The Driver's Mindset eBook
Access exclusive and unique insights on the behavior and expectations of the connected car customer and effectively maximize subscription services.
The Driver's Mindset:
Connectivity and Connectedness
Insights to a better customer experience
The Evolution of Connectivity
The year of 2022 will be marked by a big shift in car connectivity, with the rollout of the 5G network across the U.S. and many other countries in the world. This expanded bandwidth will unleash a new dynamic for the digital ecosystem.
Automakers will explore the broadened connectivity from different starting points, according to their systems and to the level of investment they have made into the connected car.
For decades, automakers have continued to assess and enhance their connectivity strategy based on the available technology options. The popularity of smartphones offered an accessible and less expensive choice for Automotive OEMs. They equipped their cars with tethered systems that made it possible to use smartphone apps to capture and transmit data.
As technology became less expensive and telecommunication providers enhanced the speed of wireless connections at affordable prices, the adoption of embedded connectivity increased, multiplying benefits and opportunities for automakers to foster and maintain an ongoing and extended relationship with their customers.
Today, regardless of the system of choice, technology is creating a new dynamic for the entire connected vehicle ecosystem. Within this new framework, automakers are empowered to steer their connectivity strategy in multiple directions and levels. Instead of technology driving strategies, now an automaker can choose the technology to support their strategy across the vehicle ownership lifecycle.
Automakers are continuing to learn how to harness the insights and create value from vehicle-generated data to deliver more digital experiences to consumers — consumers who have grown to expect and want more advanced digital experiences, even from their vehicles.
What is a Connected Car?
In 2016, with the global expansion of telecommunications and technology, the connectivity of the car parc grew exponentially. Any vehicle equipped to connect to a wireless network (AT&T, Verizon, etc.) is considered a connected car. Currently, automakers use two kinds of systems to enable connectivity: embedded and tethered. An embedded vehicle is equipped with a chipset, which includes a wireless SIM card. This equipment allows the vehicle to access and send out data, download software updates or patches, connect with other Internet of Things (IoT) devices, and provide Wi-Fi internet connection to passengers. A car with a tethered system is equipped with hardware that connects to the driver’s smartphone. Both systems have the ability to collect and transmit data. Drivers do not need cars with embedded connectivity to leverage their telematics data.
Connected Car Parc
The story of embedded connectivity started in the U.S. when General Motors (GM) introduced OnStar® in 1996. According to SBD Automotive, in 2021 the U.S. had the largest parc of vehicles in the world with embedded connectivity at 74 million.1
This growing car parc with embedded connectivity is expanding the market for connected car features and services which relies on multiple factors: technology readiness, government mandates, regulations, OEMs’ investment policies, vehicle lifecycle management, as well as customers’ expectations and acceptance. LexisNexis Risk Solutions explored the latter in a comprehensive survey with consumers.
1. SBD Automotive, Connected Car Forecast, 2021
Research Summary
In November 2021, LexisNexis Risk Solutions conducted a survey with U.S. vehicle owners who had purchased or leased a new or used car, model year 2017 or newer, within the past three years. Our objective was to uncover and map potential opportunities to enhance the customer experience throughout the stages of vehicle ownership, so that we can provide insights and support automakers as they continue to develop and execute their connectivity strategies.
By understanding their customers better, automakers can offer products and services at the right time, in a way that makes their customers feel valued and rewarded.
In this report, we present the key findings of our survey and suggest paths for automakers to engage their customers while offering a more frictionless and convenient connected experience. We cover the entire vehicle lifecycle — from purchase or leasing of the vehicle to ongoing engagement with connected services programs, to vehicle resale when a new relationship starts with the subsequent owner.
After learning the results of our survey, we believe automakers will be able to:
Connected Services and Missed Opportunities
Effectively Maximize Connected Services Subscriptions
As consumers’ reliance on connectivity continues to evolve, there has been an increasing pressure from the competition to create and offer the best vehicle ownership experience. While automakers have been using connectivity to engage and stay in touch with their customers, and connected services and features have become more mainstream, there still seems to be lower activation and conversion rates within connectivity programs. Remarkably, the low rates are related to lack of awareness and opportunity to enroll, rather than lack of interest, our survey reveals.
