Connected Car Services offer cost effective way to command customer loyalty long after initial sale

Says Paul Smith, Director, Traka Automotive

Telematics is forming the basis for a significant ‘Connected Car Services’ revolution which dealerships can take advantage of to more than double five-year customer retention numbers from the industry average which sits in the 25-35% range today. And if dealerships don’t begin offering these telematics-based services to existing customers over the next two years then their OEMs most certainly will. This is my hypothesis having reviewed what a number manufacturers and service providers are already offering in this area.

Two years ago, Penny Searles set up the UK’s first connected car service for used cars called ‘Smart Driver Club’. Penny saw an opportunity to use increasingly cost effective WI-FI, Bluetooth and USB- connectable Onboard Diagnostics (OBD) 2 devices, which provide ready-access to all data coming from vehicles’ Engine Control Units; then delivering this data in digestible form to a driver’s internet-connected smartphone as well as dealership service departments. By so doing, it’s become possible to deliver a rash of mobile-accessed, consumer-focused services designed to protect drivers and manage vehicle running costs.

Penny’s insurance broking background meant that she thoroughly understood the value of real-time vehicle usage and driving behaviour data to insurers, who were happy to use this intelligence to reduce motor insurance premiums by as much as 40% for those sharing this data. But data collected and transmitted via the OBD2 device was capable of passing far more information about the vehicle and driver back to the customer’s original dealership, providing customer permissions had been given in line with tougher GDPR requirements which went live last month.

Information coming from the OBD2 SmartPlug has been used to create multiple services/benefits for Smart Driver Club users, including:

  1. My Mechanic: to alert a motorist if the car they are driving requires maintenance
  2. Crash Assistance in which the Smart Driver Club will alert the Police to the location of a collision if the club cannot reach the driver via their phone following an accident
  3. Stolen Car tracking: An in-car tracker activated by the customer so that if a car is stolen the exact location of the vehicle can be passed onto the Police
  4. Breakdown Help: the Club can even inform roadside assistance of the location of the customer and pass on useful information about the car itself if it has broken down
  5. MyDriving: Motorists can save money on fuel costs by monitoring fuel efficiency on journeys and tempering driving style accordingly
  6. Where did I Park?: A handy location map can be viewed via the app to see exactly where your car is parked
  7. Club Insurance: The Smart Driver Club is also an insurance broker, passing details of vehicle usage and driving-style onto insurers to reduce premiums
  8. Value My Car: A combination of telematics information from the OBD 2 device and integration with valuations market leader cap hpi, makes it possible to get a highly accurate valuation at the touch of a button on your smartphone.
  9. My Deals: creates the opportunities for dealerships to put add-on products on offer via the same app.

Smart Driver Club now has a mature connected car services offering which can be white-labelled by dealerships and used to deliver all the above benefits and more to their customers. It is already operating in several major dealerships. The value-add that these services deliver has already been found to increase the customer retention considerably.

The wisdom of surrounding the customer with telematics-based services which save both time and money, and provide additional safety for drivers, is not wasted on the OEMs themselves.

It’s interesting to note that some of the manufacturers of prestige vehicles are starting to offer their own connected car services platforms to new car buyers and their franchise dealerships. Take BMW Group which is offering new BMW drivers a BMW CarData service, via it BMW ConnectedDrive customer portal. BMW CarData promises BMW dealers, once they’ve obtained the customer’s permission again, access to general status, mileage level and service requirements data which can then be used to send servicing alerts to the customer, proactively offer part changes before they wear out and much more besides.

As well as franchise dealerships, it’s also possible for insurance companies, fleet managers and other authorised third parties to register with BMW CarData, so that, with the car owner’s permission as always, it’s possible that many of the benefits offered by the Smart Driver Club will be offered via the manufacturer itself if you buy a new ‘connected’ BMW.

So, the only other question to consider as connected car services are rolled out by your OEM is: “Do I want to retain control of the customers’ data and the services I am able to offer my customers to retain them or am I comfortable with leaving that control to my OEM(s)?”.  It may depend what your OEM offers via their connected car service and how much you trust them not to share the information (about the cars your dealership has sold) with other third parties. If the majority of the cars you are selling are approved used or mainstream brands then the Smart Driver Club model is the one for you.

The key is to get in early to offer these services; learn what services your existing customers most value; and which positively impact customer loyalty the quickest. By getting ahead of your OEMs you will be able to more readily call the shots when they offer you their equivalent of BMW CarData.

Penny Searles, CEO, Smart Driver Club, sums it up:

As the market for new car sales slows and dealerships increasingly rely on servicing revenue for profitability, putting connected car data to work makes great sense. It improves customer loyalty - locking them into your service centre well beyond average three-year warranty periods.

Surrounding your customer with mobile-ready value-added services which make their lives easier, or help them reduce their running costs, feeds through to improved retention. But dealers must think beyond hitting the next few months of sales targets if they are going to take advantage of this massive opportunity