Hyundai has got off to a flying start with the new Verna and a large part of this initial success is down to the car's strength in various areas and a competitive price-tag. The new Verna has also been able to give a push to the sedan segment as buyers continue to frequent Hyundai showrooms. With all the buzz around the car, we wanted to know who really is buying the new Verna and how is a Verna buyer different from others. We were given this information along with an insight into the company's plans to improve its customer penetration by Puneet Anand, Sr General Manager (Marketing) & Group Head, Hyundai Motor India Limited. Puneet spoke to us at length on various topics apart from the new Verna, which you can read about in the following lines.
Express Drives: How has the new Verna been received by potential customers in a segment that has shrunk in the last few years?
Puneet: The response has been great and on 31st August, we had 7,000 bookings and we are receiving between 400 to 500 bookings daily, which is making the car more desirable amongst the people and at the same time it is also changing the way people looking at sedans now. Earlier, there was a time when sedans were slowing down but after the introduction of next-gen Verna, people are again choosing to invest in the segment. In August, when we launched this car the segment was at around 12,000 to 13,000 units per month. However, with the Verna, this segment has already grown to 17,000 to 18,000 per month within the first month of launch. It means our Verna has been able to excite the market and it has been able to create its own presence as far as its segment is concerned. Next up, the segment will probably close at about 20,000 units and from 13,000 to 20,000 is a big jump per month.
ED: Please tell us about the profile of the people buying the new Verna.
Puneet: When we initially did a study of customers who have booked the car we were very happy to see that almost 50% are self-employed. This means our Verna is appealing to self-made people. Many of these people are Chartered Accountants, doctors, finance professionals or they have their own business.
In terms of the age bracket, we see more than 65% of the people are below 40 years of age, which means that Verna has actually appealed to a younger audience and that was our target considering the kind of features, design, and safety we have provided. Another important thing is retention. More than 52% of the people who have booked this car are existing Hyundai customers. This shows that people have shown their confidence in investing again in the brand Hyundai. And that's where we see a very strong connect in terms of people investing again in the same brand. The people who test drove the car reported a 98% satisfaction rate. The truth of an airplane is only proven when it lands successfully on the tarmac. If it lands successfully, then yes you are a good pilot your plane is good, everything is good, that's the ultimate test. Similarly, for a car, the ultimate test is the test drive taken by a customer and the Verna has been successful in impressing people.
ED: You gave some interesting numbers but are these number highest for any car in the Hyundai stable right now?
Puneet: For this kind of a segment, which is between Rs 10 to 15 lakh we were expecting that people will be above 45 years of age but it has actually been proven that the people are all very young. The actual age bracket is between 25 to 40 and 13% customers are first-time buyers, which is very rare. Normally people graduate from Santro to Grand i10 and then to i20 and then they go to Verna. However, 13% of new Verna customers are first-time-buyers of a car, which is very unique. This also proves that the product has been able to change the way people have been thinking about the sedan segment. Last two years people have been talking mostly about SUVs and every manufacturer was trying to put their money into the SUVs. Even in such a time, we are the only manufacturer, who is still betting the money on sedans. Last year we introduced the new Elantra and followed it with the new Verna this year. We have spent more than Rs 2,000 crore on both these products to give the customer a new taste, a new choice, and a new sedan. The product has been received well. Based on feedback received from customers, they feel the price is very very reasonable considering the features and they have confidence in us as we are giving three years warranty with unlimited mileage.
ED: What about the waiting period on the car, considering the festive season is around the corner?
Puneet: We had promised to the customers that we will deliver 10,000 cars before Diwali and will maintain the price for the first 20,000 customers. Also, with the excitement around Verna, a lot of people walk into the showrooms to have a look at the car and if out of the budget, they settle for an i20, which means sales for our other models too is being helped.
ED: If the Verna is helping you push sales of cars like i20, is it also helping you to push the sales of Elantra, which is positioned above the Verna?
Puneet: Yes, it is and in August, we sold 251 Elantras and 250 Tucson's. Normally Tucson used to average around 100-150 units per month but last month it increased to 250. Elantra starts at 12.18 lakh after the price-reduction due to GST implementation. Another important thing is that 73% of the cars in this segment are financed so it's not very tough for someone buying a Verna to upgrade to Elantra.
ED: You mentioned almost 1 lakh enquiries and more than 10,000 bookings. So is this conversion rate of around 10 % high or low compared to other Hyundai models?
Puneet: Normally the enquiry to detailed conversion is close to 16%. Presently, it is almost 10% as enquiries will always be high in the beginning but eventually, it should be close to 16-17% and this rate is very good for this segment.
