The 6 keys to successful data monetization strategies for OEMS
Data monetization presents a huge opportunity to the automotive industry, and many OEMs are sitting on potential data goldmines. But, the lure of additional revenue in the short-term may cause OEMs to forget their number one priority - creating happy and loyal consumers. An organization that prioritizes revenue generation (i.e. monetization) over customer satisfaction risks damaging their brand image. Some automakers, such as Volvo Cars, have publicly turned their back on monetizing vehicle data. Its CEO, Håkan Samuelsson, said last year, "If we focus on trying to make money with driver data, I don’t think we're delivering what consumers want in their cars." Tesla is another example of an automaker that has not (as yet) pursued the potential revenues offered by vehicle data monetization. However, it has found many ways of using data to empower the customer experience. One recent example is the ability of Tesla’s vehicles to diagnose a fault which, if unable to be fixed over the air, can be aided by the pro-active ordering of replacement parts. Automakers can make huge savings if they find creative ways to use vehicle data. Therefore, SBD advises that business use cases should first and foremost be drawn up with the customer at the heart of them. Any revenues from the data following that should be seen as a convenient by-product.
There are lucrative options that can benefit both automakers and consumers. By charging third parties for access to vehicle data, new and useful connected services can be created. This could include enabling trunk delivery, turn-key UBI, predictive traffic alerts, predictive maintenance scheduling, or lease value maximization. These types of services are likely to be appreciated by the customer and will engender greater loyalty. SBD Automotive’s 6 key steps to a successful data monetization program –
1 - Focus on the customer.
Use cases should be thought of in terms of the value that they bring to the customer, creating long-term brand loyalty (and hence revenue) and maximizing positive consumer interaction. Any additional short-term revenue should be considered a bonus.
2 - Have a seat at the top table.
A successful data monetization program requires executive representation to ensure budgets, resources, and priorities can be maintained within the wider organization. The most successful programs are represented through a CDO or similar executive position. Without this representation, the program is likely to be judged against short term revenue trends which can be difficult to establish. A longer-term view is required to allow technical obstacles to be overcome and for 3rd party relationships to be established.
3 - Maximize data quality and quantity.
Each time that a third party integrates with an OEM data platform, they need to make a rational decision on the likely returns relative to the integration effort. Data consumers will want to be sure that their necessary integration overhead is justified by the value of the data. The OEM’s program should offer a large quantity of connected vehicles as compared to other OEM programs and the data catalog for each vehicle should be sizable, offering the data consumer unique, high-quality data sets.
4 - Set a goal and define success.
The automotive data monetization industry is still nascent with new opportunities arriving just as quickly as existing ones disappear. A scattered or frantic approach to data monetization will lead to the proliferation of unsuccessful products and services. Set a goal and create a strategy to reach that goal, allowing progress to be measured regularly to ensure the program isn’t straying from the path.
5 - Monitor and manage legislation.
Data privacy and right-to-repair legislation is evolving quickly in the Western hemisphere. Failure to comply with the laws can lead to enormous fines. To ensure that an OEM’s monetization program is compliant with upcoming legislation, legislative activities should be monitored closely. Furthermore, OEMs should make cooperative arrangements with each other to lobby relevant governments to ensure protection of critical program rights.
6 - Ensure interoperability and scalability.
Although it may require more resources up front, creating an open, scalable data monetization back-end will ensure simple integrations in the future and enable compatibility with a wide variety of 3rd parties. As examples, PSA and BMW have created open APIs for their monetization platforms, allowing any 3rd party to quickly and easily integrate, test, and scale without additional effort from the OEM. Consider making your data available on a data marketplace to further reduce integration effort.