the automotive industry to meet the evolving needs of consumers.
Question: Why do you think other car brands haven't stuck with the subscription proposition?
I think subscription is a very new concept in the automotive space and hasn’t been 100% defined. When subscription products were first popping up in the automotive space, each manufacturer had its own flavor.
I do believe we will see more and more manufacturers “relaunch” subscription offers – but maybe slightly different from their original approach. Or at least I hope so – it’s much more fun with a little competition!
For example, Book by Cadillac’s model looked more like a membership where you had access to a fleet of vehicle but could never stay in one for longer than a set amount of time. I think many manufacturers found that their subscription models were not meeting the needs of consumers.
Question: What would you say sets Care by Volvo apart and how did you come up with the brand "Care by" component?
"Care by" is actually a legacy branding term from HQ. Many, many years ago it was used when looking at service packages that consumers could purchase with their Volvo. It resonated really well but over time was replaced with other branded service contracts.
It resonated really well but over time was replaced with other branded service contracts.
When looking at subscription it was decided to bring this back since our subscription offer also includes the service and insurance component
Question: For the uninitiated, how is a car subscription different from a car lease?
If we look specifically at Care by Volvo the key differentiators from a lease are the flexible terms and the all-inclusive payment. A traditional lease is usually 36- or 48-month contract. If you wish to exit the contract early, you are hit with heavy end of term fees. With Care by Volvo, your payment also includes your vehicle insurance coverage and maintenance, excess wear protection packages. We really try to make it a bundled offer, so you don’t have to think about all the extra items that come with owning a vehicle.
The other key differentiator is there’s no negotiation on the payment. We know this is a pain point in the car buying process for a lot of consumers, so we really aimed to take away that anxiety.
If you look at other manufacturers, they’ve tried to work with the same pillars but maybe took a slightly different approach. I think what really makes it s subscription is the flexible terms that it offers. We are finding that consumers in this segment aren't as price sensitive. they'd rather the simplicity of the program and are willing to pay a bit more for it.
Question: What's the overall goal of the Care by Volvo subscription product - is it based upon the number of customers or customer value?
It’s a little bit of both but I would say more of the focus is customer value. We know the demands of consumers are changing and the automotive industry hasn’t really kept up. With Care by Volvo we really tried to meet those demands. We wanted to give consumers a different way to own a vehicle (through subscription) and a different way to purchase the vehicle (everything is done online!). We also wanted to bring a new consumer to the brand and subscription is helping us get there. Especially during this last year with the pandemic!
I think a really interesting piece of insight we gained when launching this is how willing consumers are to change their purchase behavior when it comes to owning a vehicle.
I think the assumption was that many consumers would be hesitant to make a "large" purchase online without ever test driving the vehicle. What we found was the exact opposite. Consumers love the ability to complete the transaction online. i think the flexible terms gives them the piece of mind to do so without feeling like they are stuck with the product for five years if they don't enjoy something about it.
Question: How is a subscriber journey for Care by Volvo different from a typical Volvo customer journey?
I think the customer journey is another great differentiator from a traditional lease. The key difference is that the whole purchase process is done online – including the application. And if a customer opts in for a home delivery, they may never even visit the dealership. They also don’t have to worry about the payment conversations that often happen at a dealership. In terms of the ownership journey – because of the business models, customers have the opportunity experience a different model Volvo every four months if they wanted to. This allows us to keep up with any changes that may occur in their life or just give them the opportunity to go from an SVU to sedan or maybe even try an electric vehicle for a few months. In terms of the ownership experience, a lot is like a traditional lease however we are looking to differentiate that even further as we learn more about our subscription customers and what exactly they are looking for.
A lot of the data that we are currently collect is being used for this purpose. How do we further define the "ownership" journey for subscription customers. What exactly are they looking for?
I think we will see a lot of consumers stick with subscription. There is always going to be the traditional purchase options but I think as our lifestyles are changing across all industries, there is a demand for these types of products that offer consumers a lot of flexibility that has definitely increased with the pandemic.
