Telematics as a CRM tool

Imagine having the following conversation with your Toyota Prius plug-in hybrid.

Prius: Your battery has only five percent left. Have you charged your vehicle?

You: I am sorry, I have forgotten. I am going to charge it immediately.

Thank you, I’ll be waiting.

I just plugged it in.

Your plug is connected. I’d like to thank you. I recommend charging to start at 23:30. I expect charging to be finished at 2:15. OK?

OK.

Your reservation is completed. See you tomorrow.

Meet Toyota Friend, a brand-new customer relationship management (CRM) system from Toyota. (The above conversation is a transcript of a conversation with a customer as demoed at My Friend’s unveiling.)

Developed jointly with the enterprise cloud-computing powerhouse Salesforce.com and launched in Japan last year on a range of electric and plug-in hybrid vehicles, Toyota Friend is rarely at a loss for words—whether it is reminding a forgetful driver to charge his vehicle, scheduling a service appointment or checking in to promote the latest offer from a nearby Toyota dealer. In a pinch, it can even connect drivers to share rides together.

And while it remains to be seen how many drivers will actually take to its distinctly polite conversational style—it communicates with via Tweet-like instant messages delivered to the driver’s smartphone or tablet—one thing is certain: at a time when car sales are hitting 17-year lows in Europe, profit margins on new cars are being squeezed across the industry and service intervals continue lengthening, modern, telematics-enabled CRM is the ticket to a more loyal customer base and a greater slice of the lucrative vehicle repair and maintenance business, of which OEMs and their respective dealers capture 20 percent, at most. (For more on CRM, see Telematics and customer relationship management and Viewpoint: Telematics and vehicle relationship management ; for more on EVs, see Industry insight: Electric vehicles.)

Big revenue

“It’s very big business, it’s very big revenue,” says  Roger Lanctot, associate director for automotive multimedia & communications service at Strategy Analytics. “In many respects, car companies generally, although not universally, don’t make a lot of money selling the cars. They really make money on the servicing of those cars and repairing those cars. We need to have a closer bond with our consumer to make sure we keep them closely bonded with the dealer, because that’s ultimately where we make all our money.”

According to Lanctot, the vehicle repair and maintenance market is worth a staggering $150 billion annually in North America alone. Yet car makers and their official dealers capture a mere sliver as customers drift over to the aftermarket for post-warranty servicing and the antiquated, analogue CRM systems in place are powerless to stop them. “Most of what’s out there is sort of shotgun email or mailed postcard-type campaigns, maybe even telephone calls usually not based on vehicle information,” Lanctot says. (For more on the aftermarket, see The telematics aftermarket gets real.)

But even some of the more modern systems that rely on remote vehicle diagnostics are insufficient as they lack forward-looking functions. “Today we have diagnostics; the future is prognostics," Lanctot said. In other words, Lanctot doesn’t want his car to notify the dealer only after the engine fails or the door is on fire, as recently happened with Toyota and led to the recall of 7.5 million cars worldwide. He wants the car to be able to predict the event and make arrangements to mitigate the damage, both to the customer and the OEM.

Beyond diagnostics

Dominique Bonte, vice president and practice director, navigation, telematics & M2M, at ABI Research, calls Toyota Friend “probably the best example at least of an intention to go further than just offering diagnostics.” He likes two aspects in particular. One is that Toyota does not try to go it alone and instead has hooked up with an well-established CRM provider. Two is the solution’s social dimension.

Toyota Friend uses a private social network to connect all equipped vehicles with their drivers, their official dealers and also the car maker itself. What’s more, an integration with Facebook and Twitter make it as if Toyota Friend was just another node on a social network that begins to include not only family and friends but also all manner of connected devices.

“CRM is not just about point-to-point communication between the OEM and the customer,” Bonte says. “It is also communication between peers, drivers communicating between themselves about the brand. That’s what young people do. They talk about what they buy, they share their excitement about the brand they are using.” (For more on connected vehicles, see Industry insight: The connected car and Industry insight: Telematics, electric vehicles and the connected home.)

Hyundai Motor America is another good example of the high priority vehicles manufactures are starting to give  to CRM. According to Barry Ratzlaff, director of Customer Connect and Blue Link at Hyundai Motor America, the connected car team at Hyundai has been within the service division for about four years now, and a number of features on Blue Link, Hyundai’s connected infotainment system that boasts over 320,000 subscribers in the United States are service-related. They include automated diagnostic trouble code notification, maintenance and recall alert, and Service Link that provides live owner support and service scheduling.

“Even before we launched Blue Link, we understood fundamentally that telematics had a strong connection to owner support for service and just general owner relationship management,” Ratzlaff says. “Fundamentally, our goal is to simplify the ownership experience for a Hyundai owner, to make it easier for them to manage their car and show them the advantages of maintaining a service relationship with their dealer. By making the ownership experience better and easier for the owner we hope to ultimately lead to repurchase loyalty as well as growing the service business for the dealers.”

Dealers and CRM

Another Asian automaker, Nissan, has teamed with Microsoft to design a CRM system that will blend dealer and customer relationship management with social collaboration tools to provide a better understanding of the target audience and covert that knowledge into higher sales and a stronger branded experience for the customer.

