Stopwatch Marketing Blog

In a recent posting on Marketing Sherpa, the President, Anne Holland used her local Lexus dealer as an exemplar of someone who could, in the words of her posting, create an offer that customers would actually click on…once that was innovative, not boring. After describing the luxurious dealer experience provided, Ms. Holland’s bottom line was “…the offer that relates *directly* to your product or service is nearly always the one that will win any test.” To see the entire posting at Marketing Sherpa, click this link:

http://www.marketingsherpa.com/article.html?ident=29664

The Lexus experience is, indeed, an exemplar. In our book, Stopwatch Marketing, we include a case study on their overall marketing strategy. Briefly, the two main problems Lexus (or any car manufacturer) faces are:

1. Everybody hates the traditional car dealer / “let’s haggle over price” experience

2. Faced with this, the consumers are very Painstaking. (We have a whole chapter on Painstaking shoppers).

Lexus has changed the traditional (unruly) relationship between manufacturer and dealer by showing potential dealers a better way, using brand-building rather than incentives to deliver not only gross sales, but the highest profitability in the industry. The company drives several dealer training and recognition programs with names like “Lotus Benchmark Service” and “Elite Dealers.” Among the features of these programs are visits to the U. S. dealerships by personal trainers from Lexus headquarters and visit to Japan by U. S. dealer personnel for months of training and indoctrination. Lexus has also changed forever the traditional consumer / dealer relationship: Entering a Lexus showroom is a lot more like visiting a luxury hotel than a car dealer; this is not entirely a surprise, since Lexus famously models its training program for employees on that given by the luxe hotel chain Ritz Carlton.

That showroom experience, as mind-blowing and as important as it is, is only the end of a very long marketing path, one that has made Lexus one of the most profitable brands in America. The problem with painstaking shoppers is that they don’t merely take pains in finding the perfect hotel room/luxury automobile/stereo system they frequently become pains as well. A manufacturer or retailer attempting to compete in this quadrant – and, given the profits to be found here, there is never a shortage – must be prepared to either anticipate all possible problems at all steps along the shopping continuum, or to have a constant stream of dissatisfied customers.

A special sort of painstaking trap lies in wait for a luxury automobile manufacturer: the better your product performs in ways that can be quantified, the more demanding your customers become. The need to constantly top not only one’s competitors, but oneself, is what keeps manufacturers in this segment up nights. Lexus’s response to this challenge has been to use their touchpoints – to reinforce the qualitative advantages of the brand. Lexus’s painstaking touchpoints are not designed to exploit customer’s anxieties, but to soothe them.

To understand this, it’s best to know something about how Lexus differs from its competitors in the allocation of marketing resources. Traditional auto marketers spend about two-thirds of those funds on the last ticks of the shopping stopwatch – sponsorships, dealer cooperative ads, and especially buyer incentives – with only one dollar spent on the earlier stage brand-building. It is estimated that Lexus, however, spends 50% of its marketing dollars on brand building, half again as much as most car companies. In some public domain consumer research among car buyers, it was found that TV and print displayed the highest impact a year prior to purchase; direct mail was highest 2-3 months prior, and website and showroom were highest within days and weeks. Painstaking shoppers want to buy (rather than to be sold), but they can’t be rushed. They have to be reeled in, slowly, with a series of touchpoints that gradually increase the level of shopper involvement.

A big chunk of Lexus’s spending – and a rapidly growing chunk – is spent on online communications. It has to be: Nearly two-thirds of new vehicle shoppers now do at least some of their shopping research online before purchasing. Lexus is producing podcasts, investing millions in web sites, and creating the industry’s best do-it-yourself feature, their “design-your-own-Lexus” web site. For the launch of the new IS model, the company ran an online sweepstakes that invited visitors to submit personal photos, (only occasionally including the actual car) which they then used to produce a “photomosaic” on what the company called the world’s largest digital display on the sixty food Reuters billboard in Times Square.

Lexus has demonstrated that the real sweet spot in the painstaking quadrant is the property of companies that do the best job at simultaneously calming and engaging shoppers who are rich in time and money.

  

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