Cracking the Code of Connected Vehicle Services for the Automotive Industry

A recent Automotive News article highlighted a significant challenge for automakers: despite forecasting massive market opportunities, they have yet to figure out how to build connected vehicle services businesses that will generate substantial revenue. As consumers increasingly expect their vehicles to serve as an extension of their connected lives, integrating these services has become essential. However, the path to monetizing connected vehicle services is fraught with challenges.

Understanding Consumer Behavior With Connectivity Forward™

At Escalent, we specialize in helping our clients understand consumer behavior and translating that understanding into successful market offerings. Our Connectivity Forward™ study, launched last year, provides key insights into consumers’ attitudes toward connected vehicle services and—crucially—the ones for which they will actually pay.

Connectivity Forward employs proprietary algorithms to help clients understand who is likely to subscribe to various connected services and why. This understanding is crucial to avoid missteps, such as BMW’s controversial attempt to charge subscriptions for heated seats. By analyzing consumer data, we pinpoint the types of features and services that resonate most with potential subscribers, ensuring that automakers invest in the right areas.

For automakers to build successful connected vehicle services businesses, the connected services need to integrate seamlessly into consumers’ tech ecosystems. This means offering services that enhance drivers’ experiences either while driving or at their destination without merely duplicating smartphone functionality. While it may be tempting to go down the “smartphone on wheels” route, customers generally will not pay again for a service they are already paying for from their phone. Instead, automakers need to focus on offering unique value-added services that justify a subscription fee.

Connectivity Forward takes two approaches to identifying these unique value-added services. The first is by direct interest: these are services that consumers tell us they are interested in and for which they would be willing to pay. However, experienced researchers and marketers know that there is often a gap between what consumers say they will do and what they actually do. As such, in order to identify promising services that consumers don’t explicitly identify (and, conversely, to validate those that they do), our second approach uses an analytical process we developed to identify latent interest based on five attitudinal and behavioral pillars.

The Five Pillars of Buying Connected Vehicle Services

Our latest Connectivity Forward report identifies five core “pillars” that influence the likelihood of consumers subscribing to connected vehicle services:

By mapping these pillars to connected vehicle services themes that consumers are willing to pay for, we predict which types of features will be most attractive to consumers.

Zeroing in on a Connected Vehicle Services Strategy

To provide specific strategic guidance to automotive brands, we go beyond this market-level analysis by examining how brand buyers compare on these pillars. Each brand’s customer base has unique preferences and priorities, affecting its customers’ willingness to pay for various connected vehicle services.

As an example of how this works, customers who score highly on the attitudinal Explore pillar are particularly interested in productivity-related features. As a result, Brand B in the chart below would have greater success in monetizing these kinds of features among its customers than Brand A.

These three attitudinal pillars—Nurture, Explore, Enjoy—are further enhanced by the remaining two behavioral pillars. For example, consumers are getting smarter about the value of their personal data and getting more savvy about leveraging that value to their benefit. Meeting customers’ expectation around data sharing and receiving relevant tangible benefits from that sharing is an important aspect of aligning connected vehicle services with consumer interest and willingness to pay.

This multistep analytical process helps automotive brands customize and optimize their portfolio of connected vehicle services offerings to align with their customer base. This ensures that brands invest in the right areas, enhancing customer satisfaction and loyalty while maximizing revenue opportunities.

If you’d like to learn more about our study or how our Automotive & Mobility experts can help you develop a successful connected vehicle strategy, use the form below to send us a note. We’re here to help you navigate the complexities of the connected vehicle services landscape and unlock new revenue opportunities.

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About Connectivity Forward™

Escalent conducted a survey of 4,726 US vehicle owners by online data collection from July 28 to September 18, 2022. The sample was drawn from a variety of panel source partners. To qualify, respondents had to be owners and decision-makers of purchasing new or used vehicles and own and use a smartphone. The data were weighted by age, gender and vehicle segment ownership and have a margin of error of +/-1.5 percentage points at a confidence level of 95%. Escalent will supply the exact wording of any survey question upon request.