At Cognizant Snapshot on From What to Howin Stockholm recently, Martin Ölund, Manager for Care by Volvo, talked about its new offering, an offering that so far has resulted in a 61 % increase in incremental sales and in increased margin during the subscription period compared to traditional sales. The Care by Volvo offering has also reached a new target group with a higher split of female customers.
In its essence, Care by Volvo allows consumers to enjoy a simplified buying experience. The car is built according to the client’s preference, delivered wherever the client wants, and the subscription period runs over either a 24 or 36 months period. Insurance and services are included.
Insights behind the offering
Launched in 2016, Volvo’s offering was initially based on several key insights: that consumers want to decide on how, when and where to purchase, that they use digital search and browsing before they even visit a store, and that they have higher demands on financial and physical flexibility than ever before.
Research had also shown that one in three Swedes said they were interested in subscribing to a car instead of owning it – and named cost and ownership hassles as top reasons for not owning. Volvo also knew that product loyalty increases with services and values that are added on top of the core product. All these factors, made Volvo strive for a new way to offer consumers its products.
Project success factors
How did Volvo realize the subscription initiative? Organization wise, the project was run in parallell outside the current structure to work around mental barriers and legacy issues. External partners were used for services and added values, and fast tracks for digital and technical needs were established.
Team members with various positions were engaged, and also people with additional knowledge about retail and digital consumer experience. While encouraging creativity and an open mind spirit, strict deadlines were also set to proceed with speed. It was also really important for the team to have an on-demand mindset where it continuously ran sprints and launched new features.
In conclusion, the critical matters for realizing the digital initiative were a thorough understanding of consumer behavior, the ability to quickly change in accordance with the new behavior, and a structured approach with both short and long term objectives.
Want to know more? Watch Martin Ölund’s whole session at Cognizant Snapshot Breakfast.