The UK is obsessed with the car. So are UK businesses. Cars and commercial vehicles keep UKplc ticking over; sales forces are kept mobile, goods are transported and tradesmen can aggressively career from blocked drain to leaking roof.
Falling broadly into two camps – company cars and commercial vehicles – this is a tough market in which to compete. The automotive sector is saturated with brands, retailers and leasing companies all desperate for a slice of the action. For both company cars and commercial vehicles, marketers categorise sales in one of two ways: low volume purchases or large fleet orders. The smaller orders are treated almost like a conventional retail sale, while the bulk buys involve a great deal of relationship marketing. However, determining the respective size of either market is somewhat fraught.
According to Mike Pulvertaft, director at data company Conduit, the dividing line for company cars comes when an organisation purchases more than 25 vehicles. “This is how the market is broken down. Clients will come to us and ask us to target those companies with 25+ cars in their fleet.”
He says that Conduit’s database holds between 8000-10,000 companies that deal in such volumes, although he admits that there are conflicting estimates. “You can talk to other companies who will put the figure at 5000. While the next person may argue there are 15,000 businesses. There is disagreement, but it is within that range.”
It is a similar story for commercial vehicles. Paul Godden, commercial vehicles brand manager at Fiat, reckons that in a market that shifted 389, 923 units in 2004, nearly two thirds of business comes from the fleet buyer. “It is very difficult to be precise about the figures, but we get something in the region of 60 per cent of business from large fleet buyers. A further 20 per cent is made up of SMEs with the rest coming from sole traders.”
Style over substance
The divide between fleet purchases and retail style purchases is crucial to the marketing strategies adopted. This is as true for company cars as it is for commercial vehicles.”Someone like BMW would push a purchase of between 1-25 cars through its dealer network,” explains Pulvertaft. “They will take some quite basic data such as the identity of the key decision-maker and fleet size. They will simply use their sales skills to seal the deal.”
Godden concurs, saying the same principle applies to commercial vehicles sold in small quantities. Data is used, and DM activity will go on, with the aim being that once the prospect goes to the dealership they are as good as a pre-qualified sale. The idea, as Belinda Neal, client services director at Crazy Horse Brand Warriors (Fiat Commercial Vehicle’s DM agency) puts it, is that “the dealer would really have to cock things up for the sale not to go through.”
One of the most important pieces of information is the time at which the customer is in market. Purchases are infrequent so a great deal of work has to be done to keep the prospect informed and to maintain good quality data.
“More than anything else, renewal dates are vital,” says Pulvertaft. A sole trader can have a lead-time of 3-6 months before making the purchase. With large fleets, this can be more like 12-18 months.
“You’re negotiating six figure contracts, so the lead time is naturally going to be that long. Key to your marketing is being aware of when a prospect is ready to purchase and making sure that you are in a conversation with them throughout that entire process,” he adds.
More sophisticated and detailed relationship marketing only comes into play when shifting large numbers of vehicles – usually 25 or more. Compared to the sole trader – who although making a business purchase is still motivated by ‘softer’ factors such as brand – fleet buyers are persuaded by the running costs of the fleet, the residual value, the fuel consumption and so on.
In Godden’s words, “this is a business decision. They are looking for cost efficiency, the best decision for the company. They are unlikely to be the person driving the van and are therefore less interested in the dynamic aspects of the model, less swayed by the badge. The sole trader also cares about value for money, but he is primarily interested in whether the van is a nice place to be every day. After all, it is his office.”
Telesales won’t play much of a role at this end of the market. Most of the work is undertaken by account managers maintaining regular contact with the fleet manager. They will know the decision-makers, the likely time of fleet renewal as well as some very detailed information about barriers to purchase and key triggers.
To buy, or not to buy?
One of the major developments in the market over the past two years, according to Pulvertaft, is the emergence of contract hire and leasing companies. “Fewer businesses are purchasing their vehicles. There is a clear move toward leasing or contract hire. The argument is that these companies can take on the fuel management, the health and safety issues and so forth. It takes the pain away from the fleet manager.”