ED: With so many things being different in the car and its customers, what other different activities did you plan for the launch?
Puneet: There is an interesting and unique thing we did this year with the next-gen Verna, which we term open door policy. All dealers were told that the car will be delivered to them 2-3 days prior to the launch. On 22nd August, they invited the customers along with a local celebrity at 1 pm. So once the launch was done in Delhi, they did their respective launches and the benefit of this is that the customer engagement on that particular day is very high.
ED: Which city have you got most bookings from?
Puneet: One might find it hard to believe but that city is Ahmedabad. Normally, Delhi is the largest market for this segment, second is Bangalore, third is Mumbai and fourth is Ahmedabad. But for the Verna, Ahmedabad emerged as the top city. Eventually, it may subside down but Gujarat is a growing state, a developing model and one of the best cities in India.
ED: Will it be safe to say that your target for the Verna is around 5,000 units per month?
Puneet: Yes, our MD also gave the statement that we are looking at a range between 4,000 to 5,000. Our production capacity for the Verna will be between 1.20 lakh to 1.30 lakh, of which around 50,000 to 60,000 is for the domestic market and around 80,000 will be exported. If the customer demands, we can increase the number for the local market. For Creta, we had initially planned a volume of 6,700 but today we are selling around 10,000 units. Our plan is flexible as we have a flexible manufacturing system. Our first priority is domestic and anyway, this year we are not exporting and they will start from 2018 as normally, the export orders shrink by the end of the year.
ED: Are you looking for the number one position with this car in the segment?
Puneet: Yes, we always say that we want to maintain a leadership position as far as the segment is concerned. We have already done 4,800 cars in the first month, which is close to the number one player.
ED: What are the new products we can expect from Hyundai?
Puneet: Next year in the second half, we will launch a small family car that will be positioned between the Eon and the Grand i10. The first compact SUV from Hyundai will be launched in 2019.
ED: Will the small family car use the Santro name?
Puneet: We have not finalised the name but once we decide we will announce the name.
ED: Coming to the CRM, now everything is now digitised, so what kind of challenges does this pose for you?
Puneet: CRMs are not very well understood by the country because the potential of customers is so huge that nobody nurtured the power of CRM. However, we have already invested in CRM and have a separate department, that is working to enrich the database of our customers. We have a customer database of more than 4.5 million. We are enriching this data by means of calling the customers and understanding his present location and details. A customer who bought a car from us 10 years back might have changed his contact details, which we may not be aware of. After refreshing the data, we are contriving the data into various packets to conduct various CRM campaigns, by WhatsApp, SMS, email or Facebook target marketing. We are using all these tools to enter into the minds of these existing customers who in the past have done some kind of a business with you.
We are investing in technologies, which can make this data more understandable, more readable, more actionable. And even sales data and service data of the customer who is coming to our workshop for a service is being targeted.
ED: What's the potential for CRM in the coming years?
Puneet: There is a huge potential and technology will come to our help so we are investing in this technology so that we can define marketing campaigns using the CRM inputs. Using this I can send emails to all customers to who are between 27 to 32 years of age, 95% male in the income bracket of 10 lakh to12 lakh rupees, staying in city like Mumbai or Delhi, Kolkata, having one car in their household with a certain insurance value and so many more data points. In the end, I can narrow it down to a very strong base of say 10,000 customers and that is called the target marketing campaign as it goes only to the customer who I feel are the right audience of that particular product.
ED: What about customer loyalty? Right now there is no differentiation between a first-time buyer and someone who has bought multiple Hyundai cars over the years.
Puneet: We have a loyalty program and we give that loyalty bonus to the eligible customer but not every customer may be looking at Rs 10-12,000 discount. So our next step after I do this data mining is a Hyundai Customer Loyalty Program, where we will try and provide benefits generally seen in loyalty programmes associated with hotels and airlines. Some car companies tried it but failed to sustain it because the technology was not supporting the programme. In our case, we are doing the reverse. We are first making the technology sustainable and very shortly we will be launching a loyalty program. It will take some time but very shortly we will be ready for all these initiatives in terms of CRM, loyalty, exchange, bookings, test drives and will have a completely robust base.
ED: And customer acquisition cost, how much have they risen in the last few years?
Puneet: They have risen quite a bit because of the increasing competition and because of the investment in the technologies. In order to acquire customers, you have to invest a lot into technologies.
ED: What is the overall projection for sales this year?
Puneet: 5,50,000 is our target and last year we did half a million and definitely we will grow and we are confident, we will exceed this target and we are also definite that we will maintain our market share of 17% in line with the industry growth.