Across the globe, customers are fast moving to subscription models for all things of regular use. From their entertainment to personal hygiene products, grocery supplies, to essential reading, ownership no longer has the same value it once did.
That is because, for one, subscriptions are fast being more sustainable alternatives to ownership, and two, there is immense convenience in not having the sole responsibility of procuring/managing things of everyday use. This change in mindset, coupled with the fallout that Covid 19 has had on daily lifestyles, one is sure to see an uptick in automobile subscription services.
As this segment of the market grows, here are a few things that can prove significantly impactful when it comes to providing a service for subscription-based car ownership –
1. Higher Accessibility = Wider Customer Base
The removal of long-term commitment from the equation makes the car subscription model extremely attractive for the customer and makes for easier conversion from a prospect to a consumer. The chances of the same customer upgrading to a better model are also higher with the right retention tactics. For this, manufacturers and dealers should invest in the right kind of infrastructure building from the get-go. The tech and billing infrastructure needs to be robust and secure, ensuring ease of access for many users and powered with the ability to provide insightful data to grow the target base.
2. Targeted Customer Acquisition
Using the right kind of data and a focus on performance marketing, car subscription management companies can optimize ad spends to run highly targeted customer acquisition campaigns. This results in higher conversion rates, especially when benchmarked against the traditional vehicle sales model.
3. No Big Loans
With an automobile subscription service, there isn’t any need for the customer to take on EMIs. Most subscriptions are available based on the customer’s credit score. The monthly fee is almost always lower than what the customer would have paid in EMI, maintenance, and other upkeep expenses. To enable maximum convenience for the customer, easy monthly billing should be enabled by the revenue management system.
4. Focus on Service Experience
Across the board, research shows that Millennial and Gen Z customers are captured and retained by delivering a superior service experience rather than a purchase experience. Automobile companies can gather very relevant customer behavior data with vehicle subscription services and deliver a service experience tailored to delight.
5. Longer Customer Lifetime
Converting new leads is always significantly harder than nurturing existing ones. By focusing on vehicle lease and subscription, manufacturers can focus on the retention of each customer, thereby being connected with them through a long journey and anticipating their next upgrade as well.
6. Flexible Exchange, Returns, or Buy-out
Once a customer is integrated into the MRR cycle, then the rental car subscription model should be such that it can allow for the customer to exchange, return or even buy out the automobile conveniently. This will provide for a chance to get additional revenue with an upgrade and add to the service experience aspect of the model.
With shared mobility growing the way it has and the work culture across Metros and Tier 1 cities seeing a significant shift due to COVID, automobile subscriptions are clearly set to grow. Car ownership no longer holds the value it once used to and is now outweighed by the need for convenience and customization. To be able to build this model of engagement with the new-age customers, automobile makers should invest in a robust digital subscription, payment, and data collection tool right at the outset. The time to ride this wave is now, or one could run the risk of being in a position where the consumer is spoilt for choice, and they’re not even in the running.