Digital loyalty networks: continuously connecting automakers with their customers and suppliers

Abstract

Over the past two years, senior managers at several automotive companies have begun to implement a new business model called a digital loyalty network (DLN). The model enables companies in any industry to continuously collect and monitor their customer, product and supply chain data and more precisely adjust engineering, production, distribution and sales/marketing activities to meet current and future demand. Moreover, they can use the same data to enhance their partnership with suppliers. For example, GM has put in place a number of components of a digital loyalty network, including the implementation of an integrated network connecting the company with suppliers, alliance partners, dealers and customers. GM has also adopted a new formula for managing the order‐to‐delivery process, has launched Web‐portals for customers and suppliers and continues to enhance and support its OnStar system, which allows drivers to communicate on the road with GM customer service representatives and vendors. Digital loyalty networks have three components: (1) Digital – the companies use sophisticated information technologies to manage information more effectively; (2) Loyalty – the system is designed to target, satisfy, and retain the most profitable customers and, in turn, use customer information and loyalty data to make the supply chain more efficient; (3) Networks – the information system links suppliers, producers and customers and is continuously updated. DLN companies use information technology resourcefully to increase the effectiveness of supply chain and customer relationship management initiatives. They develop a solid network of digitized information that ties together the value chain and creates loyalty and on both the front and back end of business operations. On the supply side, DLN companies continuously monitor customer value based on feedback about customer requirements, purchase history, and potential purchases and rely on digital technology to make certain their most valuable customers are kept satisfied. They do this by managing inventory through the supply chain so that the best customers are served first, and making certain short and long‐term capacity planning responds to these customer priorities. In addition to General Motors, Deloitte Research identified three other innovators in the automotive industry – Porsche, DaimlerChrysler and Renault/Nissan – that are developing certain aspects of a DLN.