GPS Trackers and OBD Ports

While I was working at Safe-Guard, in 2018, we adopted and co-branded a GPS tracker from ZAZ.  Shortly thereafter, we learned that our crosstown rival, EasyCare, was backing another such product, called SAVY.

Of the two, SAVY had more consumer-friendly features in their mobile app, which I feel is decisive.  This point of strategic positioning is the focus of today’s post.

Neither hookup did well, demonstrating that providers of “paper” F&I products are ill-equipped to deploy hardware.  I took the installer training, just for grins, with Hector Delgado.  So, at least I have a useful skill to fall back on.

I also consulted briefly for LoJack, in 2012, helping them sort out issues around preloading – issues they solved, ultimately, by selling the brand to Spireon.  Old-timers will recall LoJack used to work on radio.  It’s GPS now, like all the others.  “New LoJack by Spireon” is, in fact, old Spireon plus the stronger brand name.  The field today consists of:

    • Ikon
    • LoJack
    • Recover
    • SAVY
    • ZAZ

The model for all of these is that the dealer installs the tracking devices and uses them for lot management, and then sells them through to customers as theft protection.  They’re often sold as a nonnegotiable “preload,” which makes sense from the dealer’s perspective because it would cost another $50 of technician time to remove the device if the customer doesn’t want it.  You can see how consumer mobile app-appeal figures into our story.

If the device is drawing power from an OBD port, it can report the vehicle’s battery condition along with its location.  There’s a lot more you can do with OBD data, but manufacturers can be prickly about connecting to those other pins.  The typical device consists of the GPS chip, a cell modem, and an accelerometer.  You may have noticed that your iPhone also includes these parts, but not the OBD plug.

Speaking of those other pins, subprime lenders and BHPH dealers can wire the device to do starter interrupt.  That is, the OBD-powered devices.  The Recover device I saw at NADA is battery powered.  The argument for a battery-powered device is that it’s easier to install.  The opposing argument is around battery life, especially if you are selling it through, and the advanced capabilities available to an OBD scanner.

Connected Car Features

This brings me to the consumer features:

    • Service reminders
    • Teen driving
    • Driver performance
    • OBD health scan
    • Dealer inventory
    • Service scheduling
    • Credit application
    • Trip history
    • Recall notification
    • Digital glovebox

The astute reader will note that many of these features also aid the dealer in customer retention.  On the other hand, dealer-friendly features don’t mean a thing if the customer doesn’t use the app.  So, preloading can work against you if F&I fails to upsell the device properly.

Also, as mentioned above, your iPhone can support most of these functions on its own.  I run Life 360, which adds “insurance referral” to the driver performance feature.  The advantage to the dealer-installed device is that it’s physically attached to the vehicle.  By the way, you can buy a home OBD scanner for $30 at Walmart.

The dealer-installed GPS tracker is an amalgam of all these capabilities.  The key to success is exploiting them creatively and packaging them in ways that appeal to the consumer.

Direct to Consumer VSC Sales

Direct to consumer (D2C) service contract sales can be divided into two broad categories: with and without dealer consent.  This, along with the lifecycle “touchpoint,” determines the choice of tactics. Today’s post will discuss the state of the art for dealer-driven D2C selling.

Direct-to-consumer marketers price VSCs to absorb high cancellation rates and can generate margins in excess of 25% – Gina Cocking

Outfits like Car Shield market directly to consumers using their own advertising and their own lead lists.  These are generally brokers, selling service contracts from their chosen administrators, outside the dealer process.  Car Chex does this, and also does marketing for dealers.  Endurance, whose ads you may have seen on television, is actually an administrator.  On the dealer side, obviously, D2C marketers will offer whatever service contract is sold in the dealership.  The leaders here are APC and Dialog Direct.

The traditional tactics are telemarketing and direct mail, but there are some exciting new entrants.  The image above is from Tec Assured.  Their 2-8-28 contact program uses a combination of digital and phone messages directing the customer to a branded website.  The site handles credit cards and premium finance.  Instead of a call center, Tec Assured leverages the dealer’s BDC.

So, the ideal approach would be some Hegelian synthesis of the old and the new.  First, though, let’s talk about touchpoints:

  1. Second chance – this is around thirty days after the vehicle purchase, and the talk track is something like, “hope you’re enjoying the new car, and you forgot to buy a service contract.”
  2. Warranty expiration – this is a few months before the factory warranty expires. A postcard is traditional.  Directing the customer to your website, via digital marketing, is more modern.
  3. Service visit – dealers have the inside track here, because they can follow up a service visit with something like, “lucky thing that repair was covered.”

Thinking about these touchpoints, you can see the power of adding digital tactics to traditional D2C marketing.  You may also have noticed the eligibility issue and the financing issue, because the sale is happening outside the dealership and after vehicle purchase.

Servicecontract.com offers monthly subscription pricing, which may begin during the factory warranty period.  This means the customer is paying in advance for coverage that hasn’t started yet.  On the other hand, if the factory warranty is expired, then they require an inspection at Pep Boys or a 30-day waiting period.

Financing is key.  No one is going to buy a $2,000 service contract on their credit card.  This is why Dialog Direct is affiliated with Budco, a well-known premium finance provider.  APC also has a financing arm.  Servicecontract.com is essentially an innovative form of premium finance.

