Customer Management

A look at Toyotas Customer Retention Strategies

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"A look at Toyotas Customer Retention Strategies"
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Before 2009, Toyota's customer retention strategy of 'Lean CRM' had been a model for the entire car manufacturing business. When it was time to replace a car, over 60% of Toyota customers returned to Toyota. The company's internal marketing bible, "The Toyota Way in Sales and Marketing," states that Toyota’s success depends on totally satisfied customers. Lean CRM reasons that the best way to totally satisfy a customer is to know what the customer wants even before the customer knows he wants it.

When Lean CRM was first implemented, Toyota already had a large collection of customer feedback and other information, which it had been gathering through regular customer touch-points after the initial sale. This library of customer information gave Toyota detailed insight into the customer lifecycle. It also gave Toyota an early heads-up to changes in individual customer behavior.

By responding appropriately to each of these changes, Toyota was able to increase its repurchase rate and sell more vehicles. At the same time, Toyota was able to reduce its overall marketing costs by as much as 80%, because Lean CRM marketing is tightly targeted and less marketing material is wasted. Lean CRM accomplishes this goal through 3 parts: customer pull, Toyota push, and customer DNA.

Customer pull

A customer is highly responsive to marketing information when he is just starting to think about buying a new car. All of Toyota's marketing guides prospective customers to the Toyota website, where they can research various cars. The prospective customer first becomes known to Toyota when he requests further information. Because this touch-point has been initiated by the customer, it is known as customer pull.

At this point, the request triggers an automatic check to see if Toyota already knows the customer. This information will determine how Toyota employees can best deliver Toyota-initiated touch-points.

Smart Toyota push

What Toyota already knows about the prospective customer will shape how Toyota communicates with that customer. Vehicle information which is sent out is tailored to the prospective customer's known preferences. Toyota may even offer a customized deal or pre-approved credit to the prospective customer.

Where the prospective customer is not previously known, Lean CRM uses statistical models and data analysis to determine which models are likely to be most appealing to each prospective customer, as well as the type of information each person is likely to value. Where models and other data are not available, Toyota best practices are substituted.

The important thing about smart Toyota push is that every time a prospective customer 'pulls,' no matter how slightly, Toyota is quick to respond with exactly the kind of information that customer is likely to want. This combination of customer push and smart Toyota pull will continue at every step of the customer lifecycle. Ideally, it will lead the previous customer right into buying his next Toyota car.

Customer DNA

The triggers, delivery, and substance of each touch-point between Toyota and each of its customers are refined through customer DNA. Once a customer has been identified, a complete schedule of appropriate touch-points is assigned to that customer and implemented through the Unica Affinium campaign management system (CMS).

Every touch-point triggers a review of the entire schedule. If the customer comes in for a car inspection, the CMS cancels any scheduled inspection reminders. At the same time, the mileage and other information gleaned from the inspection is used to calculate when the next inspection reminder should be sent out. If the customer asks about a new model, the customer DNA will be reviewed to identify how best to follow up.

In addition to the existing touch-points of regular maintenance and appropriate information send-outs, Toyota also regularly introduces new touch-points, such as the Customer Driver Club.

After the 2009-10 recalls

Lean CRM is still a viable model for customer retention. However, the current Toyota recalls have forced a change in short-term strategy.

For decades, the Toyota brand had been nearly synonymous with car safety. When Toyota was recently forced to announce global recalls of many of their most popular brands, the Toyota brand was staggered, but could have recovered with little more than a speed bump. After all, nearly all car manufacturers have had to recall cars at some point, and recalling a car over safety concerns is still looking out for the safety interests of the customer. However, the news that Toyota had been aware of the problem for at least a decade before the recall told the customer that despite the individualized attention, Toyota really did not care about their safety at all.

Toyota is now trying to rebuild the brand, but their brand equity is so much lower than most other car brands that it has to offer exceptional deals to retain many of its customers. Typical of these deals is 5 years of 0% financing, rather than the 3 years and up to 1% financing offered by other car brands.

Most importantly, Toyota has now publicly accepted responsibility and admitted it should have acted faster on the previous recalls. Following up on this admission, Lean CRM touch-points which show how the problem is being addressed are the next step for Toyota to recover its previous customer retention dominance.

More about this author: Michael Totten

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