Question: What's been the biggest challenge in growing Care by Volvo?
I think the biggest challenge with growing Care by Volvo has been awareness. I think what’s interesting here is that this is where we think having other manufacturers be successful with subscription products would benefit us. As a smaller brand to begin with, we have the job of introducing customers to the brand but also to what subscription is.
Once consumers learn about subscription, we find that they are very interested, but it takes a lot of work to create awareness. We are constantly trying to find creative, cost effective ways to introduce consumers to the concept.
Most of our subscription advertising is done through our digital channel so we can be really data driven in this space to target the specific customer profile that's a fit for subscription. There is some cannibalization, since we are finding that the subscription customer is different from our traditional buyers, we are able to avoid cannibalizing our traditional business. Right now 80% of our subscribers are new to the volvo brand.
Question: We know that a successful onboarding is critical to retention but I don't know what that means for a car subscription. What are the critical onboarding steps for Care by Volvo and what KPIs do you track around them?
We track the entire application process for our customers. We like to see what part of the application customers drop off to deploy "abandoned cart" campaigns to try and win them back. We also track time to completion - our goal is to make the transaction as seamless as possible for the customer. Another big one that we track delivery time frame (from order to delivery of the vehicle).
We know that if we can deliver the vehicle in our promised delivery window it starts the relationship with the customer off on the right foot.
I think it's a super critical part of any online transaction, if you can't service the customer immediately, you are not meeting their expectations.
Question: Do you track any data points directly from the car itself in order to measure engagement?
We don't today. But this is definitely something we are looking to do long term.
Today's cars are SO smart. We can use a lot of data points from the vehicle to engagement with our customers.
Especially when it comes to insurance and service. I'm not sure if you've seen the recent google commercial where the phone was able to sense and accident and alerted 911 on behalf of the driver. Our goal would be to have a similar process with insurance for Care by Volvo. Imagine if your car could handle the claims process without you having to think about it
Question: How does Care by Volvo fit within the long term customer relationship strategy for Volvo? For example, do you view the Care by Volvo program as a stepping stone into other customer purchase paths such as more traditional vehicle purchases?
This is a great question. I think with subscription we view it as an opportunity to have more of a direct to consumer relationship and really leverage that. We do see some customers using it as an entry way into the brand - the flexible terms are great for that. If a previous Audi owner is on the fence, Care by Volvo is a great stepping stone to get them into a Volvo.
Subscription gives us more touch points with consumers. We are talking to them about insurance, service, etc which gives us the opportunity to deepen the relationship and increase retention - for subscription but also for our traditional ownership models.
With so many people leaving cities this past year we saw a huge amount of subscribers who indicated that they had never owned a vehicle before - this make the insurance component super appealing.
Question: What did Volvo find successful in building customer confidence in the Care by Volvo car subscription? What kind of data did you use to determine that?
Customer service! With such a new product it was critical that we had our dealers and our customer care team available to our subscribers to educate them and walk them through the process if needed.
To track, we really look at retention metrics. It was key to see what happened to our early adopters. Did they stick with subscription/Volvo? If not where did they go?
We know we had a few bumps with our launch and knowing that we were still able to retain these customers gives us the confidence that our consumers are confident in us.
Question: Can you recommend your favorite platforms for collecting data?
I really like Salesforce and Tableau. We used Salesforce as our order management tool and there’s a lot of cools things you can do with EA dashboards and integrations that really allow you to see a 360 view of the customer. Tableau is great because I am also a big fan of running different scenarios through spreadsheet work and tableau is great resource for this.I don’t know if this can be classified as a platform, but in terms of collecting customer feedback, I also think customer surveys (when correctly designed and implemented) are great ways to get very specific feedback from customers. The challenge is in the design!
Regardless of the platform, the most important data pieces that you can collect are those that give you a 360 view of the customer. You need to know where they came from, their ownership experience, if you can retain them and if not where do they go..
That's really key in fine tuning your product and adapting it to meet consumer demands.