Ford Motor Company and Budco Drive Results with Relevant Marketing - Ford Motor Company boosts extended service contract sales by 35%.
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Xerox 1:1 Lab Case Study Ford Motor Company and Budco Drive Results with Relevant Marketing Ford Motor Company boosts extended service contract sales by 35%.
An Industry Challenged
The Turbulent Economy A Direct Marketing Challenge
September 2008 marked the 100th The Ford Extended Service Plan (ESP) is the
anniversary of production start-up for the only extended service plan backed by Ford
world’s first best-selling automobile, Ford and honored by all Ford, Lincoln and Mercury
Motor Company’s Model T. But few in the dealers. Ford sells nearly a million ESP
industry were celebrating. Rather, the U.S. contracts each year in a variety of plans
auto industry teetered on the brink of collapse, offering coverage beyond the basic three-
and top automaker executives testified before year/36,000-mile new vehicle warranty.
Congress about the crisis.
Many of those contracts, representing tens
In the midst of this turmoil, day-to-day of millions in annual revenue, are generated
auto industry business continued. Among the through direct marketing. That program is run
initiatives underway at Ford was an effort to entirely by Ford’s partner, Budco, a leading
boost extended service contract sales for Ford fulfillment and direct marketing organization
cars and trucks. based in Highland Park, Michigan. With Ford’s
direction, Budco handles everything from
creative strategies and design to printing,
Client Profile call center work, order fulfillment and results
tracking. Like clockwork, ESP direct mail pieces
The Ford Motor Company produces and sells
are sent to vehicle owners at various intervals
Ford, Mercury, Lincoln and Volvo cars and
throughout the first three years of ownership.
trucks. The company is No. 7 on the Fortune
500 list of top U.S. companies, with worldwide However, in Fall 2008, the program faced
automotive revenue of $129.2 billion in 2008. more difficult challenges than at any time in
Ford was founded in 1903 by industry pioneer memory, according to Jeff Sierra, vice president
Henry Ford and is based in Dearborn, Michigan. of Budco Marketing and Product Development.
For more information, visit: www.ford.com. Consumer confidence was down in general
and for the big-three automakers in particular.
Credit was extremely tight, eliminating many
otherwise typical purchase candidates. One
result: vehicle sales were down 35%, according
to market research firm R.L. Polk.
The Players Still, the teetering economy gave many vehicle
Industry: owners good reason to consider extended
Automotive warranties. The average length of vehicle
ownership has grown by 24% since 2002, and
Client:
64% of owners said they plan to keep their
Ford Motor Company
current vehicle longer due to the recession,
Direct Marketing Provider: according to R.L. Polk. Many could benefit
Budco from an extended service contract.
Variable Design, Engineering
and Programming:
Terminal Van Gogh Ltd. (TVG)
Digital Print Technology:
Xerox
2
Enter the 1:1 Lab Testing New Creative The existing letter served as a control piece.
The test letter was similar to the existing
The Xerox 1:1 Lab, a proving ground for Over years of testing, Budco had found direct
letter, but with variable images and additional
demonstrating the power of fully variable mail letters to be the most effective way to
variable text. They shared the same 8.5" x 11"
direct marketing, thrives on challenges like generate F-150 ESP sales. The existing letter
dimensions; the same blue Ford logo and
those Ford and Budco faced. The lab tests had some basic personalization for name,
black copy with a few lines of red highlight
direct mail content comparing the results address and vehicle information: model, vehicle
color; and the same packaging, a standard
from a customer’s traditional static direct identification number (VIN) and warranty
9.25" x 6" white, window envelope. Inside it
mail campaign to the same campaign with expiration date. The letter made use of some
were the folded letter and an eight-page
customized, one-to-one messaging and printed limited graphics: black-and-white clip art,
full-color static brochure.
on a Xerox® iGen3® Digital Production Press. an image of a truck with arrows pointing to
The test helps print providers and their clients locations of potentially costly repairs and a The self-mailer, too, was executed in two
recognize how to develop more relevant, variable pricing chart based upon the model versions, one using static images and basic
customized direct mail programs that grab and location of the purchaser. The call-to- personalization, similar to the original
attention and increase response rates. action was printed in red type, making it stand letter, to serve as the control piece, and a
out amidst the black body copy. second test piece to apply more relevant
Xerox customer Budco saw an opportunity to
personalization. Both used a 4/4, six-panel,
identify and refresh a direct mail campaign for Traditionally, the 1:1 Lab uses the existing
clip-sealed self-mailer.
