In April Ian Beavis, vice president of marketing for Kia Motors America, stood before an audience of about 300 people at the Forrester Marketing Forum in Miami and questioned if any of the attendees owned a Kia vehicle. Not a single person raised their hand.
Not surprising. Ever since the company's introduction into the U.S. market in 1992, consumers and critics have associated the automaker with a mundane product.
That perception is about to change.
Kia Motors America is the sales, marketing, and service arm of Kia Motors Corporation in Seoul, Korea, part of the $19 billion Hyundai-Kia Automotive Group. One of Kia's best-kept secrets is that it often ranks higher than BMW and Mercedes in quality studies. J.D. Powers and the Insurance Institute for Highway Safety, for example, have presented Kia with numerous quality awards over the past few years, and a number of automotive enthusiast publications have given the company's vehicles high marks for safety and overall value. Last year Kia sold 294,000 vehicles globally-outselling most of its competitors. It boasts 13 consecutive years of growth, and as a result, it broke ground earlier this year for a 300,000-unit manufacturing plant in Atlanta, GA, to be completed by 2009.
Kia's headquarters-a new $87 million, 236,000-square-foot corporate campus in Irvine, CA, complete with a design center-is another mark of the company's success. And it's a sign of the company's continuing drive for progress. Inside the state-of-the-art building a cultural transformation is taking shape among the 300 employees; the goal is to guide the Korean automaker into a more solid position within the automotive industry. To do so the company plans to change its brand image to earn the respect of customers and critics alike.
Currently, in the U.S. Kia's vehicles appeal mostly to younger consumers-people who can't yet afford a higher-end vehicle. The company is planning to change the look of that customer base. New Chief Design Officer Peter Schreyer, hired last September, is tasked with creating emotional-niche products that appeal to small but influential groups of wealthy consumers by designing vehicles with a youthful and sporty feel. The company will reveal one of his new concepts at the Frankfurt Auto Show this fall.
While improving vehicle design is critical to the company's viability, it's not enough to sustain the automaker's long-term growth. Realizing this, Kia's top management hired several other new employees-largely from other auto companies-to generate fresh ideas that would appeal to the needs and lifestyles of its existing and prospective new customers. Those employees surveyed the company's processes to uncover ways to bolster the business.
Marketing was one area that needed a tune-up. Until a year ago the automaker had no marketing database to speak of, conducted virtually no direct marketing, and didn't even employ an online creative team. It powered its Web site with 10-year-old technology, which now doesn't allow for feature upgrades. According to Kia CRM Manager David Schoonover, the site lacked the ability to connect the online and offline customer experience or to integrate customer data. Additionally, the company wasn't even registered to access the Do-Not-Call list because it had never conducted outbound follow-up sales calls to its customers.
Schoonover, who came on board early last year, says that soon after he joined Kia, he started putting together internal business proposals one by one with the intention of mending the ailing marketing processes. "When I walked in the door, the answer was, 'It needed to be built or overhauled.' There wasn't anything that didn't need to be touched," he says. But he took his time to first learn and understand the environment before changing anything in haste. "The first mistake you can make is when you walk through the door and immediately start changing things." Beavis adds, "We did baby steps."
Checking under the hood
Such steps included going back to basics and applying Business 101 strategies-proving to the top executives the priority for and ROI of updating existing systems, such as the sales lead management system, and building a new marketing database.
Proving the need for a database to use for marketing campaigns was straightforward. The company couldn't even attempt to send targeted marketing communications to the vehicle owners because owner data resided in disparate systems and was likely to be outdated. Since the customer database had never been touched, someone who bought a Kia in 1998 appeared to be the same age, live at the same address, and work at the same job as when they purchased the car. So with the help of an outside marketing vendor, Kia began collecting the customer information that existed in siloed locations, like order information and purchase records. There were also hand-raisers, the people who request brochures. They too resided in what Schoonover calls a "dark corner of the Kia universe." Then there was customer information tucked away in other departments, such as parts and service, as well as in lists from the minimal number of marketing campaigns the company had conducted until that point.
After months of organizing, Kia built a marketing database comprising one million current owners and prospects. It began using the database this past winter. The first order of business was to launch an owners' magazine, Open Road, to help Kia develop a more personal relationship with its owners. Schoonover says that many customers weren't aware that Kia has offices in California, an assembly plant in Georgia, and is as much a part of the fabric of U.S. society as is any other car company. "The database will afford us to put the face on Kia," he says.
The company is also deploying a metrics platform that will link its on- and offline customer data, as well as allow the company to measure the results of its marketing programs-in essence integrating the ROI of its online campaigns with its traditional offline campaigns. This process can be used simultaneously by its media agencies. "I haven't heard of a company that has this," Schoonover says.
In ensuring the success of both its current and future marketing initiatives, Kia encourages its media partners (the direct marketing vendor and the advertising, interactive, and media agencies) to meet in person every Wednesday afternoon for a planning and strategy sharing session. "That way when campaigns are formed, they are formed with all the different mediums being considered," Schoonover says. "Some travel an hour and a half to get here. The phone is great, but there is still no replacement for face to face."
This multimedia approach is a far cry from Kia's former strategy. When Beavis joined the company in 2005, 85 percent of the advertising budget was allocated to TV. "That would have been a fabulous media plan for 1975," he says, "but it wasn't right for 2005."
