Can vehicle personalization drive loyalty?

0:00 Introduction to Vehicle Data and Personalization

Today in The Garage, we’re recording live at the COVESA All-Member Meeting in Porto, Portugal. Our topic today is really looking at vehicle data and the opportunity to provide a more personalized experience with drivers. So much of what vehicles are doing today is thinking about engaging the customer in old ways. How can we bring a more personalized engagement model to vehicles and to drivers similar to what people are experiencing with their phones.

I think there’s been an efforts in recent years to increase connectivity in vehicles. There’s been an effort to increase engagement and brand loyalty, but only some OEMs are really embracing that to an extreme extent. We’re also seeing an opportunity to capture new capabilities like improving vehicle diagnostics, improving vehicle ownership experiences, and that all relies on both data and also understanding our drivers and understanding their personal preferences and what they like. Joining me today to talk about these trends is Roger Lanctot.

1:12 Introducing Roger Lanctot

Roger is the chairman and founder of Strategia Now Consulting. He’s an a fixture of the industry for many years where he has been doing consulting and advice for all across the vehicle industry and other sectors as well. He’s a fixture at conferences, and we were so excited to be able to talk with him while we’re here at the COVESA All Member Meeting. Let’s go!

Welcome to The Garage. Roger, thank you for joining us today. Always a pleasure, John. Thank you.

You’re a repeat guest on the podcast. Thank you for coming back and joining us again. I guess we didn’t scare you away last time. Yeah.

In spite of the the debacle of our first interaction. Yes. I’m happy to be here. It’s great to see you.

So Roger, for those people who might not know you as well, tell us about you and your company and what do you work on? So Strategia Now Consulting is an organization that I work to amplify my clients’ messages as well as to help build their network within the industry and and build their position and refine their marketing messages. And you’ve got a great perspective because you, of course, you work extensively with vehicles. You’re working with vehicles for a long, long time, but you’re also exposed to some other markets as well.

Well, to be clear, I call myself “car tolerant”, not a “car enthusiast”. Okay? But I do have another incarnation, which is president of the Mobile Satellite Users Association. So I’m active in the satellite industry.

And there are some interesting experiences that are overlapping with the automotive industry from the standpoint of bringing satellite connectivity to cars, but also the fact that satellite connectivity, LEO [Low Earth Orbit]

satellites, are enabling experiences on airplanes that are creating some interesting learnings that I think are relevant to the automotive industry. Okay.

3:11 Personalization not Monetization

Well, let’s jump right into it. Let’s talk about data, I think, is an important aspect we’ve talked about here at COVESA, a lot of the focus is around data, vehicle data, and so on.

And I think about experiences. So let’s start by talking about vehicle data and what do you see as some of the opportunities to use data in new ways? So I was watching and listening with interest to your interview on stage just a little while ago, this morning here at COVESA, and I was really beginning to get thoroughly annoyed with this data monetization expression that we’ve adopted in the industry, which I think is is putting us on the wrong path. Because you did use this other expression, which I think is more appropriate, which is personalization.

Right. And I think that’s really what it is all about, and that’s how we need to think about it. That it’s…of course, we’re trying to, you know, leverage the vehicle data…but

that’s an old story, remote diagnostics, customer relationship management, service scheduling, things like this. Artificial intelligence infusing those experiences, of course, have a more intelligent engagement. But personalization, I think, is what it’s about. And that’s the fundamental challenge facing this industry, that we’re the automotive industry is a B to B business.

The car makers sell cars to and through dealers. And the challenge that we’re facing as we’re moving to electrification is becoming a B to C industry, interacting directly with the consumer and and having a more a personal experience, more in-depth engagement with the customer, and intelligent interaction with the customer. Sure, we’re turning data into revenue opportunities, but it’s the personalization that is going to open the door to contactless, seamless experiences, frictionless experiences that will open the door to further revenue opportunities. That is that is the challenge facing the industry, I think.

5:23 Engagement Strategies of New Automakers

I think that’s right. And we were chatting earlier about how different OEMs have had different approaches, different philosophies about kind of recognizing drivers, engaging with drivers. And I think your point about carmakers selling to dealers, which is which is true and it’s not a secret, but it kinda maybe fundamentally informs the thinking about how to engage with cars. I think some of the newer automakers, some of the, you know, the fresh, you know, brand new entrants have been able to come at this a very different way where they fundamentally recognize the engagement with the the driver, the owner, is fundamentally more important and different compared to maybe what has been seen in the past.