the ESP program, and approached Xerox about direct mail piece as the control, and develops
engaging the 1:1 Lab. a more relevant test piece using the same
design and basic copy, but incorporating more
Ford not only endorsed the ESP campaign
information that is tailored to the recipient.
test but asked specifically to focus on F-150
In this case, the lab also wanted to test a new
trucks, which account for a large portion of
creative approach. “The letter was too stiff and
Ford’s sales, but were the poorest performing Did You Know?
dry,” said Ben Passmore, president, Terminal
segment in the ESP direct mail program. According to DMA Response Rate
Van Gogh, Ltd. (TVG), Mississauga, Ontario,
By September, the agreement was in place the lab’s creative design and variable data Trends Report, direct mail and catalogs
to focus on the F-150 ESP campaigns, using programming partner. “It needed to be more outperform other media in building
Ford’s existing customer data. Their objectives: attractive and interesting.” traffic to a website, phone number,
improve the response rate, increase contract store or other business.
So the 1:1 Lab recommended that Ford
sales and identify best practices that could be
and Budco test two alternatives: a more
applied program-wide.
personalized and relevant letter, and a more
graphical creative approach using a
self-mailer format.
3
Data-Driven Letter
C
D
A
B
E
E
G
I
H
F
J
A Name G Pricing of plans
B City H Price expiration date
C Type of truck I Warranty start date
D Warranty expiration date J VIN
E Two components of messaging based
on triggers
F Age and gender imagery
4
Data-Driven Self-Mailer
F
E
G
I
G
A
H
J K
B
C
D
E
L
A Type of truck E Gender image
B Name F City
C Year of vehicle G Variable messaging
D Warranty expiration date H Pricing of plans
I Name
J Price expiration date
K Warranty start date
L VIN
5
Creating More Relevance Variable messaging was vastly expanded The Campaign Rollout
to enable more than 40,000 possible
From a conceptual standpoint, the 1:1 Lab The 1:1 Lab, Budco and Ford had some
combinations, with triggers based upon the
sought to create a sense of urgency among concerns about running a test during such
owner’s financing status, income level, age
F-150 truck owners to mitigate future repair a difficult time in the economy. “When the
and gender.
costs by purchasing an extended service CEOs of GM, Chrysler and Ford went in front
contract. To do this, the 1:1 Lab focused on From a graphic perspective, a number of new of Congress, we didn’t know what was going
key motivations such as avoiding major images and some existing images were used. to happen,” said Budco’s Sierra. “We were
expenses, maintaining the vehicle’s value, A new variable photo of a stranded driver concerned that we were testing during a
delivering peace of mind and taking advantage was added—or rather, 12 such images, one time when sales were going to be negatively
of a time-sensitive offer—before surprise of which was selected automatically based affected by the economy and bankruptcy
emergencies occur. In the face of the tightened upon five age bands of males and females, discussions. We talked about delaying the
credit market, the team also sought to plus three defaults. And a new graph was test, but at the end of day, we decided to
emphasize that interest-free financing was incorporated showing the time and mileage push forward.”
available and purchases could be made easily. coverage an extended service contract could
Budco produced the mailer, including
provide beyond the manufacturer’s warranty.
From a content perspective, Jeanne Gatley, printing on Xerox® iGen3® 110 Digital
This played to one of the campaign’s best
TVG’s content architect said, “We used variable Production Presses, finishing, letter-shopping
targets: owners who had long-term financing
messaging and images throughout to generate and mailing. About 20,000 pieces were mailed
and were unlikely to buy a new vehicle until
a livelier, more eye-catching look and feel with in four drops from November 2008 to
their payments were completed.
minimal text, but powerful images.” February 2009.
In the new creative for the fully variable
Copy was rewritten to convey the new Each of the four pieces—two controls and
self-mailer, the same photos were used, but in
messaging and accommodate more variability two test pieces—went to about 5,000 vehicle
color, and several new images were added. A
to be more intimately relevant to the potential owners each during those four months.
new variable full-color photo was used at the
purchaser. Four new triggers for variable
bottom of the page with the call to action,
content were added: gender, income, age and
showing attentive customer service reps
geography. In addition, the new test versions
responding to telephone calls. For male vehicle
shared five triggers with the control pieces:
owners, the image was a female consultant; for
vehicle type and year, length of ownership,
female owners, the consultant was male.
warranty expiration, plan pricing and vehicle
financing term. And another new image appeared on the
front cover showing a lonely roadside
landscape with a bright orange emergency
pylon in the foreground. Next to it, a question
calls out the vehicle owner by name and asks,
“Will you have it when you really need it?”
followed by information about when their
warranty will expire.
