Innovation and value co-creation accelerates growth in car battery market

INNOVATION AND VALUE CO-CREATION ACCELERATES GROWTH IN CAR BATTERY MARKET

Clarios: 2022 SAMA Excellence Awards™ Winner for Innovative Value Co-Creation

By Nic Halverson, Associate Editor Strategic Account Management Association (SAMA)

As the world’s largest manufacturer of automotive batteries, Clarios powers one in three of the world’s vehicles. With a portfolio of evolving battery technologies for virtually every type of vehicle, the Milwaukee, Wisconsin-based company needs to stay out front, anticipate trends reshaping the auto industry, and add value at every link of the supply chain to remain a global leader in energy storage solutions.

So, when one of their customers faced challenges related to changing consumer behaviors and a shifting business landscape, they drew upon internet trends to create a solution that represents a best practice for SAM programs at large.

By collaborating with their customer to jointly look at the entire ecosystem — from manufacturers and workshops to the customer and the customer’s customers — they built a website and network that added value to every member of that ecosystem. What could have been a mundane marketplace for a commodity product instead became a thriving matrix of value co-creation for all stakeholders.

Clarios’s partner was looking for a solution to attract and convince drivers — their customer’s customer’s customers — that a local mechanic garage (also referred to as a workshop) is the best place for battery sales, installation, and service. This Do It For Me (DIFM) model allows local mechanics to demonstrate their knowledge, integrity, and expertise and forge relationships with vehicle owners, which ultimately stokes customer loyalty.

As Clarios and their partner explored how to leverage the internet without alienating the workshops or participating in direct price competition, they agreed that a cookie-cutter e-commerce site that merely sold batteries didn’t align with their customer’s business model, for several reasons. For starters, this model catered to the Do It Yourself (DIY) drivers who want to buy and install the batteries on their own. Clarios and their partner wanted to steer clear of this demographic and model because it breaks the value chain by eliminating the need for a workshop and a mechanic’s expertise, and potentially leads DIY drivers on futile internet searches full of incomplete and inaccurate information.

“Instead, we required a customer-centric solution that included the preservation of trusted relationships, loyalty to our respective brands, continuation of high-level service, product expertise for our customers, and expertise downstream to their customers and their customer’s customers,” said Elia Perez, Commercial Learning Manager at Clarios. “We were not myopically focused on facilitating the sale of batteries over the internet; we were looking to leverage the internet to enhance relationships. This counterintuitive concept — using the internet to guide and strengthen interactions instead of replacing them — is precisely what made this project unique.”

With a mutually agreed upon destination on the horizon, Clarios and their customer put their keys in the ignition, revved their engines, and began their journey to construct a website that would provide the best battery sales, installation, and service experience for everyone.

As SAMs know, strategic partnerships are successful when each passenger adds value — the hallmark of an epic road trip, if you will. On this road trip, Clarios provided a well-recognized brand, support, battery expertise, and advanced products, while their customer provided the distribution network, logistic capabilities, and direct access to workshops.

The website went live in December of 2020, featuring access to a network of reviewed-and-approved workshops that sell and install batteries for vehicle owners. Although the site’s target strategy aims to redirect vehicle owners toward the workshops — the Do It For Me model — the website also provides equal resources for DIY drivers, to still benefit from that sliver of the market.

“The workshops included on the site provide verification services to assure vehicle owners have the right battery for their vehicle, proper installation, and service warranty coverage,” said Perez. “Vehicle owners also have the freedom to choose and purchase another manufacturer’s battery. In addition, the program enables recycling of the used battery in an environmentally friendly manner.”

SAM discovery and joint value creation

As is often the case, being intentional sparked the solution. The SAM at Clarios discovered the opportunity for joint value creation by holding regular meetings with their customer to discuss business development, distribution models, promotional opportunities, and new ways to increase customer loyalty. One meeting spawned an idea to create an emergency line for battery breakdowns, which would allow their workshops to respond, fix the problem, sell product, and provide service. As the conversation deepened, it became clear that end users — the drivers — face potential problems because, when they occur, they are unplanned events. They needed a one-stop shop in these moments of car crisis.

As Clarios and their customer collaborated, their energy and excitement grew. They discovered numerous possibilities of how to address issues, as well as how to leverage the strengths of both organizations to create a new model on the market.

“The website allows vehicle owners to search batteries online, get support, access emergency solutions, learn about batteries and technologies, and find a local workshop,” said Perez. “Because the site is designed to address all demographics, every driver can customize their level of interaction. This flexibility was well received during the pandemic and provided a win for everyone in the value chain.”

Key stakeholders

To provide transparency and structure, the SAM created relationship maps internal to Clarios. The map included the name, title, status (promoter or neutral) of key members on the customer team, primary and secondary contacts on the Clarios team, and frequency of contact. This ensured the right people were engaged at the right time for the right topic. The joint account team consisted of Key Account Managers, Marketing Managers, Communication, IT, Product Managers, and Supply Chain Managers.

To move the project forward, the SAM took specific actions to increase productivity and follow through. By developing the project framework, scope, and responsibilities, the SAM implemented regular communication and instituted a change-management initiative. These steps streamlined collaboration to maximize time and efficiency and demonstrated win-win solutions.