Two-thirds (66%) of the respondents were not aware of connected services’ availability before purchasing or leasing their new or used connected car, and over half (57%) were not offered a connected services free trial at the dealership.
Our study findings suggest activation rates would be higher if car buyers were offered the opportunity: Eight out of ten (81%) consumers who were offered a free trial accepted it, and nearly half (45%) of them converted to a paid subscription after their free trial ended.
Among those who were not offered a free trial at the dealership, seven out of ten (71%) indicated they would have been very/somewhat interested in enrolling, had they been presented with the opportunity (Figure 1).
These responses can give us an idea of the sizable and valuable opportunities available to automakers to ensure all vehicle owners are presented with the option to activate connected services and features that are embedded in their cars.
Why Did Consumers Not Enroll in a Free Trial When Given the Opportunity?
We investigated the reasons why nearly one-fifth (19%) of consumers did not enroll in a free trial of connected services when offered by the dealer. Results were surprising. The top reason, mentioned by the majority (63%) of the respondents, was that they did not see the benefit or the value of connected services. Lack of knowledge about the benefits of activating a free trial is causing consumers to not fully optimize the features and services made available in the vehicle (Figure 2).
Automakers are making a large investment in the technology and connected features in their vehicles. The opportunity to capitalize on the investment, and ultimately maximize the benefits consumers can receive by utilizing the value-add services available, is wasted if vehicle owners are not activating and engaging with those features simply because they don’t understand the value.
New vs. Used Vehicles
We further explored the results on connected services activation rates by looking separately at the experiences for new and used vehicles.
The difference is startling: buyers of new vehicles are twice as likely to be offered a free trial than buyers of used cars, even though the technology is there, available and accessible for all. (Figure 3)
There is a large pool of untapped customers to engage with a free trial offer and potentially increase connected services activation rates and conversions to a paid subscription. Moreover, opportunities in the used car parc will continue to grow and eventually will exceed the ones in new cars, since the annual turnover of connected vehicles is much higher than the sales of brand-new connected cars.
Connected Services Activation Outside Dealerships
Generating awareness for connectivity programs and creating a consistent dealer enrollment process is not trivial and can be quite time consuming and expensive. Nevertheless, if a dealer does not offer a free trial for connected services, there are further opportunities to re-engage vehicle owners with trial offers.
According to our survey, among car buyers who enrolled in a free connected services trial, nearly one-fifth (17%) did so after they left the dealer. Of those, the overwhelming majority (78%) were able to complete it without returning to the store. Consumers also indicated that an easier and smoother process could impact their willingness to enroll in a free trial.
Additionally, nearly two-thirds (64%) of survey respondents said that having their information prefilled in connected services activation forms would make them somewhat or much more likely to enroll. (Figure 4)
When automakers do reach out to customers after they have left the dealership to offer them a free connected services trial, it is important to focus on two basic aspects: to provide a seamless activation process and ensuring the identity of the customer is correct when verifying vehicle ownership.
The information entered during the purchase transaction can be used in the connected services enrollment process by employing prefill services. Contact information, such as phone numbers, email addresses, and date of birth, along with vehicle identification numbers (VINs), can be pre-populated on any digital or web-based forms.
Consumers only need to enter a minimal amount of information, such as first and last name and address, to enable their identity verification. Once their identity is verified, consumers will simply confirm the data attributes presented to them. Prefill solutions not only streamline the onboarding and activation process but also replaces repeated manual input, which can take time and create friction, as information can be entered incorrectly — and ultimately affect activation rates.
How Can Automakers Increase Connected Service Enrollment Rates Outside of the Dealer Interaction?
