Bayerische Motoren Werke AG, abbreviated as BMW, is a German multinational manufacturer of luxury vehicles and motorcycles headquartered in Munich, Bavaria, Germany. The company was founded in 1916 as a manufacturer of aircraft engines, which it produced from 191ff to 191fi and again from 1933 to 1945.
Automobiles are marketed under the brands BMW, Mini, and Rolls-Royce, and motorcycles are marketed under the brand BMW Motorrad. In 201ff, BMW was the world's fourteenth-largest producer of motor vehicles, with 2,2ff9,503 vehicles produced, and in 2022 the ffth largest by revenue. The company has a significant motorsport history, especially in touring cars, sports cars, and the Isle of Man TT.
BMW produces motor vehicles in Germany, Brazil, China, India, Mexico, the Netherlands, South Africa, the United Kingdom, and the United States. The Quandt family [de] is a long-term shareholder of the company, following investments by the brothers Herbert and Harald Quandt in 1959 that saved BMW from bankruptcy, with the remaining shares owned by the public.
LOGO BMW:
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1917 - 1936 1923 - 1953
5 ©
1936 - 1963 1963 - 1997 1970 - 1989
@ %
1997 - 2020 2020 - now Figure 2.1. The BMW Logo Evolved Through The Years!
Finance™!:
e BMW revenue for the quarter ending September 30, 2023 was $41.fi5fiB, an 11.ff9% increase year-over-year.
e BMW revenue for the twelve months ending September 30, 2023 was $162fi60B, a 14.fffi% increase year-over- year.BMW's annual revenue for 2022 was $150.254B, a 14.1ff% increase from 2021.
e BMW's annual revenue for 2021 was $131.60ffB, a 16.39%
increase from 2020.
e BMW's annual revenue for 2020 was $113.0ff6B, a 3.12%
decline from 2019.
2.2. The situation for CRM activities at BMW
Vasile (2009) noted that due to the global financial crisis, the group's revenues fell by only 4.ff%, despite being the world’s most sustainable car manufacturer, and it is expected to recover from this situation in a short time." Conversely, its net sales in the UK market saw a significant decrease, impacting the entire group’s 21
profit margin. However, BMW (200fi) stated that BMW has the potential to maintain its market leadership in the automotive industry by increasing sales by 2010."! Therefore, it plans to introduce new products with innovative strategies and offer incentives, rewards, discounts, and other benefits. BBC (2010) cited Gordon Brown’s statement about the state of the automotive industry, saying that BMW (UK) is battling for the future.™ In this context, it should adopt new strategies to increase profits. For instance, BBC (2009) reported that BMW (UK) would assist customers in buying a new car by offering scrap incentives to boost sales.!
Kotler & Keller (2006) and Pearce & Robinson (2006) suggested that a 5% increase in customer loyalty could result in a 25% to 90% increase in customer profitability..°""! Therefore, BMW (UK) took several steps to enhance its customer loyalty, one of which is the CRM program.
2.3. Customer relationship management at BMW 2.3.1. The strategic CRM at BMW
Corporate Client: A significant portion of BMW’s revenue comes from corporate sales in the UK, necessitating special attention. Therefore, BMW has a dedicated team to develop and retain these types of clients through a CRM system.
Dealership management: Since all BMW car sales are through dealer outlets, BMW primarily focuses on customers through dealers in the UK. BMW trains the dealers to provide better services to the customers and shares customer data with them to better understand the customers.
Reselling cars: BMW offers a service for reselling BMW cars to customers, helping them find a new model. This service is very popular in the UK, where a customer can list their existing BMW car for sale with BMW and buy a new model. This service is also beneficial for those who cannot afford a new car. BMW provides new motor parts to the customer if necessary and offers a discount to the loyal customers of the company.
Ancillary Service: BMW offers amenities such as fan clubs and magazines to its customers, which are greatly appreciated. In 22
addition, BMW produces new components for its existing models that customers can conveniently purchase from dealers to replace old car parts. These services from BMW are well-received by almost all customers. Through the fan club websites and magazines, customers can share their opinions about the company, providing BMW with valuable insights about its customer base.
Loyalty reward: Through this program, BMW rewards loyal customers who frequently purchase cars from them with price concessions and other incentives. The company also offers free after-sales service and free original parts to loyal customers and sometimes facilitates the sale of their old cars.
