Hero MotoCorp Boosts Topline with Customer Engagement
The automobile sector is not best known for its customer loyalty programs. Engagement levels aren’t like in the retail industry where customers visit the stores on a weekly, fortnightly or even a monthly basis. Buying a two-wheeler in India is usually considered a one-time affair and it is believed that there is very little the manufacturer has to offer once the vehicle is bought. After the initial period in which the company offers a couple of free services, the riders prefer to entrust their vehicles in the hands of cheap and untrained road-side mechanics who would in turn rely on duplicate spare parts.
Hero MotoCorp, the largest selling motorcycle manufacturer in the world with quarterly sales of close to 15 lakh (1.5 million) two wheelers, wasn’t satisfied with such an unenthusiastic engagement with its customers. The company wanted to build traction with its customer-base and offer them the specialized care that their vehicles deserved. They believed that trained technicians at its authorized service centers equipped with genuine spare parts could be of much better service to customers.
Off the Block
The need to be in constant touch with its customers gave birth to one of the first loyalty programs in the automotive sector named ‘Passport’ in 2001. Under this scheme the enrolled customers were provided with a booklet that resembled a passport. Each purchase of spares and service would be marked as stamp in this booklet and led to the accrual of loyalty points. The points could then be redeemed against gifts or used for discounts on subsequent purchases. But such a paper-based program had its limitations.
With millions of customers joining the program, it became increasingly difficult to maintain a record of the transaction data and the loyalty points. “The manual processes of Passport were difficult to manage and there were always challenges in ensuring authenticity of the data,” says Vijay Sethi, VP and CIO, Hero MotoCorp. Real time communication of information was also a challenge and there were considerable delays and discrepancies in transferring data from dealerships to the company. These inconsistencies made the analysis of the customer data very difficult. Add to this the worry of the number of trees felled to produce the booklets and the management had an issue on its hands.
The manual processes of Passport were difficult to manage and there were always challenges in ensuring authenticity of the data.
The marketing team backed by support from Sethi and his IT team thought of modifying the system with the use of technology. They decided to introduce the GoodLife program and use a magnetic Loyalty Card which would help centralize all customer information and also cut down on the need for paper. The card would enable transactions for the customers at dealer terminals by swiping it for accrual or redemption of points. So irrespective of whether the customer is based in Itanagar or Trivandrum, s/he can enroll and avail of the benefits of the GoodLife program.
When it came to developing the software back-bone for the program Sethi decided to take the D-I-Y (do-it-yourself) approach and built it in-house with the help of third-party professionals. “This approach was taken since there weren’t too many ready-made options that we could use. This was also the more economical way of getting what we wanted,” says Sethi.
The Goodlife application was developed on .Net environment and the database used was MS SQL. In order to ensure robustness, the team used Intel-based servers with high redundancy components. The Goodlife application was developed with an objective of bringing real-time information transparency for the organization. “So, we had to use technologies which would suit our requirement of handling the large volumes that were expected and at the same time, provide a seamless flow of information between the dealerships and the organization,” explains Sethi.
Based on their evaluation of the technologies available and their requirements, the .Net environment was found to be best suited for them. The environment ensured that they were able to design the application with all the functionality and equip it with a user-friendly interface. “The implementation partner we had chosen also had an expertise in development on the .Net platform and implementation partner expertise was a major factor which guided our decision,” says Sethi.
Owing to the criticality of the customer data involved and “to ensure that the huge data that is being generated is kept in a secure manner, we also implemented an offsite DR of our Goodlife data,” Sethi adds. Once developed and tested, the program was rolled out one city at a time. The entire spectrum of over 2000 dealers and Sales and Service Points (SSP) of Hero MotoCorp was covered in a relatively short span of 10 months.
Over the Hurdles
The implementation did throw up a few challenges but none that were unexpected. The key challenge was that many dealers and their executives were not quite technology savvy. “This was resolved through handholding and a continuous technical support to the dealers,” says Sethi. The lack of familiarity with technology was solved by the deployment of 2 CRM execs per dealership. These 4000 plus executives were trained on the usage of the system. Ensuring connectivity and infrastructure support to the dealerships in the most far-flung areas was as also an imposing challenge that Sethi had accounted for.
The transition of passport holders onto the GoodLife Prgram was also challenging owing to its scale. When they began the transition there were more than 25 lakh (2.5 million) members on the passport program. These members had to be seamlessly transitioned onto the new program without loss of their data on past purchases, services and the points accrued. It helped, however, that the validity of the membership to the loyalty program is 3 years and those passport members up for renewal were directly enrolled on to the GoodLife program.
Today the program has more than 1 crore (10 million) members and contributes directly to Hero MotoCorp’s topline with its reference reward system. Customers get additional points for referring family and friends to any of the company’s dealerships. “We were able to break even on our investments in a short period of 3 months,” says Sethi.
Based on the buying patterns of their customers, Hero MotoCorp is able to utilize the data to perform analytics and identify cross-sell and up-sell opportunities. “A lot of our Goodlife members re-purchase our products and besides this they also help us increase revenue by referring new customers to buy our products,” he claims. The internal processing time for transactions has also reduced from approximately three months to just five days.
They have also set up a dashboard to keep a tab on the internal benchmarks for the qualitative and quantitative measurement of the program’s success. All the senior management leaders receive an executive summary with parameters like total number of members, number of members added in the current month, referral contribution to sales, number of redemptions etc. “This implementation highlights the fact that a meaningful collaboration between the marketing and IT department is paramount for the success of any customer engagement program,” says Sethi.
The need to be in constant touch with its customers gave birth to one of the first loyalty programs in the automotive sector named 'Passport' in 2001.