Volkswagen provides a powerful case study to refute that “the customer is in charge”.
By Bill Hanifin
In the US, we are living in an era where social responsibility is taking center stage. Racial conflicts, as evidenced by the riots in Charlottesville, Va. last year and revelations from the entertainment industry that sparked public outrage and inspired the #metoo movement are two prime examples. Societal norms are shifting, and the way we treat each other as people is under more scrutiny than ever.
Corporate brands don’t escape impact from the macro movements in cultural trends. Since the “general population” are also equivalent to “customers”, most brands carefully monitor these trends and adjust ensure their brand messages are aligned with the interests of customers. Why else would corporations continue to invest heavily in and tweak the messaging in their Corporate and Social Responsibility policies?
As brands seek to align their messaging with trends in customer engagement and loyalty, the matter of “who” is in charge of a loyalty relationship between customer and brand is in play. Brands are doing their best to get ahead of the issue in their marketing communications and in their customer loyalty program communications. It was only recently that the market made a rapid shift from talking about the potential of “1 to 1” marketing and the possibilities of big data, to proclaim more broadly that they are “customer-centric” enterprises. While taking a stand that the customer comes first is the right thing to do, customers themselves will test and probe the sincerity of this broad promise through daily interactions.
Volkswagen is an interesting case study illustrating the challenges of a big enterprise in becoming “customer-centric”. After suffering through a painful public relations nightmare tied to the automaker’s emissions-cheating scandal, VW offered $500 prepaid cards to lure customers back in to showrooms. These promotional efforts evolved into “loyalty bonus” offers of $1,000, available to current VW owners who return to purchase another vehicle.
Doing a quick search on “Volkswagen customer loyalty”, I found a case study documenting how VW worked with the Adobe Marketing Cloud to create cross-channel personalization offers intended to “transform our customers’ digital experience”. While these efforts showed the potential of using data to better connect with customers and drive sales, the result was not truly tied to building Customer Loyalty. It was purely promotional, with temporary impact on financial results.
Walking into a Volkswagen dealership recently, I shared to the manager that our family had purchased 6 vehicles from them and was in the market for #7. The manager told me that Volkswagen (the factory) had loyalty incentives available and set an expectation that our multiple vehicle purchase history would be rewarded. At this point, I was believing the digital marketing mantra that “The Customer is in charge”.
As our negotiations progressed, it soon became clear that Volkswagen has its own definition of customer loyalty. Their loyalty discounts applied only to a specific set of vehicles. None happened to apply to the one we were interested in buying. In other words, Volkswagen was clearly telling us that “we consider you a loyal customer as long as you buy the product we want you to buy”. I hope the fallacy of this approach does not require further explanation or flowery prose. Similar to the past practices of retailers who only rewarded customers who made purchases with a private label store charge card, Volkswagen was placing a ring-fence on my loyalty. I – the customer – was not at all in charge. In fact, I learned that VW was exercising a product based marketing strategy, far from a customer loyalty approach.
Considering that it was only 2016/7 when VW was offering discounts designed to entice customers back in the showrooms and to erase memory of the emissions scandal, I was quite surprised that that Volkswagen had moved so far away from a customer-centric approach. The lesson learned for me was that becoming customer-centric is a more complicated process than is made to appear in business literature. It is also one that global organizations such as Volkswagen will continue to struggle with as they balance a myriad of competing priorities across different markets and respond to pressure from investors and financial markets.
Let the consumer beware and, as always, stay informed.
Bill Hanifin is COO at The Wise Marketer and is a Certified Loyalty Marketing Professional (CLMP).