Automakers can help consumers by prefilling connected services activation forms. Fatigue at the dealership, manual errors, and
inaccurate information can create friction later in the enrollment and activation process. LexisNexis Risk Solutions is developing a data prefill solution to help automakers simplify the registration and account set up process by pre-populating web-based forms with more accurate information that can be validated by the end consumer. Prefilling or pre-populating information can help reduce errors and manual processing while also improving the customer experience. The ability to digitally verify and authenticate car owners’ identities to activate and deliver connected services provides a great opportunity for automakers to transition from traditional offline processes towards more efficient digital methods — saving time, freeing resources, and most importantly, improving the customer experience.
LexisNexis® Identity Solutions for Automakers
Our suite of identity verification and authentication tools can enable a digital activation process, which can help consumers engage quickly in a free trial outside of the dealership. They help automakers create the seamless digital experience that customers want and expect.
Your customers no longer compare you just to your direct competition. You are being compared to the best service they have ever received — from any company or any person."
Shep Hyken, Forbes
Connectivity as a Competitive Advantage
Lead the Market, Increase Profits and Build Brand Loyalty
Consumers increasingly expect their connected devices, including their cars, to evolve and improve during their ownership period. Software operating through embedded connectivity will be a key element steering and defining a connected car driver’s experience.
Automakers are maximizing their investment in connectivity by leveraging the delivery of features over-the-air (OTA), to continue to personalize and enhance the customer experience in real time. Examples of OTA deliveries range from infotainment related updates — including refreshing map or GPS information, audio updates, new app versions, and streaming services — to drive control system updates — including feature upgrades and security patches related to Advanced Driver Assistance Systems (ADAS).
OTA updates allow automakers to fix, maintain and improve the vehicle software systems remotely, which saves drivers time and money as they do not need to physically visit a dealership.
In addition, connected cars can detect and transmit diagnostic and operational data from the vehicle systems and request OTA updates, when necessary, which can help reduce the occurrence of catastrophic or safety-related events.
Brands that can fully maximize connected capabilities are able to more quickly develop and deploy new services and partnerships, gaining a competitive advantage by leading the market and increasing profits.
The difference in user experience often comes down to how quickly updates can be made, issues can be fixed, and new features become available.
Connectivity, Telematics and Insurance
Insurance is a major contributor to the total cost of vehicle ownership for consumers. Automakers are looking to improve cost of ownership and the overall customer experience by leveraging vehicle and driving behavior data to enable usage-based insurance (UBI) products, such as Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD). Lower insurance premiums can contribute significantly to making car ownership more affordable, benefiting consumers and automakers.
In our survey, we asked consumers if they were aware that connected vehicles can capture and transmit telematics data, which can potentially be used for insurance discounts, and nearly two-thirds (67%) of respondents were. Only 22%, however, have used their data to obtain insurance discounts. Among those who had not used their data for insurance discounts, the overwhelming majority (71%) said they would be interested in doing that (Figure 5).
Educating consumers on how they can leverage their telematics data through your connected services program has the power to help solve the gap between consumer interest and engagement with UBI.
So, how can automakers help their customers take advantage of their telematics data?
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By creating awareness of these insurance discount opportunities and educating consumers about the potential benefits of participating.
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By providing a seamless way for customers to engage and opt in, through their automaker’s connected services program.
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By engaging with a well-managed telematics exchange, automakers create an opportunity for consumers to shop for insurance using their own driving behavior data.
Telematics datasets will continue to grow and evolve, and they will help to bring about services and solutions beyond UBI, creating the opportunity to improve other areas of the vehicle ownership experience.
The more seamless a driver’s experience becomes, the more opportunities OEMs will have to keep their customers within their brand — and potentially increase brand loyalty and retention opportunities.
Connectivity will play a key part in generating revenue opportunities for automakers and optimize vehicle costs for consumers.
Stay Connected with Vehicle Owners
Used Vehicle Owners Expect to be Connected With Their Automaker
As the connected car ecosystem and technology become more sophisticated, consumer expectations evolve in parallel, creating a need to deliver higher-value user experiences, for both new and used vehicle owners.
