Is Care by Volo helping to lower the average age of a Volvo buyer?
We are roughly six to eight years younger than the average at Volvo.
Does that mean the early 40s?
I would say it's closer to 45. I see a lot of the growth opportunities as we reach out to even younger customers.
Is the business profitable?
We don't share numbers in terms of profitability, but this would not be one of Volvo’s core pillars [to more than double global online sales to 50 percent by 2025] if we thought we couldn't make money. That is absolutely clear. And this is not something that is bleeding money today.
Does Care by Volvo look at nontraditional metrics to rate its success?
Yes. I come from the e-commerce world and I have been building up tech companies for a while. In this sector you are primarily looking at the customer’s lifetime value. That is different from what I have seen in the automotive industry. Another core pillar for us is how many visits a person makes to the retailer before making a purchase. In Germany, for example, roughly 40 percent of customers visit the retailers before making a purchase. That means 60 percent go fully online.
Does that number concern dealers?
We do not want the retailers to be excluded from the buying journey, but it's important to understand how we can improve and build the service to make sure it is as good as possible.
One of the numbers that Volve talks about is having 5 million direct customer relationships by 2025. What role will Care by Volvo play in that?
We want to build the direct relationships together with our retailers so we can do as much as possible to keep loyal customers and retain them over time. That is absolutely core to our subscription model.
What is Care by Volvo’s retention rate?
We don't share that. What I can say is that the [retention] data looks solid. Although we have a flexible model where the customer actually can switch to another car and can easily jump out or in, that is not something we want to encourage. At the same time, one of our core pillars is flexibility. If the customer needs a different car because of a life change or needs to end the subscription because they lost their job then they can. Therefore, we offer the possibility to do these things, which provides peace of mind, without encouraging people to make changes just because they can.
Why have other companies struggled in this sector?
It's difficult for me to comment on why others have struggled. I would rather talk about why we have succeeded. I think it's a combination of different things. One is truly involving the retailers to make sure the purchase journey is good from the time someone goes to the website to place an order all the way through to delivery. Another thing is looking at how we are reducing the barriers to make the purchase online, and the 30-day trial is a clear example of this. If you want the customer to buy something online and you want to have a reasonable acquisition cost to do so, you cannot put a lot of friction in there. That is the key. And I think we have been fairly good at that. But we made a lot of mistakes in the beginning.
Could you give an example?
Yes. When a customer initially went into Volvo.com and tried to sign up to Care by Volvo we forced them to sign in with a Volvo ID. Conquest customers didn’t have a Volvo ID. Just by removing that small little obstacle we increased the conversion rate by 100 percent.