Revenue secret at Hyundai: The ‘marketing guy'

LOS ANGELES — Once upon a time, automotive marketing executives spent lots of money on advertising but had little idea whether they were converting those eyeballs into buyers. The salespeople were generating the revenue.

But the Internet broke that, says Dean Evans, chief marketing officer for Hyundai Motor America. And now he's the revenue chief.

Sitting in his office at Hyundai's Southern California headquarters for an interview, Evans knows this assertion could ruffle some feathers. But he has the numbers to back it up. One example: data that tracks online shoppers from when they click on an ad offering a $50 gift card for a test drive until they sign the paperwork for a new Hyundai.

"It used to be the sales chief," Evans says, "because the sales chief was in charge of when you came in, before the Internet, and he really had the power to convert you. The marketing guy is converting now, not the sales chief."

He pauses. "As much" as the sales chief, he adds. "I'm going to get in trouble."

It's really a tag-team effort, Evans concedes, but the battle starts at his end just to get shoppers to think about a Hyundai in the first place. What dealers have to do better is pull those customers from the virtual world into the showroom and capitalize on the tools Hyundai is giving them.

"You'd better be so charming on that phone and with those email responses that you are spinning everybody in, they can't wait to get into your store," he says of dealers. "Because you're in charge of fishing, too, not just the brand. But at Hyundai, I want to be in charge of fishing, too. That's why 50 bucks is in the mix because that helps out our fishing efficiency."

Another advantage the automaker is giving dealers: fresh product. Product that headquarters in Seoul is betting on to spark sales growth this year and market-share growth into the next decade.Evans, who marks four years as chief marketing officer of the automaker's U.S. unit in August, says now is the best time to work for Hyundai Motor America, and he has props to prove his point. He flips through some papers and presents a one-page flyer outlining the tenets of the Hyundai Way.

Safety, quality and ownership costs are at the top of the page. Hyundai's Shopper Assurance buying program and "America's best warranty" are farther down.

His voice warms up as he shifts to the crush of new product launches meant to push the automaker to the next level: the Kona and Palisade crossovers, Genesis G70 sedan and Nexo fuel cell vehicle, all over just the past year. The Venue crossover, the Santa Cruz pickup and a crossover for Genesis are coming soon.

"We have been saying, for a long time, a few things," he says. "We're going to get to that 1 million cars when we — blank, blank, blank. When we have SUVs — arrived. When we have a green portfolio — arrived. OK, when we have that luxury brand — arrived."

A million remains an ambitious goal at this point. Hyundai and Genesis sold 677,945 vehicles in the U.S. last year, down 1.1 percent from 2017. But sales are up 2.5 percent in 2019 through June, and the three-row Palisade is just hitting the market. Genesis sales also are accelerating after the brand has made progress on its convoluted path to set up a dealer network.

Last week, Hyundai Motor Co. announced big new plans for its U.S. "turnaround" as part of its first-half earnings report. Based on the product onslaught, it's projecting a sales bump of 4.7 percent this year to 710,000, on the strength of second-half sales of the Palisade and gains by Genesis.

Hyundai expects its share to rise to 4.2 percent this year from 3.9 percent. And it projects sales to increase each year from now through 2023.

By then, the automaker wants 5.2 percent of the U.S., based on its projection that the product mix will rise from 51 percent light trucks in 2019 to 67 percent by the target date. It is also projecting fleet sales to fall to 14 percent, from about 19 percent this year.

Beyond product, there are the softer elements of success. Evans circles back to the Hyundai Way and how that enabled the automaker to beat Toyota, Honda and Nissan — the Japanese 3 — at their own game.

"Last year was the first year we hit No. 1 in all these: safety, quality, value/cost to own. And why are these three things important? It's what made the J3 the J3," he says, raising his voice a notch for emphasis. "And isn't that what we've been trying to do the whole time? To chase the Japanese?"