Traditionally, this activity only happened with large fleets, but Pulvertaft claims he is seeing contract hire and leasing moving down to the SMEs, where the ‘fleet’ could be as small as two or three cars.
“If you’re charged with sorting out the company cars for a smaller organisation, it is probably not your only role,” he says. “The leasing company sees that as its opportunity. You suddenly only have to deal with one leasing company; you no longer manage several cars. They take some of that hassle away from you while also getting your cash. Everyone benefits.” This is increasingly the case as the Government brings in legislation around Co2 emissions, health and safety laws and erodes the traditional tax benefits of having a company car.
Some manufacturers are acutely aware of this challenge and are tailoring communications to fleet managers in order to address these specific issues.
Nikki Wilton is group account director at Tullo Marshall Warren, Nissan UK’s main below-the-line agency. “We have found that anything that helps fleet managers in their job is always well received, which is why we created a microsite where they can calculate the tax for different models dependant on their emissions.”
This kind of service is undoubtedly useful, but the fleet manager still has to potentially trawl this information for every car on the market before making a decision. If a leasing company can take such tasks away, it is easy to see why they are increasing market share.
Beyond the mundane
There persists a view in the marketing community that the standard of creatives rarely rises above the mundane: 48-sheet posters showing a white van with its rear doors open. Paul Godden of Fiat contests this. “We’ve really tried to move away from that generic image of someone loading a palette or a cement mixer into their van. We do all forms of marketing apart from TV, and that’s only because our budget is too small. If we had the cash we would be there.”
Budgetary constraints forced Fiat to think more keenly about the above-the-line campaign that would support its key DM work. With a strategy that takes in national press, trade press, radio, outdoor and sponsorship, their marketing pound had to be wrung dry.
The risk was that the core audience of white van men are not fans of fussy marketing. “They really don’t like teaser envelopes or that kind of thing,” says Neal.
Neither would the cost efficiencies of new media prove effective. “We’ve tested email marketing but that doesn’t work. These people aren’t sat at a desk, they’re out on the road,” Neal adds.
And while Fiat is considering SMS, Godden is acutely aware of the risks. “By sending information to their mobiles we could be interrupting their business. This is their main way of communicating while on the road. We don’t want to disrupt that and become an irritant.”
Fiat commissioned Leo Burnett to research the market and discovered that, despite the impression given by the media, white van men wanted to be seen as businessmen, making business decisions.
“There’s this impression that the white van man has his arse hanging out of his jeans and isn’t too intelligent,” says Godden. “They don’t want to be seen in this way. They may drive a white van as part of their job but they are clearly running a business and have to make decisions that affect their business. Our above-the-line work reflects this, it uses humour and interesting visuals while also driving home the business benefits of our product.”
Alongside these creatives, Fiat sponsors The Sun’s Supergoals, tying together two key indexes for the market: sport and The Sun newspaper.
Leveraging brand value
Compared to much other B2B marketing, the automotive industry is at a major advantage. The audience depends upon cars and commercial vehicles; they are recognised brands and therefore benefit from much of the consumer marketing that takes place.
Email marketing and the Internet are gaining acceptance as marketing tools within the company car sector, but are less likely to demonstrate efficacy when marketing to sole traders. And while the core activity remains conventional DM, a great deal of the supporting strategies straddle the B2B-B2C divide.
The rise of contract hire and leasing is a trend likely to continue, especially with ever-tighter regulations surrounding emissions, health and safety and the gradual erosion of tax incentives.
This trend, coupled with the emergence of a user-chooser market, could see a greater reliance on consumer marketing practices, as the business decisions are handled by the leasing companies.
These companies are now jockeying for position with the car manufacturers in an ever more-crowded market. It remains to be seen whether the manufacturers will continue to market direct to the business or if they will change tact and start marketing to the intermediary.
