Friday, June 8, 2012

What’s the Value of Telematics Today and Tomorrow?

In-vehicle telematics have been around for a while (think of OnStar 10+ years ago). However, telematics are now becoming technologically advanced, widespread, and often standard equipment on new vehicles. These systems bring drivers and operators a variety of services including safety, diagnostic, monitoring, navigation, and entertainment. They have revolutionized, and continue to evolve the vehicle ownership experience. While the benefits to customers are fairly apparent (ease-of-use, information, productivity, entertainment to name a few), these systems benefit OEMs as well. So, beyond customer satisfaction, where does the industry stand? What is the real value of telematics to OEMs today? And what will it be in the coming years?

Currently, auto OEMs offer a wide variety of telematics features focused more on enhancing the driving experience and less on diagnostics and service. Conversely, heavy equipment OEMs tend to offer less on the side of entertainment and safety and focus more on providing a superior aftersales experience. Regardless of each OEM’s particular strong suit, across the industry, the majority of these OEMs are looking at ways to use telematics features to improve and enable customer relationship management and service retention. The key here is to get real-time data from the vehicle and take targeted actions, enabled by technology and dealer processes. Today, most OEMs collect diagnostics codes, subsystem status, and vehicle location information.

Heavy equipment OEMs use telematics data more pervasively than auto OEMs, mostly for vehicle/part failure analysis.

Regardless of each OEM’s specific offerings, the overarching focus of the industry is on providing customers with diagnostic reports and keeping them aware of the status of their vehicle maintenance and repair needs. However, how do we know those customers are going to use the dealer for such maintenance and repairs? This is where a few leading OEMs take the next step. Several OEMs offer customers special features to distribute service specials and coupons and to locate dealers. A very select few OEMs offer customers the ability to contact service representatives and/or dealerships to make appointments as necessary, all enabled by backend technology integration. Telematics enables OEMs to create a targeted approach to each individual customer, based on the exact status of the vehicle.

Further, even if we can get these customers into the dealership, how do we ensure they have a positive experience and keep them coming back? Diagnostic and fault code information gathered by the in-vehicle telematics systems, if available to dealerships, prepares them and provides them advance notice of what the issue is and what are the possible service and parts required to solve it. Some OEMs automatically ping customers’ “preferred” dealer at the time of fault codes, and for certain fault codes, are able to advise which parts may be needed. All of this information gathered by the telematics system means that the dealer is informed and prepared, and, hopefully, that the customer’s service experience is a positive one.

Given the strides made in service and diagnostic features, what potential value is there that OEMs should and will start to capitalize on in the next several years? Part forecasting and inventory management – as telematics systems gather data on fault codes and part failures, OEMs can use that information to get a sense of what demand will look like and how inventory will need to be deployed, both at their PDCs and dealerships. Think RIM enabled by telematics! While most OEMs say that few of their fault codes can currently be linked to specific parts, some can, and OEMs want to refine and categorize these fault codes. The technology isn’t quite there yet to allow OEMs to directly tie in their telematics data to their forecasting processes, but OEMs want to see that evolve and are beginning to invest resources in exploring and developing that link. The value of telematics will continue to grow and will soon go beyond customer satisfaction and service retention, to tie into inventory management processes—it’s only a matter of time.

Bottom line: For OEMs today, the real tangible and attainable value of in-vehicle telematics is building a relationship with the customer and improving the aftersales experience. Today, most OEMs provide proactive diagnostics and maintenance/repair information. A few use this information to facilitate service initiation and appointment setting and execute targeted marketing. No one has cracked the code on using this information to manage the supply chain. But, OEMs are looking toward what’s next and, in the coming years, we’re going to see a lot of value out of telematics for forecasting and inventory management—the technology is getting there and OEMs are gearing up.

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