Privacy: With the rapid expansion of IT, the security of individuals in the digital world is a concern. BMW uses an application system that serves the entire company and enhances the security of customer data.
Customization: Recognizing the importance of customization in the automotive industry, BMW focuses on individual customer needs to provide customized cars. Instead of mass customization, BMW caters to each customer’s specific demands.
Community: BMW encourages customers to form a community by expressing their appreciation for the company’s cars. This allows many people to share and discuss BMW’s products, services, and other topics, helping to increase sales and receive direct feedback from customers.
Customer Identification: Upon analyzing the customer database, BMW identifies its target customers to whom it directs its marketing and sales initiatives. Typically, it’s assumed that the customers are the ones behind the wheel. However, BMW's philosophy regarding customer selection differs. The person driving the car isn’t always the one making the purchase decision;
sometimes, the decision-maker is someone else. BMW targets those individuals who directly influence or make the purchasing decision, such as a company’s CffiO deciding to buy a car for the company. Customers with high purchasing potential are crucial for
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the company, and BMW implements a marketing program to retain these customers. Occasionally, a loyal customer with good profit potential may have recently bought a car. In such cases, even less attractive customers are chosen for the retention program." A part of BMW’s CRM strategy is aimed at retaining its customers while also boosting its profitability.
2.3.2. The operational CRM at BMW
Call center: BMW operates a well-developed 24-hour call center and web facilities for customers to ask any question regarding the company and its products. BMW uses its call center to receive feedback from customers and provide them with directions or suggestions.
Customer’ service: BMW _ offers high-quality service, encompassing both sales and after-sales services. It provides insurance, loans, and other facilities to customers when they purchase a car from BMW.
Building a Customer Database: Creating a customer database is the first step for BMW UK in building relationships with its customers. This database houses comprehensive data and customer history, enabling BMW to evaluate its customers.
Previously, this was done through direct contact and phone calls.
21 However, BMW now leverages a robust network and IT infrastructure to collect customer data and implement CRM. In this process, BMW primarily collects the following customer data:
e Transaction details: BMW collects all data related to a customer's past purchases, including purchasing habits, payment habits, and payment methods."
e Customer address: BMW _ collects detailed customer addresses to locate and contact customers. It also identifies the customer's previous purchase point.
e Customer Preference: BMW collects information about a customer's vehicle preferences, including preferences expressed by customers in the past.!23!
e Marketing response: The data BMW collects about marketing responses includes the response rate of 24
customers to various marketing initiatives. Some customers are influenced by advertisements, some prefer direct sales offers, and others are attracted to promotional offers.
BMW currently uses Siebel Systems’ application to collect customer information. The financial services provided by the BMW Group also serve as a means to collect customer data. After gathering customer data, BMW creates a comprehensive customer database to analyze customer demand and other issues.
2.3.3. The analytical CRM at BMW
Data Analysis: The primary objective of analyzing data from the database is to discern various customer patterns and categorize them into distinct segments for sales purposes.
However, the modern approach has shifted, and currently, particularly in the case of BMW UK, individual customer focus is paramount. BMW employs the contemporary concept of Lifetime Customer Value (LCV), which involves analyzing each customer based on their current and future profitability. In this context, the profit derived from each customer is weighed against the cost of acquiring the customer and _ factored into the analysis.
Subsequently, the marketing manager determines which customers should be prioritized for the company’s future profit and which customers should receive less attention." BMW utilizes this strategy to maintain long-term customer relationships. Since all of BMW’s business is conducted through dealers, it’s crucial to relay customer information to the dealers so they can act accordingly.
BMW also takes into account the customer's purchase volume and uses the application system to calculate how often customers visit the company’s site for purchases and other information."°!
2.4. Result
2.4.1. Customer Satisfaction
In the case of BMW, customer satisfaction levels varied.
Firstly, half of the participants expressed high satisfaction with BMW, appreciating both the car and the post-sale service.
Secondly, four participants had a moderate level of satisfaction;
they were neither highly satisfied nor dissatisfied with BMW. They felt that the after-sales service could be improved, but they 25
enjoyed driving the car. Thirdly, six participants were dissatisfied with BMW, citing issues with the car and subpar after-sales service. One participant shared an experience of delayed response to a problem, having to wait for over a month to receive feedback from the company. Conversely, satisfied customers reported receiving prompt responses from BMW regarding their issues, and they felt that the company handled their problems attentively.