6Stellar Results
The most notable result of the campaign was Ford was also pleased. “The campaign was
that the fully variable self-mailer substantially a huge success and now we are rolling it out
outperformed all three other approaches. Its across Ford’s entire portfolio of extended
response rate was 5.7% better than the second service products,” said Mark Bardusch, national
best performer, the existing basic letter, and its sales and marketing manager, Extended
sales were 35.7% greater. Service Business, Ford Motor Company. “Simply
The results are especially noteworthy given put—the campaign will drive millions of dollars
the timing of the mailing, intersecting with into our extended warranty business.”
the heavy-mail holiday season and the sharp According to Sierra, the F-150 program
economic downturn. switched over to the fully variable, self-mailer
“The test tells us that traditional direct mail approach in November 2009. Increased levels
“The test tells us that traditional direct
still works, even during one of the most of relevant personalization are now being
mail still works, even during one of the
turbulent periods in the history of the U.S. auto incorporated in many other letter, postcard and
most turbulent periods in the history
industry,” said Budco’s Sierra. “The key is to self-mailer ESP campaigns.
of the U.S. auto industry.”
not overcomplicate it. Apply basic techniques “This has been a very positive program,” he
– Jeff Sierra
based on a good offer, good segmentation said. “We’re using the results to continue to
Vice President of Marketing
and good timing. And relevant personalization improve the program. That’s going to make our
and Product Development
can drive improved performance, creating a customer happy, so everyone who participated
Budco
meaningful customer dialogue that increases is going to come out a winner.”
responses and product sales.”
And that’s a result worth celebrating.
About Budco
Budco is a leading fulfillment and direct marketing organization with headquarters in
Highland Park, Michigan. As The Dialogue Company, Budco helps clients build strong
relationships with business and consumer audiences by facilitating ongoing, two-way
communication. Founded in 1982, Budco applies a suite of in-house resources to develop
and execute innovative, end-to-end business solutions, delivering results that drive client
success. A Xerox customer since the early 1990s, Budco is a member of the Xerox Premier
Partners Global Network and has seven Xerox printers including three Xerox® iGen3® 110
Digital Production Presses and three Xerox Nuvera® 144 production monochrome printers.
For more, visit www.budco.com.
7The Difference
Program Objectives Results—The Power of Relevance
“Simply put—the campaign will drive
• Prove that the more customized, data-driven Data-Driven Customized Package millions of dollars into our extended
mail piece generates more responses and warranty business.”
• 35.7% increase in sales with the
sales than more traditional mass-marketing
more relevant self-mailer
• Test two direct mail formats, a letter and – Mark Bardusch
• 5.7% increase in response rate for
a self-mailer National Sales and Marketing Manager
the more relevant self-mailer
• Improve response rates for Ford’s direct mail of Extended Services Business
• Reduced production costs by 3.2%
program promoting its Extended Service Ford Motor Company
• Adopting techniques from the test campaign
Plan (ESP) for F-150 truck owners
for the F-150 and other ESP campaigns
• Increase sales of Ford’s ESP for F-150
• Projecting that the new approach will
truck owners
generate millions of dollars in additional
• Identify best practices that could be applied
annual sales
to other ESP direct marketing campaigns
Case Study Snapshot
Industry Business Challenge Background
• Automotive • I ncrease sales of Extended Service • B
udco, Terminal van Gogh and the
Contracts in one of the worst economic Xerox 1:1 Lab program were partners in
Key Client Contacts climates in the history of the U.S. auto providing the direct mail lab test
• National Sales and Marketing Manager industry, with extremely tight credit and
• T
he Xerox 1:1 Lab is an educational
low consumer confidence
Partners program for creating data-driven
• U
pgrade personalized direct mail letter direct mail
• Budco used to generate Extended Service
• T
he Ford-Budco campaign created
• Terminal Van Gogh Ltd. Plan sales
individually relevant mailings based upon
• Xerox Graphic Communications information in Ford’s customer database
For more information about the Xerox 1:1 Lab
or to schedule an appointment with a Xerox
representative to discuss how your business
can build better relationships with customers
using the power of digital, data-driven direct
marketing, visit www.xerox.com/1to1lab or
call 1-800-ASK-XEROX.
©2010 Xerox Corporation. All rights reserved. Xerox® and the
sphere of connectivity design, iGen3® and Xerox Nuvera® are trademarks
of Xerox Corporation in the United States and/or other countries. 01/10
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