Telematics, CRM, and a very long-tailed proposition, part II

Telematics, CRM, and a very long-tailed proposition, part II

The Blue Link blueprint for CRM

Hyundai's Blue Link telematics system is one of the most advanced when it comes to CRM telematics.

“Telematic service scheduling was a part of its plan from very early, and Hyundai made a substantial commitment to enabling its dealer network," says David Sturtz, vice president of marketing and business development for Xtime. According to him, 97-98% of Hyundai dealerships are at this point Xtime-enabled, meaning that they can receive and process service appointments via Blue Link.

For Hyundai drivers, this means having a seamless consumer experience, which, for example, involves having their arrival anticipated and prepared for in terms of the necessary replacement parts being on hand and ready for installation. For the dealerships, it means a stronger connection with their customers and the ability to manage their service capacity more efficiently.

According to Pat McGinnis, vice president for business development for Tweddle Group, Hyundai deliberately chose to design its Blue Link system to emphasize service scheduling first and concierge services second, even though concierge services were far sexier in the customer's eyes.

According to Roger Lanctot, associate director, automotive multimedia & communications service, Strategy Analytics, other OEMs are also starting to put greater emphasis on service scheduling in designing their upcoming telematics packages.

“Oil changes and tires is boring stuff, but that's where the dollars lie,” he says. “Multiple carmakers are creating service scheduling in the car propositions. OnStar has shown something in their LTE car demonstrators/betas. Volvo is launching their cars globally with service scheduling from the car. Hyundai already has this. KIA claims to be doing this via customers' connected phones. Volkswagen on their Car-Net seems to have service scheduling from the car. Acura also.”

Paying for telematics until it pays for itself

Finally, the challenge of paying for CRM telematics needs to be addressed as CRM is far from paying for itself.

Even if the hardware costs continue to drop, telematics is not free. But asking customers to pay subscription fees is “annoying,” says Wesley L. Lutz, president of Extreme Chrysler/Dodge/Jeep, RAM Inc. of Jackson, Michigan, comparing it to going to a Best Buy to buy a $60 piece of electronics hardware and then being offered a product warranty at an extra cost. “What's the first thing they try to do to you?” he asks. “Sell you a product warranty! It's never less than twenty bucks. Everybody hates that.”

Rather than let it become an issue, BMW has decided to provide its core telematics services for free. According to Lanctot, customers in Europe get a free three-year subscription while customers in the United States get ten years for free. Lanctot calls it “Free quote/unquote” because he figures BMW will find ways of making money from it.

“The model of BMW is to give the service away for free, so it's activated in all their cars so that you can add-on or sell premium services of whatever variety,” he says. “You have a long-tail opportunity/proposition. So that's clearly where the latest solutions are coming from. It's a long tail kind of a story.”

Lanctot cites the example of the connected commercial fleet industry as the likely direction for CRM telematics in the passenger vehicle space. According to this particular business model, remote vehicle diagnostics and free replacement vehicles are accepted as the cost of doing business within the very competitive commercial fleet sector.

Lanctot notes that Hyundai's Blue Link operates similarly.  “In the luxury segment, if you've got a Hyundai Genesis [and] anything goes wrong, they'll come to you,” he says. “And I think that kind of model is going to work its way further through the distribution channel. This is also partially a response to Tesla, which is already delivering this level of service.”

He continues: “There's going to have to be a lot more going to the customers. You have to up the ante to customer service.”

Why relationships matter

Lanctot, McGinnis and Sturtz all agree that the automotive industry needs to be less about manufacturing cars and more about maintaining customer relationships, so that the customer will direct a greater part of the $150 billion service and repair market to OEMs and their dealers.

And in light of what telematics-enhanced CRM makes possible, thinking about the business in terms of selling cars or “moving metal” is a short-term strategy, Sturtz says. “Forward-thinking dealers view their business in terms of lifetime ownership or generating customers for life,' he says. “These dealers provide a great experience at every stage of the buying and owning process, providing a great overall ownership experience.”

CRM telematics has the potential to give dealers a critical advantage of being there first with the customer – a crucial period during which they can engage the customer and gain his loyalty and trust. But it is, at best, a narrow advantage. The aftermarket is never far behind. In addition, it is quick to adapt, infinitely opportunistic and considerably cheaper than a dealership's service department. 

Also, with CRM telematics, dealers can deliver a level of proactive service, which the aftermarket is not geared to providing.  But even this can change.  McGinnis believes that OEMs and dealers need to always keep their eye on what the aftermarket is up to and to learn from it.

Lanctot also believes that OEMs need to understand how important providing a positive customer's user experience actually is. “Part of the experience is the brand experience, and that's going to have to change,” he says. “Tesla has basically redefined that. They changed the game and raised the bar,” he adds, referring to Tesla's approach of eliminating local dealerships and selling directly to customers.

“Now it comes down to the OEMs needing to make a decision,” Lanctot says. “Go dealer-less, like Tesla, or, if they're going to keep the dealers, use the dealers to their advantage.  And telematics is the key to that proposition.”

(For the first part of the series, see Telematics, CRM and a very long-tailed proposition, part I.)

Brendan McNally is a regular contributor to TU.

For all the latest telematics trends, check out Data Business for Connected Vehicles Japan 2014 on May 14-15 in Tokyo, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Update Awards 2014 on June 3 in Novi, Michigan, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014 on Sept. 3-4 in Chicago, Telematics Japan 2014 in October in Tokyo and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Insurance Telematics Report 2014Connected Fleet Report 2014The Automotive HMI Report 2013 and Telematics Connectivity Strategies Report 2013

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