Generally, customers wish to share their experiences with the company after purchasing a car, but BMW has struggled to give equal attention to all customers. This is one of the significant challenges the company faces in managing CRM effectively.
Customer Satisfaction
10 8
6 m Series 1
4 mSeries2
2 nSeries 3
Number of Level of Satisfaction participant
Figure 2,2. Customer Satisfaction
2.4.2. Respond to the customer
The response rates of BMW to the customers are not very good as most of the customers address this issue. However, BMW claims that they quickly respond to the customer demand but the dealers are late. The sale of BMW cars is solely done by the dealer and the customer buys the car from the dealer’s point of sale. At the same time, the after-sale service is also provided from the sales point where the customer buys the car. As a result, the process takes more time as the dealer addresses the problem to the company and the company gives the service through the dealer point. To reduce the problem BMW currently uses advanced 26
database software and call center to respond to the customer quickly. According to this software, all the information regarding the customers are available at every point of selling and a team working on the issues and visiting the dealer outlet to improve the service. In the customer survey in the UK, 65% of the participants believe that the response to the customer by BMW is late and negatively affects the loyalty of the customers and only 20%
believe that the response of the company to the customer is quick and 15% believe that the response was moderate. From these findings, it is clear that the response of BMW to the customer is not satisfactory.
Response to the Customer
70%
60%
50%
40% 30%
20%
10%
0%
Quick Late Modarate
Response Response Response
Figure 2,3. Response to the Customer Product Quality and Design
BMW is known for its premium cars, where the emphasis on quality and design plays a crucial role in attracting customers. The company invests heavily in research and development to create new and superior vehicles. Generally, BMW customers express satisfaction with the quality and design of their purchased cars.
About 50% of customers consider the car’s quality to be the best and find the design equally impressive. Meanwhile, 30% of customers feel that the quality and design of BMW cars are better than others, and 15% think they are good. Only a small fraction, 5%, of customers are not satisfied with the quality and design.
This analysis clearly indicates that BMW’s product quality and 2ff
design are highly appreciated, and customers are content with BMW’‘s current product range.
Quality and Design of BMW car
5% 15%
aw Good o Better
50% 30% w Best
w Worse
Figure 2.4. Quality and Design of BMW car Communication
Communication with customers is crucial for an organization, especially when the product is of high quality and price. BMW adopts a communication strategy that treats each customer individually, communicating with them about new _ products, services, and other matters. In addition, the company operates a 24-hour call center and web facilities, enabling both BMW and the customer to communicate with the company. BMW collects data on individual customer preferences and notifies the customer if such automobiles are available at the outlet. BMW also reaches out to customers through various types of advertisements across different mediums, including their website, cable, print, and more.
However, due to certain constraints, BMW is unable to maintain communication with every customer. Despite this, most BMW customers expressed satisfaction with the communication strategies and appreciated being informed about the company’s various activities.
* Sale and Resale
BMW offers a service that allows customers to sell their old cars and purchase a new model from the company. They operate a platform where a customer can list their old car for sale and buy 2fi
another car, whether new or used. The company provides a guarantee for the car being sold and supplies necessary spare parts to the buyer if needed. Customers appreciate these services from BMW as they get the opportunity to trade in their old car for a new one. Additionally, this arrangement benefits those who may not have the means to easily purchase a new car. The majority of customers express their satisfaction with BMW’s services related to the buying and selling of used cars.
* Ancillary Service
BMW offers amenities such as fan clubs and magazines to its customers, which are greatly appreciated. In addition, BMW produces new components for its existing models that customers can conveniently purchase from dealers to replace old car parts.
These services from BMW are well-received by almost. all customers. Through the fan club websites and magazines, customers can share their opinions about the company, providing BMW with valuable insights about its customer base.
2.4.3. BMW’s position in terms of CRM compared to its Industry rivals
BMW's main competitors in the UK include General Motors (GM), Mercedes-Benz, Daimler AG, Volkswagen Group United Kingdom Limited, Honda, Toyota, Nissan, Ford, Alfa Romeo, and others. All these competitors have CRM programs primarily aimed at retaining existing customers and acquiring new ones."*! In the UK market, BMW’s share is less than its competitors, suggesting that BMW's CRM may be less effective than theirs. The relationship with customers is mirrored in the company’s sales volume.
