Friday, April 4, 2014

Service Retention in the Age of Telematics

By Eliza Johnson
As most of us are aware, service retention is one of our top challenges. To put it simply, we need to keep customers coming back to the dealer. Unfortunately, customers have reason to turn to the aftermarket; they say that they trust independents to charge them fairly.

But once those customers enter the aftermarket, they typically don’t come back. It’s a service black hole. And it only gets tougher as vehicles age; consumers are less likely to return to the dealer as they fall out of warranty and their vehicles get older.

How to win back these customers? That’s a subject for another blog, but the best way to break this cycle is to retain customers in the first place. We have to keep new vehicle owners at the dealership.

With advances in telematics, a lot of our new vehicles are becoming “connected”. This means that, increasingly, the vehicle owns the relationship with the customer; it talks to the customer and provides the information and feedback. Often, these systems provide diagnostic information, system status, and even the ability to schedule appointments.

Without a doubt, these changes will impact how a customer makes his or her service decisions. The customer can get more information from the vehicle than from a dealer, and since the customer trusts the “smart” car, maybe he feels he no longer “needs” the dealer.

That’s why, as the car becomes increasingly connected with the customer, it is critical for OEMs and dealers to stay connected to that customer, too. The advances in telematics systems provide an advantage. OEMs have access to the customer through the vehicle and access to more and more data, but there is a lot at stake and we have to get it right.

While there is power in the back end of the systems, let’s not forget the system's’ effectiveness is largely dictated by whether or not customers use them. We need to encourage customers to share vehicle and service information; once that communication channel is open, dealers can use it to communicate with owners, market services, and schedule maintenance. But how?

We’ve done a lot of research, including some recent focus groups and here’s what we know:
  1. Drivers trust their cars and telematics reports, often more than they trust their dealer. However, reports without digestible details and specific numbers are useless, such as the “Check Engine” light.
  2. Owners become skeptical of their car's messages when they think that they are being given limited information or channeled to an incomplete set of vendors or shops.
  3. Customer preferences on service scheduling are still scattered across multiple channels, including in-vehicle, but all want it to be quick and easy.
  4. Customers expect their service provider to know their vehicle history and status, and to provide them with customized service offerings.
  5. Customers want access to their RO and service history.
  6. Customizable privacy settings must be available to mitigate customer feelings of intrusiveness.
  7. Customers are willing to pay for valuable services, but currently do not place value on their vehicle systems beyond infotainment (e.g. XM and internet radio, concierge services, etc.).
Dealer salespeople need to understand and explain the value of telematics systems, and embed them into the new maintenance and service process.

Bottom Line: As we launch into the age of the connected car, we must pay attention to what customers are thinking, feeling, and saying about their connected car. Without customer buy-in, the potential of telematics systems is very limited. If customers don’t trust telematics, they won’t use it. We must help the customer understand the value of vehicle connectivity throughout all aspects of services and repairs: vehicle health monitoring, diagnostics, shop locating and scheduling, and maintaining service records. This connected strategy must be carried throughout the entire value chain; it can’t be piecemeal. So, what do we do, short term and long term?
  1. In-vehicle: In the short term, we need to connect the vehicle and the customer, and implement technology that the customer can use: diagnostics, appointment scheduling, and ongoing vehicle health monitoring.
  2. At the dealership: Next, we need to connect the dealer and the customer/vehicle. This includes CRM programs, automatic vehicle detection, and personalized service offerings.
  3. At the OEM: Long term, we must continue to be perceptive of customer usage and sentiments in order to design system interfaces that drive connectivity. The ultimate goal is to improve OEM strategy and supply chain performance, including using in-vehicle data for predictive analysis, parts deployment, and tailored service.
  4. Currently, no OEM has a holistic connected solution that spans the entire service cycle, and this is the golden ticket for leveraging telematics toward maximum retention.

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