We’ve been watching the rise of subscription retail, which attempts to replicate in the real world of retail goods the loyalty and engagement inherent in subscription-based digital services. Such services function essentially as fee-based loyalty programs, with consumers raising their hands via cash on the barrelhead to engage in a deeper relationship with your brand. So ubiquitous have subscription retail programs become that you can now attend an annual conference to hear case studies and learn best practices. Can the concept migrate successfully to big-ticket and luxury purchases? Automobile manufacturer Porsche is about to test that theory.
By Rick Ferguson
Automotive News has the story, which reveals the details of Porsche Car North America’s new Porsche Passport program, now undergoing a pilot test in Atlanta, where the company is headquartered. The program is supported via the mobile app-based vehicle subscription platform of Atlanta-based Clutch Technologies, and offers access to Porsche vehicles for a monthly fee of $2,000 or $3,000. The monthly fee buys subscribers access to eight model variants at the $2,000 level and 22 variants at the $3,000 level; the fee includes registration, insurance, maintenance and detailing.
Money quote from Porsche Cars North America CEO Klaus Zellmer:
"Hopefully we can engage some people we normally don't engage with the brand. If somebody offers customers in the future a subscription model for sports cars, and this potentially involves a few Porsches, but also some other cars, then we lose touch with our customers. One of our main guardrails for the future is that we want to maintain the control of the touch point with our customer."
This desire for control of the customer relationship is the prime motivation for the rise of subscription-based loyalty programs around the retail world. By creating a “walled garden” approach to customer relationships, retailers hope to encourage via subscription fees customer loyalty that consolidates spend and stems attrition. For Porsche, the Passport program’s goal is less about consolidation and more about acquisition, as it hopes to attract younger drivers into a relationship with the Porsche brand while avoiding cannibalizing Porsche dealers’ customers. Porsche is taking a cautious approach to the pilot, limiting the Atlanta program to 50 customers with the potential to expand into new markets should the test prove successful.
Another potential benefit of the Passport program: better insight into Porsche customers through data. The ability to derive customer insight is a key selling point of Clutch Technologies’ platform, which promises “meaningful relationships built on data… Every interaction, every trip, every [vehicle] flip creates rich information. This helps our system get smarter, which lets you serve your customers better.” In addition to providing white-label services to manufacturers, Clutch also operates a consumer-facing subscription program providing a wide variety of vehicle brands to consumers.
Porsche is also not the only automobile brand with a branded subscription program. General Motors is currently wait-listing customers for its upcoming Book by Cadillac program, which for $1,500 per month will provide up to 18 vehicle swaps per year. Audi’s Audi on Demand currently operates in San Francisco, while Volvo operates its own subscription plan Care By Volvo.
If subscription automobile clubs become the future of driving – and particularly if autonomous vehicles ever reach mass adoption – then the very idea of car ownership might be reduced to a small group of wealthy collectors, while everyone else subscribes to their cars the same way they subscribe to Netflix or pay a monthly fee to always own the latest smartphone. For subscription automobile programs to take off, Porsche and its competitors will need to embrace the idea of leveraging driver data to build one-to-one relationships with their drivers. Porsche’s Atlanta pilot program will be a major step in testing that concept.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).