LAS VEGAS — Dealers should dip their toes in the water of subscription services, advised Tripp Rackley, chairman of Clutch Technologies and the man behind Clutch, a mobile subscription car service.
Don't aim for 400 subscription customers, he told the Automotive News Retail Forum: NADA here. "Go out and get 50, and learn" how subscriptions work for your market and business model. Most importantly, he added, "Don't wait until the tipping point and then try to catch up."
Clutch has grown from three partners a year ago to 15 in multiple states today. Most of those partners, generally dealership groups, offer seven categories of vehicles, such as pickups, sedans and crossovers. About 80 percent of the customers take advantage of five or more of those categories as they swap out vehicles — twice a month, on average — either because of a temporary need or, increasingly, after the Clutch app suggests one.
The suggestions are possible because of how much Clutch learns about its customers, and dealerships have four to five conversations a month with the customers.
"We're learning in microscopic ways about them," Rackley said. Clutch knows, for example, when a client switches to a larger vehicle to pick up visitors at the airport and when they take short trips.
For errands, customers may choose an electric vehicle. While EVs account for barely 2 percent of U.S. light-vehicle sales, 43 percent of Clutch customers take an EV at some point.
Those customers are "super viral," he said. "The day we get one person at a school, we get 10." Early adopters among them "spend irrationally," averaging a 25 to 40 percent premium over a leased vehicle.
"Every time we raised the price, more people signed up," Rackley said. He added, "Consumers are paying a premium to new car [prices], but not a single person gets in an actual new car."
Once on the service, few leave. Only 2.5 percent of new customers join briefly and drop it, he said. That especially pleases Rackley, who helped to launch Internet banking, because the serial innovator wants to come up with products and services where, as he put it, "Once somebody uses it, they will never not use it."
Clutch, he said, "makes customers for life."