The owner of a mom-and-pop store knew that little Laura was especially fond of the caramel sweets and always did his very best to steer Mama into the store as a regular stop on her shopping rounds. The mother of the family of five always found that the mom-and-pop store offered the right combination of food, beverages, and other items for daily use – plus good advice for raising the little rascals or a tip for treating minor aches and pains. Pampered by such good service, Laura’s mom did not pay much attention to the few cents that she might have been able to save by shopping at the discount store in the city.

Connected Car? Connected Customer!

Customer Loyalty in After-salesConnected Car brings car-makers closer to their customers. That is why it is an elementary part of digital customer relationship management that focuses on the ownership phase.

The growing constraints arising from the necessity to serve the mass markets profitably have led to the disappearance of the mom-and-pop stores everywhere because the economies of scale have ultimately won out over all other considerations. Neverthe-less, the basic principle of optimal customer care as a basis for customer loyalty has stayed the same:

> Offer the right product> to the right customer> at the right point in time> in the right way.

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Translated into modern CRM concepts, this means:

> Accurate segmentation of clientele> Prediction of the presumable point in time at which a need

will arise> Offering products and services tailored to individual needs

that are felt to be a “good fit”> Making use of the appropriate communication channels –

as necessary, based on individual preferences

How can this concept be practically implemented with the aid of innovative information and communications technology?

Challenges in after-sales in the automotive industry

Car-makers have in the past been confronted with the dilemma that they met their customers only during the pre-purchase phase that ended when the vehicle was handed over to them. Most of the interaction with customers took place at the dealership and, later, in the service center. Since dealers and service centers are generally legally independent companies whose corporate value is determined to a major degree by their (loyal) clientele, it will come as no surprise that they are often rather reluctant to share their knowledge about the customers and their needs with man-ufacturers. The tracks left behind by drivers of older cars in particular became increasingly faint, and when there was a cus-tomer change because of the sale of a used car (at the latest), the connection to the manufacturer was cut off completely.

As a result, car-makers have largely had their hands tied when they actively wanted to secure customer loyalty in the phase “vehicle use/service” (“ownership”) and over the complete life cycle by using appropriate communication measures. Yet loyalty is an existential issue for manufacturers, not only in the sense of “After the purchase is before the purchase”, but also for the profitable spare parts business during service life itself. As vehicles become older, the need for spare parts increases, but, unfortu-nately, the change in loyalty is inversely proportionate: loyalty to the brand-name service center rapidly declines as the vehicle ages, and manufacturers have no chance to respond to this develop-ment by specifically addressing the customers.

How does Connected Car solve this problem?

Connected Car now opens up an opportunity for manufacturers to remain in contact with customers even after the handover of the vehicle, to learn everything about the service and repair needs of their vehicles, and, in the event of a change of owners, to become acquainted with the new customers, the buyers of the used vehicles.

Laura Loyal has decided to purchase the built-in Connected Car services in her new car. Her “digital co-pilot” supports her while she is driving; she always receives the latest reports online, and her children are delighted by the “always on” entertainment functions available through the car hotspot. Her app explains to her what the warning message “Error E404.03” on her display really means: “The airflow meter has reported implausible values. There may be a drop in engine performance. Please contact a service center within the next 100 km.” She is relieved because she knows that she can still drive her children to visit their grand-mother. The vehicle also sends the error code to the manufactur-er’s back end, where it is prepared as a lead for the pertinent service center. The service center receives information about the error code, the vehicle that sent it, and the customer. The dealer can now contact Laura on the same day, using WhatsApp, her communication channel of choice, and offer her three possible dates for a service center appointment. Naturally, all three sug-gestions are in the afternoon because Laura, a childminder, is known to be completely busy taking care of children in the mornings.

Ingo Disloyal purchases a used car on an Internet platform at a good price. Curious about the small, unassuming box bearing the Bluetooth symbol in the driver footwell, he hears from the previous owner that this is a Connected Car retrofit that com-municates with the vehicle’s electronic systems via an OBD2 interface (“diagnostics plug”). Curious about the digital add-ons of his new “used car”, he registers on the manufacturer’s customer portal and can now use the downloaded app as a “digital co-pi-lot”. Ingo is delighted to have the driver’s logbook function; now he can increase the amount of his tax reimbursement with very little effort. The authorized dealer in his area is notified of the registration and, thanks to the odometer reading sent by the back end, there is no more guessing about when the next service is due. The dealer – assuming Ingo is in agreement – can contact Ingo about the service that is due and make him an offer that this price-sensitive customer will consider to be a real bargain. The manufacturer, aware that Ingo’s financial resources are lim-ited, can send the appropriate newsletter or specific push notifi-cation to the Connected Car app when certain problems arise and call his attention to the low-priced second line of spare parts, the “Efficiency Parts”. Even if Ingo now goes to an independent service center, he will at least maintain the quality of the original parts for the important replacements.

