Membership models are the future for the automotive industry

Sam Jordan, Executive Vice President at Manifesto

Three quarters of business leaders in the automotive industry see significant potential in subscription and membership commercial models, according to a new survey that identifies untapped opportunity in the industry.

‘How to Make Money from the Membership Economy’, commissioned by international growth strategy experts Manifesto Growth Architects, has revealed that 72% of senior professionals in the automotive industry agree, having either already implemented similar commercial models, or believe doing so would deliver substantial benefits.

More than 500 senior business leaders across the retail, finance, automotive, leisure and utilities sectors were polled to ascertain the future of membership and subscription models and attitude towards change across these industries. The survey revealed an evident appetite for more commercially based customer models within the sector, however, 72% of respondents disclosed that less than 30% of their revenue is currently accrued through these methods. Similarly, just 3% of respondents reported that more than 50% of their business revenue is generated through commercial customer models, revealing the opportunity for growth in this area.

In order to change or add to the incumbent commercial model, automotive companies would need to examine the resources and processes in place. When asked which areas of their business would need work to maximise on the opportunity presented by subscription and membership models, 36% of respondents cited customer services, followed by marketing with 28% and digital platform development with 19%.

Many key players in the automotive industry have already explored this space, meaning it can be done. In June 2018, Jaguar Land Rover launched Carpe (Latin for ‘seize’), offering an all-inclusive car subscription service providing customers with hassle-free access to brand new Jaguars and Land Rovers. Not to be outdone, car manufacturer Audi is another company to be maximising the gap with Audi select, a monthly subscription service launched in the USA last year that allows motorists to buy, lease or subscribe to cars. Meanwhile, car leasing overtook the traditional purchase of cars in 2017, and car sharing network Zipcar continues to accrue members far past the one million mark.

Manifesto, which specialises in developing growth strategies for major international household names including Merlin, Disney, News Corp, Purina, Pay.UK and Coty, advises businesses how to run these services profitably. Identifying an opportunity in the automotive sector means companies in this space have room to grow their businesses through lucrative, targeted membership or subscription models.

Sam Jordan, Executive Vice President at Manifesto and member proposition development specialist, said: “The results of this survey identify the huge opportunity within the automotive sector – and there are already companies leading the way in this space. Those businesses who haven’t yet incorporated new ideas around subscription and membership into their business models may run the risk of being outpaced in a highly competitive and rapidly changing market.

“It is great to see that senior professionals in the automotive sector are realising financial pay off as a result of introducing these contemporary business models. Alongside the industry-held belief that this is a viable and rewarding system to build on – as revealed by our survey – the sector has established a firm foundation on which to build further successes for the dual benefit of these innovating companies and their customers.”

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