The next time you’re shopping for a new car, choose the brand carefully, because it could be your last.
Don’t be fooled: Car accessory subscriptions – also known as Features on Demand (FoD) – are more than just a way for car companies to milk their owner base and build a supplementary recurring income stream.
They’re an insidious drug designed to hook you to that brand for life.
In-car technology is the Brave New Frontier of automotive marketing. It offers an unrivalled opportunity for car companies to shore up shrinking profit margins by charging existing customers to unlock features their car already has.
Right now, this online subscription model is little more than enabling seat heaters and adding infotainment enhancements, but with increasing levels of in-car tech and Over The Air updates, the potential is huge.
Anyone who remembers the original Apple App Store from 2006 will recall that there were but a few apps to buy, with rudimentary functionality. These days the various online app stores have an estimated 8.93 million apps for sale that can do everything from organise your life to steal your time and even control real-world appliances in your home. Heck, they can even control your car.
On the automotive front, we’re still very much in the early days of what technology can do. That won’t last long, because car companies are incentivised as Hell to give you more, as long as you pay for it.
Kia has already flagged that buyers of the new EV9 large electric SUV will be able to purchase everything from more performance to new grille lighting patterns. That’s all after paying $100,000 or more for the actual car first.
Kia’s doing this for two reasons. The first is to generate incremental revenue from the owner base – because up to now the only way car companies got money from existing owners was through servicing costs.
The second is to shackle you to their brand so that when the time comes to buy your next new car, it’s easier to stick with them.
That’s right, brands are looking to become your drug of choice and one that you cannot escape.
Look at the smartphone ecosystem. Once you head down the Apple or Android path, it’s almost impossible to get out. You buy apps, you use the iCloud or Google Drive to store memories, calendars, emails, contact details, birthdays, documents, videos, passwords and more.
One day you cross a line, but you won’t be aware of it. Not until some time later when you decide your current phone is too old or too slow – or maybe you just want a new one. That’s when you’ll realise that the line you crossed some time ago is now a towering 700ft ice wall guarded by zombies.
Crossing back is possible, but it’s so arduous and dangerous – and expensive – that most people quickly dismiss it and just buy the updated Apple Google Samsung version of their last phone.
Adventurous types who endeavour to cross back risk losing their life’s valuable ‘digital’ belongings, and spending hundreds on a whole new ecosystem of apps.
That’s the scenario car companies are building towards. Features on Demand are all just bricks in this wall, as are subscription services. Every time you buy another feature or take out another subscription, the wall will grow.
Car companies are smart. They want to sell you a car. They also want to sell you your next car. And if they can find ways to make it ‘easier’ for you to stay in the family, then they will.
According to the Australian government’s Road Vehicles, Australia 2022 census, there were 15 million passenger vehicles (cars and SUVs) on Australian roads in 2022. Toyota has the largest car park with 3.05 million, then comes Mazda (1.42 million), Holden (1.37 million), Hyundai (1.21 million) and Ford (974,880) with a further not insignificant 3.8 million light commercial vehicles (utes and vans) where data by brand is not available.
That’s a lot of potential customers who liked your brand enough to vote with their wallets once. How do you ‘encourage’ them to do it again?
There’s an old sales adage that says repeat customers are easier than new customers. Firstly, people are inherently conservative when spending large amounts of money. Secondly, an existing customer already knows what your brand can deliver, and how to work your products.
So, imagine how your sales could skyrocket if you can make it harder for customers to leave your brand.
Let me rephrase that from a Customer eXperience (CX) perspective: imagine if we can make it easier for you to transition to a new car by migrating all your apps, data, accessories and purchases?
Customer eXperience Officers are the new drug dealers of the automotive world. Their job is to build loyalty during the ownership experience – both the earned kind and the insidious kind. Their job is to get you hooked so heavily on their brand that leaving is harder than staying and paying.
In the smartphone world, 64 per cent of buyers have already decided which brand they want before (re)entering the market. I’ll bet marbles to mountains that’s because it’s easier to upgrade than migrate all your digital furniture to a new ecosystem.
Upgrading the latest iPhones and Google phones is as easy as putting the old one and new one beside each other and tapping a few buttons. The phones do the rest.
Moving from Apple to Android, however, is so difficult for the average person that you’d think they deliberately engineered it that way. Well, they did.
In the Australian automotive world, an average of 22 per cent of new car buyers have previously owned a car from the brand they end up choosing.
For some brands, it’s slightly higher, and for others it’s lower, but no brand comes close to the smartphone average of 64 per cent. In fact, the top performer in Australia’s top 10 brands barely makes it halfway to that vaunted benchmark.
Once upon a time, car companies sold cars. Now they’re going to sell you an automotive drug. And they hope you will never kick the habit.
Loyalty is behind everything car companies do. They want you to not just buy one car from them. They want you to buy every car from them. For life.
Brand loyalty has never been more important to auto brands’ futures than it is right now. We are just a decade or two away from a future where we no longer drive the cars we buy. Instead, they will be mobile offices and living rooms.
When that happens, car companies will have lost the biggest lure reeling in customers for the last 120 years: “our car drives better than their car”.
So now, hooking customers into the brand ownership experience must focus on everything beyond ‘the drive’. It must focus on how a car – sorry, a mobility space – supports and enhances the owner’s lifestyle.
The next time you hear about a CX person from a car company – a customer experience expert – call them what they are. A drug dealer. Once, a marketer’s job was to convince you to buy a car. The moment you became an owner you were handballed to the aftersales team. Now you fall into the clutches of the CX team, and they are determined to never let you go.
The insidious thing is, you’ll actually choose to stay… because it’s easier than the alternative.
So, the next time you go shopping for a new car, choose wisely. It could be the last time you exercise that right.
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