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Figure 1: Customer Life Cycle in the Automotive Industry

Source: Detecon

Customer Lifecycle

Ownership0 - 2 Years

Ownership2- 4 Years

Ownership> 4 Years

SalesPre-Sales

Retention/ Re-Purchase

Awareness

Digital potential of Connected Car for customer relationship management

The digital possibilities offered by Connected Car help the auto-mobile manufacturers in all four dimensions of CRM:

> Since they will know who their customers are throughout the entire vehicle life cycle – even when there is a change of owners – car-makers will have the chance, thanks to Connected Car, to remain in direct communication with customers during the use phase as well. The interaction between manufacturers and dealers will become more intense. The collection of data about the vehicle and – provided that drivers have given their consent – about the users’ driving behavior provides valuable information about the individual needs of vehicles and their drivers. Such data can also be analyzed in anonymized form by means of big data and customer analytics functions and used for a more precise segmentation.

> Thanks to the online transmission of the current odometer reading and generated service or error messages, determining the time when service or repairs are required is no longer a guessing game. The exact needs can now be seen in real time, particularly for older vehicles or after a change of owners and the correspond-ing change in driving behavior (frequent/infrequent drivers, city driving or highway).

> This advantage is true of the need per se, not just the point in time. Service or error messages give the expert service consultants in the service center exact specifications about the work that is

required and the necessary spare parts. As a consequence, annoy-ing waiting times or delays in the service center can be avoided because the dealers already know exactly what service is required before customers take their cars to the service center. The neces-sity to order spare parts could previously not be determined until the car had arrived at the service center; now the orders can be sent off ahead of time. In the past, there were often massive complaints from dealers about the quality of the leads generated by the manufacturers and forwarded to them. Thanks to Con-nected Car, the leads are immediately qualified in high quality at the moment they are generated. Requirements are described exactly, and customers have expressed an interest – by using the Connected Car functions – in maintaining an ongoing relation-ship to the manufacturer and its network of partners.

> Finally, Connected Car opens new channels of communication. One goes through the head unit that customers use intensively as the communication interface with their cars as representatives of the brand. Advertising content – in appropriate form and moder-ation – can be displayed here. Another is created by the Connected Car app that becomes the constant companion of drivers and, especially for younger target groups, is the medium of choice on their mobile devices. A special advantage of these two Connected Car channels for addressing customers is the immediate relation-ship to the product and use of services. The communication can take place at the very moment customers experience the product “car” or the Connected Car services. This “immediacy” can be used to ensure that the message being sent “arrives” in much more direct and more intensive form than would be the case of an email that comes in at some point during the day or of a brochure that is found in the mailbox.

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Figure 2: Architecture of a Connected Car Solution with Dealer Integration

Source: Detecon

VehicleBackend

Connected CarArchitecture

Dealer/Service CenterConCar App Head Unit in the Car Customer Portal

CRM Manufacturer DMS

Connected Car solutions have their origins in the development departments of car manufacturers and have frequently been conceived on the basis of what is technologically feasible. The key question – what customers actually want and need – was often neglected. Detecon brings its outstanding expertise in CRM, sales, and service to Connected Car projects so that the focus is on customers. When this is achieved, Connected Car becomes the Connected Customer and realizes its full potential.

By the way, Laura is still thrilled when, after the service check, she finds a small bag of caramel sweets and not just the updated service booklet on the passenger seat ...

Dr. Jürgen Padberg is Partner in the Automotive Practice and head of Global Knowledge Practice CRM, Sales & Service. He advices clients to the topic of digital transformation in order to explore new ways of Customer Com-munication and Customer Experience with the help of innovative Technology.

Andreas Seel is Managing Consultant and an expert in Connected Car. He is a member of Connected Car Solution Center and advices car makers and sup-pliers on technical and economical topics.

Focus is on customers, not technology

The immense potential of Connected Car for customer relation-ship management does not develop its full impact, however, unless users actively participate. Customers must use the Con-nected Car services if the desired data are to be generated and the ongoing interaction with the manufacturers is to be main-tained. The functions of the Connected Car solution – whether as installed hardware in the cars or in the form of a mobile app – must offer concrete benefits and tangible added value to drivers. The ideal solution is a combination of rational benefits (such as functions for increasing efficiency like a gas-saving driving style or more convenience in the form of support pro-vided by the “digital co-pilot”) with emotional components that excite customers. Examples might be the integration of social activities (social network integration) or fun components (gam-ification). Unless customers recognize how they will benefit, they will not be prepared to pay in the “currency” usual for such transactions – the disclosure of their data.

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