Built around Microsoft Dynamics CRM platform, the key feature is extensibility, says Sanjay Ravi, worldwide managing director of Microsoft’s automotive and electronics businesses. “That’s the uniqueness of our platform, ability to build layers of business functions on top of something that is common, it’s very easy to do and cheap to do,” he says. (For more on dealers, see Telematics and dealerships: How to connect dealers to connected cars and Telematics: How positive customer relationships improve ROI.)

U.S. automakers are not far behind. In addition to bringing to bear its ever-expanding OnStar telematics package, General Motors has started assigning every Chevy Volt customer a personal advisor to handle questions about the vehicle. And Ford is betting heavily on its SYNC telematics and infotainment package as it evolves from a straightforward, feature-driven communication system to a far more complex tool to engage the customer.

Also in the United States, Nissan and Infiniti now offer online service booking through Xtime, a Silicon Valley start-up that has emerged as a significant force in cloud-based automotive CRM last year. The solution allows customers to pick a service appointment from available time slots, choose from available services, and receive an electronic confirmation of the booking. Customers can also choose to receive a text reminder of an upcoming appointment, book a loaner car, receive status updates as their car is being serviced, and pay online.

Further enhancements will soon automate reminders for regular service appointments. And new-generation telematics software will make it possible to make bookings through the screen in the car. For now, they can only be made through a PC, smartphone or tablet. “This is not just an email requesting an appointment, but an appointment that is actually in the dealer shop system,” says Kent O’Hara, director of sales and marketing for parts and service for the Infiniti and Nissan brands in North America.

Customer loyalty

In Europe, Fiat is busy at work on myCar, a new CRM system due out in 2014 or 2015. According to Candido Peterlini, Fiat’s VP for marketing innovation, myCar is being tailored to three distinct driver profiles: novices who know nothing about the car and need CRM to basically run their cars, pragmatists who know enough but still prefer the convenience of someone keeping track of service intervals and taking preventive measures to avoid costly repairs due to breakdowns, and enthusiasts who have their car as a hobby and are looking to get the best possible performance out of their vehicle.

Peterlini expects myCar’s pay off to be twofold: it will save money for the company by making its internal processes more efficient and it will enhance customer loyalty by providing a better service in terms of user friendliness, simplicity of use and ease of access. Whether it will also result in more sales of original parts and improved customer retention is hard to say, according to Peterlini. “We are not there yet,” he says.

The idea of using telematics to monitor vehicle health is hardly new. Remote vehicle diagnostics has been around for well over a decade. The origin of Toyota Friend can be traced back to 1998 when Toyota introduced Gazoo, an early in-car subscription-based information service. The challenge is how to mine the ever growing amounts of vehicle data, collate them with information from dealers and automakers, and convert them into actionable suggestions that take into account the complexity of the extended supply chain. (For more on diagnostics and data, see How to profit from telematics driver data and Should Drivers Have Access to Their Diagnostics Data?)

Today that supply chain consists of customer, dealer and automaker. But in the future it is also expected to include insurance companies, finance companies and even telematics service providers.

A U.S. company named Covisint specializes in how to keep the entire chain functioning in a transparent and coordinated way. “We have what we call an engagement platform,” says Tim Evavold, the company’s director of connected car & dealer ecosystems. “The purpose of it is to be able to bring disparate data, disparate systems, disparate organizations to execute a consistent customer experience.” With this approach, particularly if it is happening in real time, each partner in the supply chain sees where they fit in and what they should be doing to treat the customer as if it’s one company.

Social media integration

Social media integration is another important aspect of a successful CRM strategy, says Microsoft’s Ravi. Microsoft’s recent work with BMW in Latin America is a case in point. The project was to conduct an interactive marketing campaign that used Facebook to promote the launch of two new BMW models. Microsoft provided the Facebook integration, and the project was a huge success with 90,000 participants engaged and 900 converted into sales prospects.

“That’s the kind of scale that we are thinking of,” Ravi says. “It is how you leverage the information you have via your CRM systems and integrate it with Facebook and other social media to reach out to [potential customers] and then attract them and convert them. It is very powerful.”

The benefits of car makers and dealers working together to provide a better customer experience may seem obvious. But it is still an effort in places like the United States where the vast majority of dealerships is independently owned and where comfort with data sharing varies widely.

“You would think it would be kind of a no-brainer that they will get service leads from the telematics system so they will want to participate, but it’s not that simple,” Lanctot says. “The process is one of coercion and evolution and slowly easing the dealers into the process and the program.”

But the industry is quickly evolving, says James Maguire, director of product management at ADP Dealer Services, a global specialist in dealer management systems. “Whereas before there was friction over whose customer was it—‘I sold this to them’ but ‘You sold them my car’—now the industry is evolving and becoming more sophisticated about how we are working together to be able to do the best job of keeping this customer happy with my brand, with my vehicle and with the relationship they have with the local dealership,” Maguire says.

Jan Stojaspal is a regular contributor to TU.

For more on CRM, see Industry insight: Telematics and data.

For the latest on CRM, visit Telematics Detroit 2013 on June 5-6.

For all the latest telematics trends, check out Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Telematics India and South Asia 2013 on April 17-18 in Bangalore, Insurance Telematics Europe 2013 on May 7-8 in London, Content & Apps for Automotive Europe 2013 on June 18-19 in Munich and Telematics Russia 2013 in September in Moscow.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.


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