Is personalization the key to successful automotive experiences?
Automotive personalization is not a new idea
The automotive industry has a long history of personalization. Over the years, consumers have enjoyed personalization of their cars, from the color of the body, to the material of the seats. Personalized cars have contributed to consumer's loyalty to the brand and/or the car itself by giving an idea of “this car was made for me”. This type of hardware personalization has not gone away. However, new opportunities for personalization are emerging thanks to technology developments in recent years.
The new generation of personalization started with digital services
The new realm of personalization started with digital services – with the most prominent being Amazon’s recommendations. Amazon’s recommendation engine automatically suggests numerous shopping items out of the huge product list in their marketplace based on the purchase history of individual account. The more transactions you make on Amazon, the more it gets to know you – the genres of book you prefer, the brands of clothes you are most likely to buy, how frequently you purchase them, etc. It means you don’t have to spend forever to pick up your preferred item out of millions of similar products. The system automatically makes a couple of suggestions based on your past behaviors.
Why personalization matters in digital services
For current digital services, personalization is no doubt one of the key accelerators. Essentially, every successful digital service offers some types of personalized experience – in addition to Amazon, Facebook shows you posts which most likely get your attention. Google shows the most probable search word the moment you enter “a” its search box. Instagram shows you images / videos that you likely want to see. Spotify delivers you a list of songs that are most likely liked. Netflix pops up the movies / programs that you are most likely to find interesting. These personalized experiences have largely contributed to increasing the amount of time spent on the platforms, so that users make more transactions, and the platforms get to know more about consumers, further increasing the engagement of consumers in the platforms, and so on.
Why personalization matters to consumers
The business purposes of those personalized services differ by company – some companies aim to improve the efficiency of targeted advertisement, others aim to increase the number of subscribers, and some aim to increase the number of transactions on their platform. However, the most important point from consumers’ perspective would be that they can feel “they know me and understand me” – on Amazon you don’t have to walk to a shelf in the corner of your nearest grocery store to get your favorite cereal. When you log in, it will likely recommend you buy it again on the top page. The consumer experience is smooth, it is seamless, thanks to the platform knowing you well.
How does it impact the automotive industry
With more digitalized features available in the automotive experience, consumers will naturally expect a similar level of personalized experiences to those delivered by the digital service giants, just like how “an infotainment system that works like a smartphone” became the buzz idea a couple of years ago – consumers will think “why doesn’t the navigation system on my car know I go to the office every day when it literally takes me there every morning, and home every afternoon?” when they find other digital location services suggesting going to the office. Such predictive services are just starting to roll out in the automotive experience. Currently, a couple of OEMs are leading in personalized experiences with some key enabling technologies, such as cloud user profiles, or machine learning modeling to store users’ behaviors with identification and predict possible paths from the stored behavior.
Digital personalization has just begun in automotive - with significant opportunities for improvement
Some digital services, mainly audio streaming services, have already been implemented in infotainment systems, such as Amazon music, Spotify or Tidal, but SBD Automotive’s testing has found that those implementations are generally clunky compared to native experience on smartphones or personal computers. Some systems with predictive features, such as navigation automatically suggesting destinations based on history, have just been rolled out – BMW, GM, and Mercedes-Benz are offering predictive navigation features which suggest setting the home address as the destination in the afternoon when the driver likely to go back home from the office, or some other POI as the destination the driver often goes to. Examples here still have a limited number of use cases, however OEMs could pursue more areas for personalization.
How personalized vehicles can be successful
Personalization can be a strong tool to increase consumer loyalty. However, implementing it poorly can cause a significant negative impact on user experience, as well as the potential profit for automakers. A few key points to remember -
Data ownership & privacy. There are a number of laws regulating data ownership and privacy to liberate data dominance of tech giants. OEMs must implement clear & transparent data handling policies to avoid violating data privacy and give full control of consumer data to the consumers themselves.
Try to keep being a champion of in-car use cases. Tech giants, especially those with huge ecosystems, have massive influence over personalization. However, through its research, SBD Automotive believes automakers and suppliers still have an advantage in the in-car experience. Expanding personalized experience to digital services, such as audio streaming is important, but improving the in-car experience is where OEM should be focusing first.
In-car personalized experiences may not be a great direct revenue source, because much more sophisticated personalized experiences are available in digital services. Just as with connected car services, many OEMs are shifting their focus from direct revenue through subscription fees to customer engagement tools or data collection tool. Personalized features may have to be a part of the automotive customer experience without direct cost to consumers. Rather, OEMs should see it as another strong tool to improve customers’ engagement and to increase customer loyalty.
In creating "Personalized Vehicles", a new report for 2022, we looked at personalized vehicles from various point of views, such as market drivers, technology enablers, consumer acceptance, regulatory factors etc. to create a comprehensive analysis of the current market, digital ecosystems and future directions. You can download your sample of the report