Why European car firms could follow Chinese lead in loyalty apps

Car brands in the UK and Europe have never really fully embraced the idea of loyalty points, bar Ford’s now defunct membership of the Nectar points scheme. But that’s all set to change as they try to build more direct, app-based relationships with their customers. “Almost all major auto players are looking to develop solutions which can increase direct engagement,” Manuel Wiener, head of innovation and strategy at consultantcy Capgemini Invent, told Autocar. To get a sneak preview of a possible future for customer loyalty programmes for car companies in Europe, you need to explore the eye-popping world of Chinese car makers and the extraordinary growth of the ‘fan’s economy’ in their home country. Brands such as Lynk&Co, Nio and Xpeng – all three of which are now pushing into Europe - have developed their apps into something far more than just a place to check your average fuel economy or pre-heat your EV. Instead they’ve managed to create entire communities where owners and non-owners alike are encouraged to engage with the promise of rewards. For Autocar Business webinars and podcasts, visit Autocar Business Live Geely-owned Lynk&Co and start-up Nio begun the trend, creating their respective apps in 2017. The biggest players have created digital spaces that combine an owner’s forum, an online shopping centre, a car communication device and, in the case of Lynk&Co, what a spokesman described as “Etsy on steroids” where users can sell each other products. The claimed numbers of users are incredible. Nio reckons it has 2.4 million users, of whom 440,000 are active daily. Lynk&Co says it has almost 1.9 million users, of whom 180,000 check or post daily. Of those 1.9 million, only 700,000 are actually Lynk&Co owners, meaning more than half of its users are just fans of the brand. Nio even launched its app before its cars. “It’s not just about the product,” Hui Zhang, head of Nio in Europe, told Autocar. “It all comes back to our vision to build a community based around a smart EV – what we call Nio life.” The points, or CoCoins in Lynk&Co speak, are awarded mainly to spur on more interaction. “We want to build a relationship with customers. Just giving cash would be weird. Points are fun,” said Jackie Qiang, head of Xpeng sales in Europe. “It encourages people to post something in the community, go through the education programme, introduce friends to buy a car, things like that.” The big question is: would the same system work here? “We will wait and see how it works with Europe. It’s hard to say,” Qiang said. “We will have to adapt to European culture.” One reason the fan economy might have taken off so fast in China is down to the youth of its users. According to Lynk&Co, almost 70% of its app users were born in the 1990s. “They grew up with internet culture and are capable of using digital tools to make products and services that others need,” a spokesman said. It's going to be trickier here. According to Steve Young, managing director of automotive retail analyst ICDP: “All manufacturers want to have more customer data and the direct relationship, but providing rewards and treats in return for recommendations or enhancing your personal profile doesn't sound to me like an approach that would work in the UK.” More creativity is required, Young reckons, for example special access to the Formula 1 teams at race day for those participating or a travelogue involving a Land Rover Defender. Car makers will need to tread carefully in crafting digital relationships with customers, according to Wiener. “They will need to shift the common consumer mindset that an interaction with an automotive company is a one-time occurrence at the point when they purchase a car,” he said. Shifting that mindset will be the increased push to sell cars directly to the consumer, reducing the dealer to more of a handler or agent than a director of the sales process. The app will be crucial. Ford is already moving down that path with its FordPass app. The company joined the Nectar scheme in 2003, handing buyers of a new car a whopping 15,000 points, but it left in 2014. “The time had come to develop the focus more towards customer initiatives that build specifically on Ford brand values,” a spokesman said. In the US, it has already developed a FordPass points system that encourages customers to move to ever higher tiers, a bit like British Airways' Avios scheme. However, the colours work the other way around: Bronze, Silver and Blue at the top (fitting for the Blue Oval). Points are earned at purchase and can be exchanged for servicing. You move up tiers depending on the number of ‘milestones’ you accrue. For example, a service is worth 25 milestones and you need 120 milestones to jump from Bronze to Silver. The higher the tier, the greater the rewards, so you qualify for one free servicing/repair pick-up and delivery on Bronze or unlimited on Blue. The FordPass reward system is “being Europeanised for launch here”, the UK spokesman said, without giving a timeframe. Ford in the US hopes this could help replace much of its marketing. “Our models are messed up. We spend $600 to $700 on a vehicle to promote it. And we spend nothing post-warranty on the customer experience,” CEO Jim Farley said in an interview with the bank Bernstein early June. “The parts business has historically been very profitable, but we only get maybe 10% or 20% of the customers coming back to us. It would be much better if we try to develop an ecosystem where 100% came back, and we gave them experiences, and that's our marketing.” Volkswagen is another company looking seriously into a reward system. It has already dipped a toe in with its We Connect app, which allows you to collect points or trophies for visiting a dealer or using the app regularly. So far this is just ‘gamification’ rather than giving money off. It also rewards frugal driving, although that mostly seems to have sparked the cynical amusement of users rather than undying loyalty. One posted disbelievingly on a Volkswagen T-Roc forum that he had been awarded 500 “Ant” trophy points for “not moving my car for five days”. In the UK, it’s less clear as to Volkswagen's plans. A spokesman told us: “We don't have a loyalty scheme at Volkswagen UK right now. The element you refer to relates to games/challenges, rather than monetary points.” Using rewards to change driver behaviour has also been deployed by BMW to get people to use the electric side of their plug-in hybrid more. The scheme works with BMWs running OS 7.0 and up and awards points for every electric mile driven, which are doubled in BMW-defined eDrive urban zones. Points are also awarded for charging and can be spent at participating public chargers. As legislators look more closely at the real-life CO2 output of plug-in hybrids, reward schemes such as BMW’s work as a useful corrective to the lazy company-car driver who picked a PHEV to cut tax bills rather than reduce fuel use. Meanwhile, charging companies are looking at rewards to boost loyalty beyond membership schemes. Those investigating these membership schemes include Osprey. “To make you choose Osprey, we will have to keep innovating,” CEO Ian Johnston told Autocar. “That means technical innovation for the best chargers but also innovations to make us more appealing. That might be loyalty points, it might be rewards.” Car makers have other ways to create loyalty in customers. Finance packages such as PCP and leasing invariably return the customer back to the same brand after the period ends. But in an era where customers might be engaging with their car brand daily via their app, a well-crafted loyalty scheme could steer them to spend more in a way that traditional marketing never could. The weird world of Chinese car company apps If you were looking to buy camping kit, your first thought might not be to turn to a car company. But the shopping channels of the apps run by Nio, Lynk&Co, Xpeng and others are bursting to the seams with tents, blow-up beds, awnings, camp chairs, stoves... If you need it to camp, it’s available on their app. Some kit is branded, some isn’t, and you buy it with cash or reward points. “Nobody in China can go abroad for holidays, so camping is the next big thing,” a spokesman for Lynk&Co said. It’s not just camping kit offered within the shopping tabs of these apps. Nio reckons it offers four million items for sales, including page after page of wine, each bottle with its own detailed set of tasting notes. Keen drinkers are asked if they want to join The Tipsy Club ('Since 2020’). Clothing goes far beyond a few branded sweatshirts to offer customers an entire wardrobe, some created with big-name designers. The car firms aren’t making this stuff but collaborating with other companies to embed products with matching brand values into an app-based ecosystem that aims to make the whole experience more engaging for customers. The need to work with others is key, argued Wiener. “Designing an attractive loyalty ecosystem also depends on collaboration,” he said. “Many automotive players are often hesitant to look externally, but doing so will enable them to offer expanded services to the consumer and deliver these to market at a faster rate.”