We asked used car owners participating in the survey (which comprised about a quarter of the total respondents), whether they expected the auto manufacturer to contact them after their used vehicle regarding specific topics related to their vehicles.
Nearly everyone (92%), expected to be contacted about safety recall notices, with warranty coverage coming in second, selected by 80% of respondents. (Figure 6)
The features commanding the highest interest are safety and convenience services. Used car owners, however, expect more than that. Half of respondents said they definitely or somewhat expect their OEM to contact them about a connected services free trial, while an additional 33% said they do not expect but would appreciate the offer. That adds up to 83% of used connected car owners who could potentially become connected services clients but are untapped and, so far, ignored.
By not contacting the subsequent owner, automakers are limiting their return on investment in technology and connectivity.
With over 60% of used vehicle sales taking place outside of an automaker’s network, it can be difficult to identify subsequent vehicle owners quickly and accurately. This information gap, or “blind spot”, in detecting those subsequent owners has been an industry challenge for decades. Blind spots can create potential issues for Automotive OEMs, such as not knowing when to deactivate the prior vehicle owner’s connected services and transfer them to the subsequent owner, along with other benefits inherent to the vehicle — and potentially losing the opportunity to start building a relationship with the subsequent vehicle owner.
*LexisNexis Risk Solutions Internal Proprietary Research 2022
Communicating to subsequent owners about their vehicle’s connected features is as much about safety as it is about the overall customer experience and investing in valuable relationships.
Secondary Owner Intelligence
Automakers need an enhanced data strategy, as well as to employ the right resources, to identify and engage subsequent vehicle owners. By bringing secondary owners back into their customer network quickly and accurately, OEMs can establish brand loyalty. LexisNexis Risk Solutions has successfully assisted automakers in having a more accurate and clearer line of sight into vehicle ownership changes which helps automakers unlock new customer engagement and retention opportunities with both new and used vehicle owners.
Unlock New Opportunities by Gaining Access to Subsequent Owners
Subsequent vehicle owners benefit from gaining access and control of connected services, which allows them to realize the full potential of their car’s features. LexisNexis® Owner Check can identify ownership changes within a matter of weeks, with 96% of coverage.* Our solution offers a single, consolidated view with a more accurate, complete and comprehensive data associated with the vehicle owner, helping to ensure that automakers have more precise customer records in their database for ongoing engagement and retention opportunities.
Recall Outreach — Improving Vehicle Safety Through Enhanced Customer Intelligence
33% of consumers indicate that a recall on their vehicle would make them less likely to purchase that brand of vehicle in the future. Automakers need to access accurate and recent ownership changes, so they do not miss out on supporting existing customers and building new customer relationships. The sooner an automaker can reach a newly identified subsequent owner, the more likely that owner is to interact with the automaker. According to LexisNexis Risk Solutions Internal Research conducted in 2021, if an automaker can contact customers within 90 days of purchasing their vehicle, consumers are five times more likely to complete a recall.
LexisNexis Risk Solutions can help automakers identify owners of hard-to-find vehicles for safety recalls faster and more efficiently through LexisNexis® Recall Clarity. We have helped automakers locate 96% of hard-to-find vehicles and append customer contact information on 99% of those vehicles.*
*LexisNexis Risk Solutions Internal Proprietary Research 2022
Conclusion and Recommendations
Maximize Connected Services and Improve the Customer Experience
Expanded, ubiquitous connectivity requires dynamic strategies and readiness from automakers to deliver new digital features and services, at a fast pace. The competition for customers’ preference and loyalty is fierce.
Connectivity also brings new opportunities for OEMs to differentiate themselves from other automakers, by creating a unique and high-quality customer experience throughout the vehicle lifecycle.
Based on the findings of our survey, combined with our extensive experience with data and analytics, LexisNexis Risk Solutions prepared a set of recommendations to help automakers fully embrace connectivity, effectively maximize connected services subscriptions, and improve the overall customer experience.