You know, strategies like understanding, you know, my experience in the vehicle, maybe my wife’s experience, what we might want, our driving habits, our style, our might be very different. You were telling me some similar stories about that. Yeah. I know you don’t wanna name names, but I’m I’m going to name a name because this company has got gotten a lot of things right, but maybe not everything quite right.

6:27 Case Study: Chevy Equinox Connectivity Experience

So I took delivery of a Chevy Equinox in the fall, and you get eight years of free connectivity with that car. That doesn’t sound like such a big deal, except it’s a very big deal. It’s a very big deal. Because GM is not supporting on their new cars, CarPlay or Android Auto.

Because if you are enabling Android Auto and CarPlay in your cars, you lose all visibility to what the customer is doing, you know, in that in that ecosystem. And so they they wanted to have that visibility. They wanted to have access to that. And so with I get eight years of connectivity for free.

So that’s OnStar plus Google Maps and Google Assistant and the Google Play Store. Now before I left the dealer lot, I had to provision OnStar. I maybe I could have said I could have driven off without doing that, but he strongly suggested that I, you know, activate it on the dealer lot. However, I didn’t activate my the SiriusXM subscription, and the car was intended for my wife, and I was taking delivery of the car.

In ideal circumstances, she would have set up her Google account. So which she ultimately did, and now in the center stack, you can see my wife’s face, and her and her Gmail account is, you know, accessed and and synchronized. But the missed opportunity is prioritizing the setting up of all the relevant, you know, important subscriptions in the car, and I would submit to you a SiriusXM subscription—GM’s getting a piece of that action—so it’s in their interest that I at least activate, you know, beyond the free trial period or something. And so but even more so, you had eight years of free connectivity, but it’s not a personalized experience.

So there’s no facial recognition in the car, or if there is, it’s it’s not being integrated with the connectivity experience. So there’s a missed opportunity to have a personalization experience in the car. And what I’m and what I’m saying is it’s not even meeting the the very low bar of the experience you would have on a Delta flight or a United flight where you sit down and you’re identified in your seat as hello, John. Hello, Roger.

My car isn’t even recognizing me and yet. Yeah. We’re if we’re we were talking about that, it seems because we’re both we will fly a lot and we’re we both have, you know, customer customer loyalty to our respective airlines, which is the same airline. But what you find is that airlines in general, I think, have mastered in many respects the customer engagement and driving customer loyalty.

And in some sense, you mentioned, you know, kind of sitting down and recognizing you. I think there’s a growing trend in in the airlines when you sit down and says, hey, Roger, welcome. You know, kind of to to have that last touch of customer recognition. That’s actually relatively hard problem because there’s, you know, lots of passengers moving around and so on like that.

Vehicle, generally, there’s maybe one driver, maybe there’s two drivers, maybe three drivers. But yet some cars have different philosophies and different strategies for recognizing whether it’s your phone, whether it’s a key fob, or other kinds of things. But generally speaking, they’re not consistently recognizing the driver. My wife is constantly giving me grief when I get when she gets in the car and it still thinks it was me driving and the seat’s set wrong.

9:57 The Cost of Customer Acquisition and Retention

The wrong radio station. Yeah. So I think that’s a that’s a simple opportunity to make sure we’re really engaging the consumer, engaging the driver at another level. What I’m suggesting is more attention needs to be paid to the fact that there is a cost of customer acquisition, and there’s a cost to customer retention or customer defection.

I love quoting Alicia Boler Davis, used to be head of global connected consumer at GM, and she had other responsibilities there as well before going to Amazon. And actually, now she’s president of Ford Pro. But she said one percent of customer retention is worth $700 million in vehicle sales. It’s like, oh!

Thats…

I’m going quote that, that’s very good. Now I care about retaining customers, and now I care about how much it’s costing me to obtain a customer. And I don’t think it’s a secret that a lot of Tesla owners are quoted saying, I’m never buying another vehicle. I’m always going to stay a Tesla customer.

Well, every automaker needs to have that same kind of thought process, that kind of customer engagement. Because, you know, when I first came into understanding of this proposition was around insurance, vehicle insurance. And it’s understood in the insurance industry 40% of the time, if you have a total loss, that customer is going to go to another brand. 40%?

40%! So that means at your lowest point of customer satisfaction, you’re at the highest point of customer defection. That’s how I ended up driving a BMW. I had an Infiniti, some teenager not paying attention pulled out in front of my wife.