Diverse teams and departments on both sides collaborated effectively, due to excellent zippering (lining up with customers at like levels) of both organizations, thanks to the coordination of all activities and smooth information flow.

Strategic steps for alignment

Communication between both partners became the strongest tool during Clarios and their partner’s journey to build, implement, and release the new model and ensure the website’s success.

The SAM was strategic in addressing and delegating what level of communication fit best for each meeting. Whenever possible, the SAM used face-to-face (and customer-preferred) meetings to bring together diverse, cross-functional groups when strategic issues were on the table. Virtual conference calls were used when communicating project status, timelines, and deliverables, and to address tactical questions. Issues needing clarification, or questions directed to a specific person, were addressed via email or a phone call.

Internally, the SAM at Clarios conducted quarterly strategic account reviews (STARS) with leadership and stakeholders. This increased awareness about the potential value of this initiative inside the organization. He provided updates of main KPIs and the impact this initiative would have on business results, the relationship with their strategic partner, brand awareness with their main product, and the benefits to their customer’s customer, as well as their customers. This robust engagement built the momentum necessary to receive support from all levels of Clarios.

Additionally, the Clarios Marketing Manager shared updates during monthly marketing review meetings, attended by marketing and regional sales members.

Clarios also conducted monthly project review meetings with their customer to stay on track. Due to the collaborative nature of this partnership, all team members from Clarios and the customer made themselves available outside of these structured meetings to provide information and assistance when needed.

Business results and measuring success

Perez said that Clarios’s business outcomes have exceeded previously planned KPIs. Internet use surged during the pandemic, as vehicle owners carefully searched, evaluated options, and looked for a safe place to have their vehicle serviced.

“These behaviors quickly validated the soundness of our joint project’s goal: the creation of a website that would provide the best battery experience for everyone,” Perez said. “It meets customers where they are. Everyone in the value chain has experienced reputational, operational, and financial gains.”

The website is mainly visited by people in the 25 to 34 age range — the target market for Clarios and their partner. They want to influence the behavior of this generation of vehicle owners and convert them from DIY to DIFM. As the results show, they are already driving that trend.

The numbers

In terms of measuring the website’s success, internet traffic remains the standard. One of the key indicators is the site’s Google search ranking. In the target region, the website consistently ranks in the top three for the keyword “battery.”

Website Interaction as of September 30, 2021:

• 99,000,000 users had contact with the project name, webpage, or advertisement.

• 5,600,000 users viewed promotional videos.

• 380,000 users clicked the website’s links.

Clarios enjoyed extremely strong business results for their premium brand with their customer, as indicated by a 64% volume growth in FY21. Their customer also experienced positive gains in customer satisfaction and market share.

Customer Satisfaction Metrics:

• Truly Loyal increased from 86% in 2019 to 100% in 2021.

• Net Promoter Score increased from 14% in 2019 to 50% in 2021.

• Customer’s Market Share, YTD as of September 30, 2021: 2–3% increase, primarily driven by Clarios brand.

Their Customer’s Customer

“Participating workshops are selling more premium brands and the website is the driver of the increase,” said Perez. “The workshops that experienced growth in premium battery sales reinforce the timeliness, relevancy, and sound execution of the model. As well, the workshops that participated in the website platform have experienced higher sales growth.”

And, their collective footprint continues to grow. As of September 30,2021,100 workshops join the project every month and approximately 1,000 workshops are enrolled.

Sales Volume (Units) Growth, YTD as of September 30, 2021

• 14% growth for all workshops (participating and not participatingin website) for all batteries.

• 20% growth for participating website workshops in batterysales (multiple brands).

• 39% growth for participating website workshops in premiumbattery sales.

Creating their own solution

Batteries are playing a bigger role in revenues for participating workshops, and they are selling more premium brands in markets where Clarios and their customer operate. The growing number of workshops embracing this model provides evidence that innovative solutions are required to address changing consumer behaviors.

“The website is the first online platform for that market dedicated to batteries and has the potential to positively impact customers at all market levels, from manufacturer to end user,”said Perez. “We did not waver from our joint commitment to find a solution that would leverage the internet to fit our model and provide value to all stakeholders. Since it did not exist, we had to create our own innovative solution.”

And that they did. They created a website that is accessible and easy to use for vehicle owners looking to buy a battery online, get support, find emergency solutions, locate a workshop, schedule service, gain knowledge about batteries, and learn about technologies. It speaks to DIFM and DIY vehicle owners and offers several ways to interact — phone, email, and face-to-face options.

“This initiative strengthens an already strong relationship with our customer,” said Perez. “The joint level of cooperation, coupled with strong business results, will foster many years of customer loyalty. It has also fueled interest by workshops in our brands and expertise.”

Not only that, but the customer is promoting the unique solution as a business best practice for other automotive spare-parts dealers that could lead to expansion within new markets.

“They are leveraging our battery knowledge and expertise with their distribution chain, and there are plans to replicate the mechanics of this project to other countries where the customer operates,” said Perez.