Educate your customers about your connected services program and the benefits of participating. There are opportunities to do that right from the beginning of the process when customers start shopping online. Do not forget to reach out to and engage used car owners as well.
Reach out to customers who were not offered a connected services free trial at the dealership and engage them to try one. In order to make the process more seamless, automakers should consider incorporating a prefill solution within their current online worklfows to populate web-based forms with more accurate consumer information. Incorporating a prefill solution helps reduce errors or information manually entered, avoiding friction later in the enrollment process and minimizing service activation abandonment.
Encourage dealers to more consistently offer free connected services trials and to discuss the benefits of connectivity with customers. Currently, only about two in five car buyers recall being offered a free trial. Enrollment rates are high among those offered a free trial, and consumers who engage in a free trial are much more likely to become paid subscribers, compared to consumers enrolling on their own.
Limit the risk of fraud, for both you and your customers, by employing identity authentication tools to check whether the person and the information you are receiving are real. Identity verification and authentication tools let you quickly and safely onboard new customers giving them continual, seamless access to their personalized services. As the value of your services and the number of ways you interact with your customers increase, the risk of fraud increases, too.
Keep up-to-date records of subsequent owners. Used car owners want to receive communications from their automaker regarding several key pieces of information. In fact, the majority expect OEMs to keep them informed about safety recalls and warranty coverage. Automakers can enhance their customer engagement strategy by monitoring vehicle ownership data on a regular, reoccurring basis so they can stay connected with subsequent vehicle owners.
Locate and reach out to used car owners eligible for free trials. Offer them the opportunity to activate a free connected services trial so they can engage with your brand, and you can establish an ongoing relationship.
Give your customers an opportunity to reduce the cost of vehicle ownership by engaging with a well-managed telematics exchange to help consumers take advantage of their driving behavior data for potential insurance discounts and other applicable use cases. Considerable opportunity exists in terms of consumer receptivity to insurance and driving data-related features offered through connected vehicles.
Create more digital, personalized experiences that consumers have grown to expect and want.
It’s very important to have a clear and complete view of the vehicle ownership lifecycle supported by accurate and comprehensive data assets.
Take a proactive approach in using and leveraging data and analytics.
This will allow you to make the right decisions for your customers and your business, helping to set you apart from the competition, now and into the future.
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About the Research
The Driver’s Mindset: Connectivity and Connectedness was a web-based survey conducted among recent U.S. car buyers.
The sample was selected based on the following criteria:
- Age 25 to 70
- Household yearly income higher than $30,000
- Purchased or leased a vehicle model year 2017 or newer within the past three years
- Was the primary or joint decision-maker for vehicle purchase
A total of 2,045 interviews were completed November 18-30, 2021. The online panel sample was managed to ensure a representative sample of U.S. recent car buyers purchasing a model year 2017 or newer. Key demographics, including age, income, gender and geographic region, were monitored for those who responded to the survey (including those who qualified as well as those who did not) to ensure the characteristics of respondents matched U.S. Census demographic distributions.
About the Author
David is a veteran of the automotive industry with a variety of experience in automotive sales, business development, sales, marketing, product and risk management. As a member of the Connected Car Team at LexisNexis Risk Solutions, David leads a group responsible for the strategy, development and management of automotive OEM solutions. His team collaborates regularly with automotive OEM clients helping to solve industry challenges around the ownership experience.
Prior to joining LexisNexis Risk Solutions, David served for many years with Experian Automotive helping to develop its automotive vertical. He held advancing roles in sales and product management ultimately serving as Senior Vice President of Sales. Prior to that, David spent many years with Chrysler Corporation in various field and headquarters positions. David graduated from the University of Pittsburgh with a BA in Business Economics & Finance before going on to complete an MS in Management from Central Michigan University.
David Nemtuda
Head of OEM Product, U.S. Connected Car Business,
LexisNexis Risk Solutions