So my wife T-boned this Lexus with our Infiniti, and I ended up with a BMW. And Infiniti never even knew that that happened. I, of course, kept getting Infiniti mailers for preventative maintenance or whatever for a couple of years afterwards. But the industry needs to think differently about this experience, this customer engagement, and how important it is.

12:11 Ensuring Privacy

And, you know, we just take it for granted, you know, that if you’re a lot of international flights, your face is going to get scanned. If you go to the airport, you’re going to see the Amazon store, which says just walk out. And it’s like we’re scanning our faces with our phones all the time. Why isn’t the car scanning our face and recognizing who we are so your wife is a little bit less frustrated.

Right. With the proper seat settings, the proper radio station. II listen to WAMU in the Washington DC area. My wife is a WTOP listener.

It’s kind of annoying if I’m getting in after her. Well, mean, you you you the question about privacy you mentioned, I think is an important one because of course the industry cares about privacy. There’s been a lot of focus on ensuring drivers are confident and can trust privacy. But that’s also not saying you can’t have drivers to have an opt-in experience because many of us, you know, I opt in to pretty much everything because I’m relatively confident of the companies I work with.

But if those those customers that opt out, no problem. But for those people that opt in, make sure they have a seamless experience. Most cars in some geographies, growing geographies, occupant monitoring, driver monitoring for attention is required by law. So actually, the data’s already there to recognize people.

So in an opt-in experience, why not make it seamless? This is, “oh, I noticed it’s John driving, so let me set up John’s profile seamlessly”. So for example, on stage, a part of the conversation was also about data monetization, but also about diagnostics. You know, sort of intelligent diagnostics.

So of course, I’m driving my BMW now, it’s telling me I’m overdue for service. Well, give me the details, okay? Because I got a mailer that that I believe told me that I’m no longer within the free service period, so I really don’t want to go to the dealer. So why don’t you tell me, you are due for an oil change, and, you know, we need to check out your brakes, and it’s not going to cost you anything, or it’s going to cost you twenty five dollars, or it’s going to cost you three hundred dollars, whatever.

You know, full disclosure, we have the data, and the informed what I’ve learned from organizations like Cox that have a lot of CRM solutions out there is an informed customer is more inclined to pay. So if they know that there’s something that there’s important that needs to be done, they’re more inclined to to pay for it. So just educate the customer, you know, and and be intelligent about the interaction. You know, coming for an oil change, I’m gonna go to Jiffy Lube, you know.

14:47 Emerging Trends in Vehicle Diagnostics

Well, you you mentioned, you know, data, and this is a great transition because in the the the panel I was just participating in, we talked about how vehicle diagnostics is emerging as one of the top diagnostics preventative maintenance. That whole family of things is emerging from OEMs and a a wide slice of the vehicle industry feels like that’s a critical thing. And, you know, you talked also about how the vehicle’s collecting so much data now. Well, if you think about it as sort of the proverbial check engine lights, right, it’s a fairly dumb indicator that something’s wrong.

Well, is that something wrong? You go now? I’m pull over? We’ve moved beyond the idea of this.

But when it comes to oil changes or other kind of preventative. If we’re providing better value creating things that says, you’re having a problem with a tire, one of your tires is wearing wrong, or you know, you’re you’re this is a system that you should fix quickly. And by the way, you’re covered under warranty, so let’s make sure you get in and out of the service center quickly. We’ve got all the parts ready for you.

Connecting all the dots like

that.

15:45 The Evolution of Usage-Based Insurance

So talking about

applications of vehicle data, we were chatting earlier about usage-based insurance. That’s not a new concept, but it has evolved a lot. And just across the way here in the the expo is our mutual friends at MOTER.

And they were recent guests on the podcast as well. We were chatting earlier about how we can take in, for example, one of the things MOTER is doing is is going beyond just usage-based insurance to doing more like driver coa-hing and so on. What’s your take on that? Well, I’ve I’ve written about this and it’s no secret and what they’re doing is is is very clever and and and industry leading.

And I have my own personal experiences with usage based insurance where I was getting with State Farm Drive Safe and Save, and this is years ago, but it was interesting at the time. I had my wife and myself and two of my sons on a portal, all be getting grades, but you really couldn’t figure out exactly why you got that grade. And so MOTER has is giving direct feedback. In fact, MOTER is giving you feedback in real time.

