Telematics will revolutionize the dealership in ways that are both obvious and not. Auto dealerships today are grappling with a long-term shift in their profitability, away from the initial purchase and toward finance, parts, and services. Telematics solutions are well positioned to help the dealer profit from this trend. Many well-run dealerships already use telematics, and it’s important to examine what these early adopters are looking for from the technology. In working with these dealership professionals, we’ve learned the following:
- Telematics should offer a platform, not a single point solution
- Ease of use is a must-have requirement
- Consumer branding will drive the lifetime value
- And most importantly, math makes money!
Telematics as a Platform
Dealers, particularly larger dealer groups with hundreds or thousands of employees, must standardize, keep things simple, and diligently focus on process. If they’re going to introduce a big change to their operations, they must derive value in multiple ways to drive ROI. It’s not enough to have a stand-alone lot-management solution. It’s not enough to have a great consumer upsell product. And it’s certainly not enough to offer one-off products without bundling and thinking about the big picture.
This rule guides many decisions. If one platform can solve three value propositions, that is a win. If dealers can simplify the sale in the F&I office down to fewer branded products, they are more likely to succeed. If the same platform can be forward compatible, so the dealer sees that additional features will drive more value over time, then that will reduce the installation friction today.
Ease of Use is Required
Telematics solutions at the dealership are quickly going from early-adopter status to scale. When a new technology is introduced in any new market, there are early pain points, and at the moment, we’re in a stage of the market where those glitches should be ironed out. Here are a few examples of how ease-of-use can make or break the product:
OBD plug-in telematics devices are not all the same. The best ones are backed up by teams of engineers who reverse engineer OBD libraries for each make and model as soon as it is released by the OEM. Why does this matter? When a plug-in telematics device is installed, it should automatically populate the vehicle as an asset in a lot management app in seconds, without manual input. It’s just that simple. No typing in the VIN, or a stock number, it should just work.
Another example of ease-of-use is the seamless sale of a consumer application. Done right, the consumer application could be activated with one click, at the time of vehicle purchase. The same telematics device and platform installed in the vehicle could deliver both lot management and the consumer application, and switch from one to the other without reinstallation, software update or complexity.
Finally, having a change-centric organization and platform are essential. At this scale, this means offering a platform that manages the complexity of the Internet of Things for the dealer. We know change is inevitable. Each new vehicle model and each new upgrade presents engineering complexity. When upgrades and patches are needed, it’s crucial to be able to leverage deep bench strength in engineering, and quickly release updates securely over the air to millions of connected devices.
Consumer Branding Will Drive the Lifetime Value
Consumers are far more likely to purchase if they know a brand, and trust it. With many telematics providers and aftermarket suppliers out there, it’s important to choose one that has the power to resonate with the consumer.
A well-known brand can help drive the adoption rate with the consumer, which is perhaps the key factor that will help the dealer succeed with telematics. Vendors will win or lose in the space based on their ability to penetrate the consumer market at the time of vehicle purchase. Telematics vendors must remember that they are working with a channel indirectly representing their connected car offering to the consumer. The branding is essential to make that secondary sale happen.
And Finally, Math Makes Money!
Telematics is about math. The best run dealerships put the data from telematics to good use, and always keep tabs on the numbers with daily utilization reports. This data can help managers assess where all the vehicles are on the lot, which ones are going out for the most test drives, which are stuck in the corner, and which have been off the lot for too long.
Turnover analysis is just the tip of the iceberg. Dealers can use telematics to analyze which vehicle batteries are low, and which are losing charge faster. Telematics can offer up analytics on penetration rate by make or model, and even offer up salesperson and finance manager success metrics.
Over time, telematics will help the dealership offer concierge services, and white glove treatment when car buyers need services across the vehicle lifecycle. The old ways of sending out mailers based on an estimate of miles driven will be replaced by an ROI-conscious and permissioned dialogue with the customer when the need arises. When the consumer’s check engine light activates, the dealer should be able to offer help, in the right context, and bring them back to the lot for services. How many service opportunities that the dealer should be capitalizing on are lost to local shops? Telematics can help re-capture those opportunities, and improve the bottom line. That same technology that helps the dealer also helps make the lives of their customers easier.
Overall, telematics will transform the customer experience, from the first moment a new car buyer steps onto a lot to the lifetime of vehicle use.
Author: Dev Bhatia
Dev Bhatia is Senior Director, Product at CalAmp, delivering innovations under the LoJack brand. He has deep experience in Internet, Mobile, and Telematics. Prior to CalAmp, he served as Chief Marketing Officer at Spireon, a Business Intelligence platform for Telematics.