Telematics: How positive customer relationships improve ROI

Krystyna

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12th December 2011

The ultimate success of customer-relationship management is achieving higher repeat purchases.

A surge in telematics in recent years has presented the auto industry an opportunity to reinvent these relationships. This is linked to an increase in brand loyalty via communication, service and upselling.

Automakers and their vendors are now able to target the end user and collect data wirelessly to improve the customer experience.

This is relatively new to the industry, where the automaker never had a chance to interact with the consumer directly.

“Used to be the car salesman and auto dealerships were the only contact with customers,” says Vishnu Muralidharan, an industry analyst in the automotive and transportation group with Frost & Sullivan.

Now, though, several diagnostic and repair services can be offered to the customer post-purchase through vehicle warnings—engine check, oil change, tire pressure, etc.—which produce long-term value.

These maintenance services reinforce the service quality perception and provide peace of mind for drivers.

In some cases, it’s possible for a dealer to remotely fix a problem in the car through a software update or a reset, Muralidharan says. In commercial fleets this is a common practice, and it’s now becoming available to the mass consumer market as well.

Owner alerts and data mining

One example is the Ford Sync, which offers vehicle health reports delivered to an owner via email or text message notification.

The comprehensive reports include recommended actions, such as scheduled or unscheduled maintenance and open recalls.

Users can send the report to Ford’s online appointment system to schedule service with a dealership. BMW, Mercedes, Audi and others are offering similar services.

Data mining to detect patterns or predictive information is relatively new to the mass consumer market.

However, commercial fleets have been using reports and logs for years to calculate downtime, productivity and fuel usage. (For more on data mining, see How to profit from telematics driver data.)

Telogis, a provider of location-based services for fleet owners, businesses and other enterprises, also collects data on driver behavior. Subsequent alerts and reports for fleet managers can include a driver’s idle time, braking habits and average speeds.

“This is especially important for certain industries, such as utility companies, where safety is key,” says Susan Heystee, executive vice president of global sales for Telogis. (For more on driver behavior, see Insurance telematics in the US: Ready to grow? and Telematics, EVs, and changing driver behavior.)

In the consumer market, automakers have begun to extract data, such as predictive information, to enhance the driver’s experience, improve customer relationships and build brand loyalty.

One example is alerting customers before a defect becomes a problem. This saves the vehicle owner time and money, enhances the relationship and builds trust between the brand and consumer.

In Italy, Octo Telematics has developed a technology that allows drivers to access their vehicles’ diagnostic system and send the relevant data to the car manufacturers' information-technology system. If any failure or defect is detected, the driver receives a notification asking for possible service dates, while the replacement part is on its way.

Telematics as marketing tool

The end result of effective data mining, Muralidharan says, should reduce the total cost of ownership for the customer, from the point of sale to the purchase of the next vehicle.

Using telematics to notify drivers of repairs and defects is one way, but the automaker also knows when it’s time for the driver to start thinking about a new purchase.

Mazda recently launched the MyMazda iPhone app, which not only provides service and maintenance information, but it’s also used as a marketing tool.

The app generates service coupons and alerts car owners of offers and promotions for new purchases.

If an automaker can retain an existing customer with another vehicle purchase, it has capitalized on its investment in brand loyalty. This data “is educating the customer as well as the automaker,” Muralidharan says.

Stephanie Flores is a regular contributor to TU.

For more all the latest telematics trends, join the sector’s other key players at TK.

For exclusive telematics business analysis and insight, check out TU’s In-Vehicle Smartphone Integration Reportand Smart Vehicle Technology: The Future of Insurance Telematics.