Companies that can foster strong relationships with customers typically see an increase in sales. Indicators of the success of a company’s CRM include market share, profit trends, and the number of car sales.H”1
2.4.3.1. | Number of car sales
In 2009, Ford managed to generate the highest revenue by selling the most cars in the UK market. In contrast, BMW ranked sixth in car sales, which suggests a less effective CRM strategy, given that all the top ten companies produce high-quality cars, so 29
there isn't a significant difference in quality. The relationship Ford has with its customers in the UK is stronger than BMW's, as evidenced by its sales and profit.
Number of Cars Sold
@ Number of Cars Sold
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Figure 2.5. Numbers of Cars Sold
The primary objective of CRM is to foster strong relationships with customers and retain them, preventing other companies from winning them over. The effectiveness of a company’s CRM directly influences its sales volume. If the relationship with the customer is positive, these customers not only purchase the product themselves but also act as referees, encouraging others to buy the product. Therefore, a company’s sales volume and market share reflect the success and customer retention rate of its CRM strategy, even though it may not provide the exact retention rate.
2.4.3.2. | Market Share
In terms of total sales and market share in the UK, Ford leads the pack with a commanding 15.fi6% of the total market. In contrast, BMW holds only 4.95% of the total market, ranking sixth in terms of market share. Ford’s customer service software, developed by Microsoft and IBM, allows the company to closely monitor its customers and foster strong relationships.1*®! Similarly, GM has cultivated a good rapport with its customers, securing a market share of 11.92% in the UK automobile market.
30
% Market Share
nFord m Vauxhall n Volkswagen
16% O Toyota
mw Peugeot o BMW w Audi O Nissan m Honda m Citroen nOthers
Figure 2.6. Market Share 2.4.3.3. — Profit level
In 2009, a majority of UK automobile companies, including BMW, Ford, GM, Honda, and others, experienced a decline in profits compared to the previous year. Many of these companies also saw a reduction in their market share.”° The drop in profits could be attributed to the economic downturn that affected the Western world. However, during this period, companies like Ford and GM experienced only minor setbacks. Conversely, BMW lost 12.ffff% of its market share in 2009. This loss was not solely due to the economic downturn, but also due to weaknesses in BMW's CRM system, which failed to maintain strong relationships with customers.”!! As a result, while GM lost market shares in one brand, it was able to recover through its other brands in the market.
2.4.3.4, | Response to the Customer
Responding to customers is crucial for expanding the customer base, which subsequently contributes to a company’s revenue and profit. BMW was less reactive to the market, particularly in 2009 when customers were grappling with economic difficulties and couldn’t afford high-priced cars. BMW continued to offer its luxury cars and consequently lost customers. Conversely, 31
companies like GM and Ford were quick to respond to the market conditions, reducing their car prices to attract customers. As a result, they managed to divert customers from BMW to their brands.
2.5. Advantages - Disadvantages 2.5.1. Advantages
* The strategic CRM at BMW
Customers appreciate these services from BMW, especially the opportunity to sell their old car and buy a new one. This arrangement also benefits those who may not have the means to easily purchase a new car. Most customers express satisfaction with BMW's services related to buying and selling used cars.
BMW's product quality and design are highly appreciated, and customers are content with BMW’s current product range.
BMW adopts a communication strategy that treats each customer individually, communicating with them about new products, services, and other matters
BMW offers amenities such as fan clubs and magazines to its customers, which are greatly appreciated.
“ The operational CRM at BMW
Uses advanced database software and call center to respond to the customer quickly. According to this software, all the information regarding the customers are available at every point of selling and a team working on the issues and visiting the dealer outlet to improve the service.
“ The analytical CRM at BMW
BMW employs the contemporary concept of Lifetime Customer Value (LCV), which involves analyzing each customer based on their current and future profitability.
BMW targets those individuals who directly influence or make the purchasing decision.
2.5.2. Disadvantages
“ The Strategic CRM at BMW
Ambiguous responsibility: The accountability for customer feedback between BMW and its dealers is unclear, leading to
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