The Promise and Challenge of the Computer on Wheels
How Automakers Need to Accelerate Their Software Monetization Efforts to Win
Securing Market Share in the New Automotive Economy
The burgeoning 'computer on wheels' concept presents a dual-edged sword of promise and challenge for today's OEMs, necessitating an accelerated push in software monetization strategies to remain competitive. A 2022 Roland Berger study projected a substantial increase in automotive industry spend on software innovation, anticipating a rise from $26 billion in 2021 to a potential $59 billion by 2030 (1). The study suggests a shift toward a software platform development approach to optimize costs effectively.
Recent developments from industry giants like Volkswagen and Ford, who are reassessing or scaling back their software investments — from VW's Cariad to Ford Next — highlight the pressing need for strategic changes in automotive software development. However, the challenge doesn't stop at creation; it extends into how software is packaged, priced, and marketed. This struggle is starkly illustrated by the low activation rates for connected service trials, often stemming from a lack of customer awareness rather than disinterest. With ambitious financial goals like GM's $25 billion revenue target for connected software sales (2), a steep climb from mere millions in 2020, it's clear that the route to achieving such aspirations is fraught with obstacles.
Meanwhile, Tesla's advanced driver assistance system FSD capability (short for Full Self-Driving, which it is not), showcases the real potential of monetizing connected car technologies. Despite safety concerns and a significant recall (3), Tesla has successfully marketed its Level 2 FSD as a premium self-driving package, affirming the viability of software monetization in the automotive sector.
Tesla’s FSD software is already worth $1 billion to $3 billion in terms of annual revenue, and the market opportunity for software like FSD could be $10 billion to $75 billion a year in revenue by 2030 (4).
In this complex landscape, Connected Intelligence emerges as a critical enabler for traditional OEMs. However, its true power is unleashed not when confined within departmental silos, such as marketing or sales, but when it permeates the entire organization. This holistic integration synthesizes data from every sector — R&D, production, customer service, and beyond — ensuring that insights contribute to a unified strategic vision.
Adopting Connected Intelligence beyond the confines of a single department means weaving a fabric of data-driven decision-making that spans the breadth of the organization, facilitating not just the commercialization of products but their very conception and development. By adopting this approach, OEMs can ensure that innovations are deeply aligned with customer needs, and operational efficiencies are maximized. Such an interconnected system enables a dynamic feedback loop where customer interactions inform product development, and product insights enhance customer engagement. It's a comprehensive model where every part of the organization contributes to and benefits from the shared intelligence, setting the stage for OEMs to redefine the future of automotive mobility — creating vehicles and services that are not only technologically advanced but also inherently attuned to the evolving landscape of customer expectations.
The future is ripe with possibilities for OEMs to innovate and drive customer engagement and loyalty programs through Connected Intelligence. For instance, envision a digital co-driver that not only provides real-time driving assistance but also offers personalized recommendations for vehicle maintenance based on the driver’s habits and vehicle data. Similarly, a carbon footprint assistant could suggest eco-friendly driving practices and vehicle upgrades, tailored to the user's driving patterns and preferences, thereby promoting sustainability while fostering a deeper brand connection.
Moreover, in the realm of CRM, Connected Intelligence facilitates a more dynamic and responsive approach to customer relationships. By integrating predictive analytics, OEMs can anticipate customer needs, tailor communications, and streamline service offerings, ensuring that customers receive relevant, timely, and engaging content and suggestions. This level of personalization and anticipation builds trust and loyalty, key components for long-term customer retention in an increasingly competitive marketplace.
As OEMs navigate the shift toward a digital-first automotive landscape, the integration of Connected Intelligence into CRM strategies will be paramount. This fusion not only promises to accelerate the pace of product innovation but also to revolutionize the way OEMs interact with their customers. By harnessing the power of data to inform every aspect of the customer journey, automotive brands can deliver unprecedented levels of personalization, efficiency, and environmental consciousness, setting new standards for customer engagement and loyalty.
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In essence, the future of automotive innovation lies not just in the technology embedded within vehicles but in how OEMs leverage Connected Intelligence to transform customer experiences. As the industry moves forward, the synergy between product innovation and CRM will be a key determinant of success, enabling OEMs to not just adapt to the changing landscape, but to lead the charge toward a more connected, customer-centric future of mobility.
Authors:
Katrin Zimmermann (she / her) | Managing Director | OPMG (TLGG)
Stella May Lochner | Business Unit Lead Mobility | OPMG (TLGG)
Scott Hensley | Partner, Global Client Lead | OPMG (Credera)
References
Omnicom Precision Marketing Group (OPMG)
Omnicom Precision Marketing Group (OPMG) aligns Omnicom’s global data, martech, commerce, digital and CRM capabilities to deliver precisely targeted and meaningful customer experiences at scale. Using a universal framework of connected people, processes and platforms, OPMG provides services that include digital experience design, development and innovation, technology strategy and implementation, data-driven product / service design, CRM / loyalty strategy and activation, econometric and attribution modeling, technical and business consulting and change / program management services. At the core of delivering these services is Omni, an advanced technology platform that combines advanced AI tools for content intelligence and automation with a powerful cultural insights engine and massively scaled data insights from first-, second- and third-party sources, including several proprietary Omnicom data partnerships. OPMG is a division of Omnicom Group Inc (NYSE: OMC).
#ConnectedIntelligence #AutomotiveCommerce #NewAutomotiveEconomy #AutomotiveCRM #AutomotiveMarketing
C# developer, Azure cloud engineer | 19+ years in .NET | 10+ years in Full Stack
8moThank you for sharing. I loved the detailed infographic 👍
Advising organisations how to transform their customer engagement through personalisation at scale, decision management and re-configuring organisational structure & processes.
8moExcellent article. Summarises well the huge impact insight and decision automation has on monetisation and customer experience inside and outside the car.
Chief Marketing Officer | Product MVP Expert | Cyber Security Enthusiast | @ GITEX DUBAI in October
8moThanks for sharing Andrés Londoño Botero
Business Unit Lead @ TLGG | Business Unit Management, New Media
8moSmart thoughts, well explained. I remember the world premiere of the NIO ET9 in December, in which a big chunk of the car presentation was dedicated to explain the internal chip of the operating system, not hardware like suspensions or brakes.