In my experience, the hardest piece to build is the call center and support infrastructure.  Whoever handles the finance contract has to support accounting, cancellations, and customer service.  Even if you’re not doing telemarketing, you still need a call center.

Digital marketing means using email, text, social, and retargeting to direct the customer to your website, following a contact program like Tec Assured.  As a Salesforce trailblazer, I would call this a “customer journey.”  The journey should be driven by some analytics, and culminate in the customer clicking a Personalized URL that links to the website.  The journey can also include phone contact and direct mail.

The website can change its skin to match the dealer’s branding, based on the PURL.  When I was at MenuVantage, we supported a dozen different brands, like GMAC’s IntelliMenu, all from a single code base.  The site UX will include the usual shopping and checkout features, along with sales tools like testimonials and TCO data – not unlike an F&I menu system.

Also like a menu system, the website must be able to originate contracts via API for whatever product provider the dealer chooses.  See my various posts on this topic, as here and here.

This is classic digital transformation.  The challengers bring new tactics, and these tactics will certainly become the norm.  The incumbents are well entrenched, though, and tactics can be copied.

Corona News Roundup

I spent my sequester time looking for smart people with fresh takes on the crisis.  First, in the “obvious” category: a lot of people got hurt, and dealers who could sell online got hurt a little less.  By the way, if you’re in need of some encouragement, click on over to Megadealer News and check out some of the philanthropic efforts underway.  I have been actively seeking positive news for my Twitter feed.

I like to frame this in terms of people developing new capabilities. 

Going forward, buyer behavior is going to change.  Some of this is an acceleration of existing trends.  Balaji Srinivasan writes that corona is putting an end to the Twentieth Century:

  • Offices → Remote work
  • Stadium sports → eSports
  • Movie theaters → Streaming
  • TV news → YouTube news
  • College → MOOCs
  • Public school → Internet homeschooling
  • Corporate journalism → Citizen journalism

He might have added socializing by video conference.  We had our kids staying with us, doing remote work by day, and Zoom parties in the evening.  I like to frame this in terms of people developing new capabilities.  Here is Andrew Tai talking about people in his neighborhood having groceries delivered for the first time.

I got to know Max Zanan from watching Joe St. John’s webcasts, talking about touchless car delivery and service pickup.  In a pandemic world, we are not just worried about dirt on the floormats.  Interior prophylaxis is part of the service.  Max also points out that, if you can’t sell service contracts in the dealership, you can still sell them Direct to Consumer.  This is something I know a little about, so maybe I’ll do another post just on that.

Ridership on New York’s transit system is down 90%, and experts say this could portend a permanent change in the mobility equation.  The alternative to a personal vehicle used to be public transit or, in drivable cities like Atlanta, ride hailing.  Both are good ways to get sick.

Guns, ammo, and survival gear sold out rapidly, as if everyone is suddenly a “prepper.”  I imagine these people will want to have their own vehicle, with four-wheel drive.  I can relate, because I lived in South Florida for many years.  You don’t want to be waiting on Uber when there’s a hurricane bearing down.

My last few findings are from the world of computer networking.  Infrastructure becomes a challenge when the dealership shifts to online work, notably network security.  Virus scanning and security procedures may not be up to speed when people are working from home.  Also, not all dealer software is web-based, so VPN access becomes a requirement.

Be safe out there.

Asbury Drive in the House

Photo Credit: Nyisha MorrisKelly and I were sipping coffee at Digital Dealer, greeting participants, and speculating on how the ultimate online buying experience would come to pass.  Presenters had talked about Amazon, obviously, and the recent opening of a Hyundai digital showroom on Amazon Autos.

A while back, I organized the various offerings into categories like: online platforms where multiple dealers may list their inventory (basically lead providers) versus eCommerce plug-ins to be placed on individual dealer web sites.

One key variable was whether the site actually holds inventory, i.e., is a dealer, not just a technology play.  Carvana, for example, or Shift.  Increasingly, what I notice is that the good technology either evolved from a dealership, or – I found this intriguing – they will buy a dealership to serve as a test bed.

Your rapper name is a top twenty dealer group plus a digital retail system.

Roadster came from a concierge buying service which, as far as I know, they still operate.  A2Z Sync came out of Denver-based Schomp group.  The Gogocar people operate a Kia dealership.  This brings me to the next level of dealer technology tie-ups, those where big dealer groups choose an online retail solution and commit to it.

Roadster is working with AutoNation, Lithia just bought a big stake in Shift, and Drive is in all Asbury stores.  The Lithia deal is pure genius, because it allows Shift to handle more inventory and slashes their floorplan costs.  The many links in this post show support for my prediction using publicly available information.

We philosophically do not believe that software development is our expertise. Instead, we’d prefer to partner with third parties – Craig Monaghan

That prediction is … continuing the consolidation megatrend, we will see dominant groups taking the lead in online retail, but unable to master the technology on their own.  This is what I call the “Kodak syndrome.”  Incumbent leaders are not agile enough to ride a paradigm shift.  This means not only the dealer groups, but the traditional software vendors.

I expect to see the Sonics and Asburys of the world buying up the digital retail people, absorbing their talent, and denying access to their competitors.  I characterized this as a “land rush” in the earlier piece.  Direct to consumer is the final frontier.