Real time aspect to see in real time, you know, what you know, this is the thing you’re doing right now, that is transformative. That so you can see drive by drive with Tesla now, but motor take is taking it further, real time feedback. And we had this chat with with Michael O’Shea from from MOTER a few weeks ago, and I was making the analogy with him as well that when you I drive an EV, most of us drive EVs now, and where you see how the the EV will show you live how much energy you’re drawing if you’re accelerating very quickly. And you very quickly realize, I probably could have accelerated a little more slowly and gotten there just as fast, and it would have saved me a lot of energy.

So that real-time feedback is very powerful. And I think that’s the same concept they’re doing with usage based insurance. So we’re on a little bit of a journey there, both in terms of insurance and in terms of EVs and how much feedback you’re getting. When I’m in a Prius, Uber, or whatever, some of the information that’s being delivered to the driver in real time about the battery performance and energy consumption seems a little like information overload.

But that’s what I mean. We’re on a journey as to understanding how much information is useful, how much is too much Right. While you’re driving the car. I think simplifying, you’re right, simplifying in the right direction.

Less is more. I mean, I think some of these displays in my car, for example, is quite simple. It’s like really getting a sense of sort of the energy draw, and a lot of different vehicles have this now. Energy draw.

It’s a simple thing to understand is like, oh, I really could have eased up a little bit. And and I think that’s causing me to think about my driving slightly differently. Like, you know, maybe there’s times you need to accelerate. There’s other times when, yeah, you could just take it take it a little easier and get a little extra range on your vehicle.

18:43 Real-Time Feedback and Driver Engagement

So this is where, you know, you were asking me before we came here about artificial intelligence. Yeah. So artificial intelligence, you know, these agentic experiences can be fantastic. So when I’m in the Chevy Equinox, I’m asking, you know, I’m interacting with voice almost all the time.

I have a similar, but not equivalent capability in my BMW, but my son was complaining. So he has an older GM product, so he’s using his Android Auto with his phone. And he was complaining that Gemini has now been enabled on the Android Auto platform, and it’s like talking to him when he’s not really interested in that interaction. So again, it’s appropriate opportunities to engage.

And the other thing is, he’s younger, know, you might think, they may be more pro-interaction, but he actually is less interested. So the reality is you just have to understand your driver, understand their different preferences, meet them where they are. There are opportunities to have a higher level engagement with the customer, a personalized experience. And so that’s the bone I wanted to pick with you a little bit after watching the interview on stage.

19:59 The Future of Personalization in Automotive

It’s so much data monetization, it’s personalization. Because the ultimate objective is to get to the point where the customer is very comfortable in the car, and then you’re setting the stage for seamless, frictionless revenue opportunities and experiences. And that’s, I think, really where we want to be as an industry. What that contributes to ultimately… so the Equinox, like I said, eight years of free connectivity.

Of course, it’s not free. And that was made clear from the latest GM earnings report where they talked about that this year, GM expects to have seven and a half billion dollars in deferred revenue. Well, a lot of that, if not all of it, is coming from the car connectivity that’s being paid for in the price of the vehicle as new. So they’re capturing that revenue, but they’re setting the stage for even more revenue opportunities by…Value

creating things…based on taking connectivity just out of the equation. It’s included. Right. Your car is of course, it’s connected and we’re going to but they haven’t closed the loop at the end.

21:06 Changing the Dealer Engagement Model

They’re not alone in the industry. Turning that connectivity value proposition into a different form of customer engagement. And ultimately, the the dealers are gonna be have to have to really change the way they’re engaging with their customers. Dealers should be like genius bars for their OEMs.

And I don’t think anybody thinks about their dealers that way. Most people, when they think about the dealer, they grab their wallet, you know, because that dealer is gonna, you know, he’s gonna take money from me. That needs to change, I think. And I think it is changing with, you know, some of the new upstart OEMs are beginning to change that engagement model that, you know, I think, dare I say, in some cases, you mentioned Tesla earlier, drivers are excited to engage with the OEM, are excited, which is a crazy thing, as you say, to think about.

So I think that that’s an opportunity that the industry has to to change that. And your your point about connectivity, taking connectivity off the table as a barrier to creating these value creating services and capabilities, I think it’s a smart move. I think we’re gonna see more of that in the industry. Well, Roger, it’s always great to talk with you.

22:13 Conclusion and Future Perspectives

I we I constantly run into your conferences, so I’m always excited to have you on the the show and and bring your fresh and unvarnished perspective. You’re you’re you’re willing to tell people like it is and that’s why we’re glad to have you. It’s great to see you as always. Thank you for having me, John.

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