The Lochbridge Connected Car Maturity Model
The connected car ecosystem consists of a plethora of players both small and large. Lots of innovation and transformation is happening in this space, which can cause some confusion. Where would an OEM want to focus their time and investments? What decides what matters most for an OEM to align with its vision to give a competitive advantage?
We at Lochbridge have developed a maturity model to help OEMs map the connected car journey and stay ahead of the curve. Our approach focuses on outcomes and not just on the progression of technology. Technology should help focus on business objectives.
Take a quick trip down memory lane – our industry started in 1997 with OnStar’s introduction of Telematics. The business model then was commercialization of remote connectivity to the car, the early days of IoT in my perspective. In OnStar’s case – a simple 3 button system to provide safety and security related services. In fact, OnStar was set aside for all practical reasons as a separate company focusing not just on OnStar but other OEMs as well. Other similar ventures like Wingcast (from Ford) and ATX Technologies were started as well. All of these offerings were TSP-centric (Telematics Service Provider) and were available only for high-end cars.
Today our industry has progressed where the pipe is being leveraged for a multitude of things making the car another node on the network. The focus is both on the Customer and the Vehicle. Every OEM either has a Telematics offering on their own, are in the process of building one or uses a TSP. Telematics is slowly but surely becoming a standard offering.
Infotainment related offerings is becoming more mainstream as well. A drop in computing and display costs are allowing the 7” screen to become more affordable and a standard offering.
With the newly booming industry it is important to make sure that a proactive and not a reactive approach is being taken. The following sections details the outcomes which we think are important in deciding and defining your Connected Car journey.
Every OEM wants to create that sticky relationship with the Customer to enhance their brand awareness and create the Loyalty factor. So we like to re-define TCO from “Total Cost of Ownership” to “Total Convenience of Ownership”. A hassle-free ownership experience with an automobile plays the biggest role in creating brand loyalty.
We have made a lot of progress in this regard but gaps still exist in the customer-OEM-dealer relationships. I own two luxury brands in my household – one domestic and another foreign. Both have telematics and neither can help my dealer identify me at a dealership automatically or the reason for my visit to the dealership. Neither can help me download a performance or feature upgrade on-demand. We do have gaps to be filled and by closing these gaps, we can create a loyal customer.
While we have made great strides by integrating digital into the vehicle, are we really leveraging the car’s screen as the 4th screen? We have a disjointed inconsistent experience within and across OEMs. If we take some lessons from the mobile world, you will see that we are not leveraging the capability to make the experience more personal and contextual. With both the products I drive, I have inconsistent Bluetooth integration for audio where restarting the car or the phone does not seem to help. I am sure people who own an iPhone will agree with me. I rented a car recently with Apple Carplay and struggled to figure out how to search for a POI (though I use an iPhone). At the very least, our industry has progressed where pretty much most OEMs have started to support Apple Carplay and Google Auto and some have their own implementation as well to help with a seamless user experience.
Now to discuss the Holy Grail. How do I make money while creating a happy customer? In the race to keep up with the competition, OEMs directly or indirectly using TSPs, are connecting theirs cars but are still figuring out how to at least break even on the TCU or IHU costs related to connectivity. The key opportunity is in the transformation of the data and in the insights the OEM and their partners can use. I am not going to debate about privacy here because if Google can do it, I am sure our industry can too. So to name a few opportunities, very few OEMs expose the data as APIs for partner integration to create an ecosystem. To site an example, Progressive offers the snapshot product but also has a partnership with OnStar. More of these partnerships between OEMs and other industries like Insurance, Retail, Healthcare, etc. will help monetize the connection. To go back to my personal story, one of the products I drive helps the dealership by using my service-due reminder with the closest dealership resulting in a personal call from the dealership to schedule a service appointment. This is just one out of the many more opportunities that exist to create a trusted partnership between Dealerships and the customer to drive parts and service revenue and not just by re-selling voice and data packages.
Now let’s move to the product – the car. Let’s discuss how connectivity will make lemons a thing of the past. This is one perfect business case to justify connectivity cost. With the pipeline in place we can push upgrades to reduce risk and extract vehicle insights to engineer a better product for tomorrow. With the wealth of data we could collect, we can foresee patterns and predict future failures and prevent an expensive recall and a damaging customer experience.
Recently, I had trouble with one of my cars (remember this is a luxury brand). The car did not warn me. I had to take it to the dealership on my own. The dealership advised it is safe to drive but I had to bring it back in a few days since they did not have a loaner available. Going back to our new definition of TCO, isn’t this a lot of hassle when my car is connected. Wouldn’t it have been awesome if the car warned me of the issue, contacted my dealer and scheduled an appointment and loaner based on my availability? Connectivity could have been used to address quality and user experience issues – though we will continue to see updates to maps, TCU and Infotainment precede ECU updates.
We hope our model will serve as a map to help assess how technology can help achieve these outcomes by focusing on the essentials:
Loyalty – Create a new relationship between customers, cars and the companies that participate in the ecosystem
Differentiation – Gain a competitive edge with unique experiences both inside and outside of the vehicle.
Monetization – Introduce new services that customers will pay for and allow third-parties to participate.
Quality – Analyze Vehicle data to enhance product quality and performance and gain visibility into potential risks.