After tracking and surveying how people respond to different forms of advertising, Kia launched a multimedia campaign this past spring that focuses on encouraging prospective customers to visit Kia.com and Kiamatch.com (where prospects use an entertaining guided selling tool to find the Kia automobile that is their "perfect match"). The tongue-in-cheek ads, which feature customers talking about how Kia.com saved their personal lives by teaching them everything they know, were well received by the public, driving considerable traffic to Kia's sites. Some dealers believe that 75 percent of their business now originates from the site.
This insight is one reason Kia began revamping its Web site, even though Kia.com has won the J.D. Powers evaluation study three times. Another reason, Schoonover says, is that Kia wants to meet consumers' expectations through video and by introducing features that allow customers to build the vehicle themselves online.
The operability of the updated Web site is especially critical because Kia plans to increase its focus on migrating prospects and customers to the Web using traditional media. Russell Wager, managing partner at David & Goliath, the advertising firm responsible for Kia's online creative, told AdvertisingAge in April that visitors to Kia.com are 60 percent more likely to buy a Kia than someone who doesn't conduct research prior to going to the dealership. Beavis adds that shoppers who visit the site prior to visiting a third-party auto site have a "significantly higher propensity" to buy a Kia. "A well-informed consumer is our best consumer," he says.
The long-term goal is to build a sense of community among Kia customers and move customers and prospects from the Internet to the dealerships and then to the service department by using a combination of online and traditional marketing activities, as well as events like conducting test drives and offering free-giveaways outside of NBA games.
Getting dealers in gear
Optimizing its marketing and advertising is essential to becoming a well-respected automotive brand. But improving the front-line staff is equally urgent in overcoming the perception that Kia is a low-end brand.
The company's first move in this area was to improve its communications to dealers, who have a huge stake in Kia's success. Beavis says the company needed to build trust with dealers and to create transparency so dealers would help spread the word to consumers about Kia's high quality ratings, lessening the negative perception gap. In the past dealer communications were fragmented and delivered on an ad-hoc basis. So the company started sending consistent, branded messaging to its dealer network. "We are a small brand fighting to be heard," Beavis says. "We need to be consistent in what we do. We don't have money to waste."
Being consistent required the company to align sales and marketing. Kia achieved that by combining the factory and dealer marketing groups into one department, and by consolidating the creative work for digital media with one agency. The company also established weekly cross-functional team meetings between marketing, sales, service, and top-level corporate executives to update colleagues on each other's projects.
Additionally, Kia introduced executive in-person visits to dealerships for relationship building. Kia University-Kia's training department-added classes to educate dealers about new products, warranties, services, etc.
Scott Slade, acting vice president of service-responsible for customer satisfaction, warranty information, and training-says there are a variety of supporting materials to ensure the success of the dealer program. For example, Kia sends a monthly newsletter to its dealers to educate them on new products and services, as well as schedules regular conference calls to follow up on product and service updates. "It is mission critical to narrow the gap between what [the dealers] want the customer to feel and what the dealer delivers," Slade says. "You invest millions in a product and you finally get them into the dealership and it all hinges on one guy that started working there. It comes down to getting the dealer share of mind."
But keeping the dealers informed isn't enough to win over new customers. Slade says the dealers' sales reps need to be motivated as well to affect customer satisfaction. Now, for example, when customers buy a Kia, the salespeople introduce them to the service department immediately. "We're attracting a new kind of buyer-a higher-level buyer-so we have to educate [customers] on scheduled maintenance," Slade says. "Having that transition between sales and service so we don't lose them is critical."
Slade says that changing salespeople's mind-set to focus on customer satisfaction can be challenging, so the company started attaching some cach?o the strategy by tying monetary incentives to it. On October 1 the company will even launch a sales blog on which the sales reps from the company's 650 U.S. dealerships can share information and best practices about customers.
Kia now tracks dealerships that need to improve their customer satisfaction scores. In such cases, Kia's district service and sales managers, as well as some executives, visit such dealerships and deliver training and marketing materials. Using satisfaction surveys focused on the dealer experience, Kia closely monitors those dealers until their customer satisfaction levels improve. Changing the mind-set "is a lot of awareness," Slade says. "It's not rocket science."
The working mechanics
Taking a customer-centric approach may not be rocket science, but it does require a team approach and open communication. At Kia, this attitude to work together toward a common goal is inherent. "It's the core part of our culture," Schoonover explains. Instead of everyone worrying solely about their own projects, they work together. He says it's an expectation of executive management, which has a philosophy about transparency and constantly reminds employees to help keep others informed about what their colleagues are working on. "It's set up that way so that everybody knows a piece of the pie," he says.
That philosophy helps to break down the walls that exist at many automakers. Schoonover says that at most companies five or six departments are talking to the same customer. It's the same with the media partners. "No matter what [automotive] company you'll go to, you'll find that marketing is siloed," he says. "We're integrated on our end. That means our customers are integrated as well and we can serve them better."
Kia Motors is already preparing for the success this approach helps to create, with an announced goal to sell 1.54 million units globally this year, a 22.6 percent increase over last year, generating $22 billion in sales. Kia America is contributing to that growth. With record July sales of 26,690 automobiles-its biggest month ever-the company is on track to see its 14th year of growth.
Those numbers are significant enough to get consumers to start noticing the small automaker. "People won't help but soon notice the exciting changes at Kia," Schoonover says. "We're a big secret waiting to get out."