Hero Honda focuses on CRM; may slowly slash advertising

Mohini Bhatnagar 23 April 2003

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Mumbai: Hero Honda Motors, the joint venture between Munjal promoted Hero Motors and Honda Motor Co of Japan, is focusing on its customer relationship management (CRM) programme to drive growth. The company has secured over 1 million members in the last three years with the Passport Programme, which involves offering members a small card/booklet that looks like the Indian passport, complete with ''visa'' stamps for points, similar to those offered by credit card companies and airlines. The only difference in this programme is that the member need not always spend money to obtain points, say company officials. With the passport programme, each time a Hero Honda customer visits a service centre, he gets points and depending on the profile submitted by the customer, he gets benefits like free passes to a cricket match sponsored by the company. Hero Honda Motor India vice-president (sales and marketing) Atul Sobti says under the programme a customer can collect points by merely visiting the service centre, which he would have done in the normal course of things. "Hero Honda scheme rewards customers even for free services." Whatever you do as a normal customer entitles you to some gift, he says. "We prefer the Passport Programme because we can talk to our customer on a one-to-one basis, rather than put up a big ad and hope that out of 10 lakh people, 1 lakh will respond. The company will, in the long run, increase focus on the CRM programme and cut down on print and TV advertising to expand the programme and its freebies." Membership to the programme comes for a nominal fee of Rs 95 for three years. Not just this, along with the programme a customer gets a Rs 1-lakh accident insurance policy for which Hero Honda has tied up with New India Assurance Company. At present the company has allocated just about 5 per cent of its advertising budget towards building up the Passport Programme and Sobti says this could go up to 10 per cent very soon.

"The company factors in the costs as part of its advertising and media spend budget." Another customer service initiative to be launched jointly by Hero Honda and State Bank of India is a co-branded credit card. This time SBI Cards & Payment Services (SBI Card) is teaming up with Hero Honda Motors to offer the Hero Honda SBI Card, the first card for the two-wheeler industry in India. SBI card is said to be India''s No 1 Visa card-issuer with over 11 lakh cards issued. The co-branded card is designed to strengthen Hero Honda''s Passport Programme. Company officials say the co-branded initiative will allow SBI Card to reach out to Hero Honda customers (a vast middle-class segment and possibly first-time users of credit cards). In the first phase of rollout, the co-branded card team, comprising executives from both Hero Honda and SBI Card, will target four cities - Delhi, Kolkata, Chennai and Pune. In the second phase 66 cities will be covered and in the third phase 100 cities. Hero Honda Motors recorded a 25-per cent increase in its net profits to Rs 581 crore and a 14per cent higher turnover at Rs 5,195 crore for the year ended 31 March 2003. The company has also announced a 900-per cent dividend for the year, which includes a dividend of 500 per cent and a special dividend of 400 per cent. But for the fourth quarter ended 31 March 2003, Hero Honda''s net profit fell by 2.36 per cent to Rs 148.96 crore from Rs 152.56 crore a year ago. Total sales also went down by 3 per cent year on year to Rs 1,248 crore from Rs 1,286 crore. Net sales were also lower by 3.2 per cent at Rs 1,215.40 crore during the January-March quarter against Rs 1,255.50 crore in the same quarter of 2001-02. This was mainly due to a nearly 1-per cent drop in motorcycle sales which slipped to 3,96,193 units from 3,99,200 units last year. The Hero group and Japan''s Honda Motor Company each have a 26-per cent holding in Hero Honda while the remaining shareholding is with financial institutions and the public.

When Hero Cycles and Honda Motor Company of Japan inked their joint venture in India in April 1984, only few could have imagined that the two would go on to create history and become the subject of a case study at business schools, internationally.

In a little over two decades, the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide. The company has sold over 31million motorcycles and has consistently grown at double digits since its inception and today, every second motorcycle sold in the country is a Hero Honda. Hero Honda bikes currently roll out from its three globally benchmarked manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in Haryana and the third state of the art manufacturing facility was recently inaugurated at Haridwar, Uttrakhand. These plants together are capable of producing 5.0 million units per year. Hero Honda's extensive sales and service network now spans over 3000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockists and authorized representatives of dealers located across different geographies. Hero Honda values its relationship with customers. Its unique CRM initiative Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 5.4 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors YES AWARD INDIA Objective:The Honda Young Engineer and Scientist Award in India (YES Award in India) program is designed to strengthen Japanese ties with India through provision of financial aid to young engineers to encourage specialized study in ecotechnology as well as provide an opportunity to acquire higher professional education in Japan. This is part of the Honda Foundation (HOF) efforts to strive for a more environmentally balanced development of the industrial and science-based modern civilization including India, which has enjoyed fast-paced growth in economy since its liberalization in 1991. BENEFITS The Award would recognise brilliant students who would drive future society towards an ecotechnological orientation. Each YES Award recipient will receive US$ 3,000 (US Dollar Three Thousand only) in equivalent Indian Rupees.

Every YES Award recipient becomes eligible for the YES Award Plus, an additional award, if, within three years after he/she received the YES

Award prize, he/she is admitted to, and pledges to attend within one year after admission, either of the following:

1. 2.

A credit-granting internship program offered by a Japanese company or research institute's summer program for two and half months. Internship participants will receive US$7,000 (US Dollar Seven Thousand only) or equivalent Indian Rupees as the YES Award Plus. A masters or doctoral course at a Japanese graduate school. These students will receive US$10,000 (US Dollar Ten Thousand only) or equivalent Indian Rupees as the YES Award Plus.

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