Among the relevant markers of those three achievements: 11 Hyundai vehicles recognized as a Top Safety Pick by the Insurance Institute for Highway Safety, J.D. Power awards for quality and Kelley Blue Book's calculation that Hyundai is the mass-market brand with the lowest cost of ownership.

Evans says Hyundai also is enjoying a trickle-down effect from the Genesis luxury brand, which has been winning product and quality awards of its own.

Take the Palisade. The crossover has been "Genesis-ized," yet is one of the top values in its segment, Evans says.

"Yes, those are separate brands, but you can tell the influence in that car," he says. "We really know how to make a nice car, and it's hard to walk you back when you know how to really do it, how to do it cost-effectively. You can really be high-value and wow them with an interior."

Getting here has been a long journey for Hyundai, which introduced itself in the U.S. more than three decades ago with the Excel subcompact. It was an instant hit for its low price and extensive standard features — until the car started falling apart and became its own punchline for shoddy quality.

After shedding customers and dealers in droves, the company countered with a 10-year/100,000-mile warranty that turned the quality equation around in its favor. In 2004, it topped Toyota in J.D. Power's Initial Quality Study. This year, Genesis, Hyundai and corporate sibling Kia extended their quality advantage over their closest rivals in J.D. Power's rankings.

Evans, a 2018 Automotive News All-Star and No. 8 on Forbes' list of the world's most influential chief marketing officers last year, attributes his success to having lived through the digital conversion of the industry.

His former titles include director of interactive marketing at Land Rover North America, CMO at Dealer.com and CMO at Subaru of America. He's a disciple of data-driven marketing and "feel-good" ads that bond consumers to a brand.

"I think it's helped that I'm an old man now," he says. He turns 51 in September. "I've been in the business for 30 years, and I've had a very diversified experience at retail. I was lucky that I was at retail when digital just started. I'm not just the TV ad guy here. I'm over in the sales department telling them how to sell cars — or influencing that."

Evans is the TV ad guy when it comes to the Super Bowl, however. And this year's ad, featuring actor Jason Bateman as an elevator operator, was a massive hit. The ad mocked the usual car-buying experience as hellish and contrasted that with a more heavenly option available through Shopper Assurance.

Hyundai said this month that Bateman would be the voice of the brand in more commercials, beginning with the "Better Drives Us" campaign that touches on the emotional aspects of family outings and features the brand's crossovers, including the Palisade.

"Some people expect a launch spot where the car just vrooms in and stares at you, and you just turn it into car porn and turn it on a turntable," Evans says. "Or driving 100 miles per hour on the test track, like 'look at that thing go.' When we test that in front of consumers, nobody cares. But when we bring in families, and tell a story, and put them on a beach and say we're bringing families together because they don't spend enough time together ... people watch it."

At the other end of the spectrum, Evans is deploying smaller tools to get customers into Hyundai dealerships, since the brand still lags behind the industry in some metrics. When he surveys Hyundai shoppers taking a test drive to ask how many brands they are shopping, the answer is 3.8 on average.

The industry average for the same question is 1.5 brands, and the "J3" are ranked first because shoppers are often already owners of those brands. That means Hyundai's competitors get first shot to convert those shoppers.

To reverse the sort order, the brand offers a $50 gift card with every test drive in ads targeted to in-market shoppers ready to pull the trigger.

Not a big deal, Evans says, downplaying the tactic as similar to a bank offering steak knives back in the day for opening an account. "All we're trying to say is 'come in and drive our car.' We put it in channels tactically once in a while to get a little more juice out of what is a very active shopping in-market audience."

Only later, when pressed on the concrete benefits of giving away $50, does Evans come clean. "The conversion is great. When they come in the store, 50 percent buy," he says in an unusually quiet voice. "When they come in on the $50 offer, half buy."

Then, breaking into laughter, he adds: "That's why I don't want to talk about this topic. It's a really good tactic, and I don't want everyone to know. Make it sound like it's a disaster project and the dealers are knocking my teeth out on it."