How car subscriptions could upsell mileage
Using car connectivity for a better developer and driver experience
Recently, we wrote about the rise of car subscription services and their impact on the driving experience as their popularity among a new generation of drivers continues to grow. In many industries, use is being prioritized by customers over ownership, and the evidence shows that cars will be no different from this model. Following our perspective on the topic, several service providers approached us. They wanted to learn more about our view on car connectivity and how they could make a difference in some of their internal processes; in other words, how they could take connectivity to the next level.
Although every subscription company can make attractive promises to its customers regarding a fixed monthly price which includes maintenance and insurance costs, the service as a whole comes with limited flexibility in price. This lack of flexibility can be off-putting to some potential customers and restricts who can take advantage of a service that offers the feeling of “owning” a vehicle without the responsibility or additional costs that come with car ownership.
Keep the base promise to customers with a flat monthly fee but offer flexibility in a seamless way to those who need it.
Specifically, those who reached out to us were curious to know how tapping into car data can help them solve the following pain point: keep the base promise to customers with a flat monthly fee but offer flexibility in a seamless way to those who need it. A subscription with a plus, if you will.
Extra mileage as an upsell
Accurate car data, straight from the vehicle, enables a car subscription service to offer high quality, personalised services for customers. A key selling point for a car subscription service is its flat monthly fee that includes maintenance and insurance (and even tires and vehicle upgrades). This model is attractive for drivers who might otherwise, when owning a vehicle, be hit by unexpected maintenance and repair costs.
However, drivers are currently limited by how many miles they can cover per month as per the terms of service. Understandably, this limit serves to minimise risks related to insurance and to avoid excessive depreciation of the vehicle (which also affects maintenance costs down the road).
Now, here is a problem that car connectivity can fix.
Upon returning the vehicle at the end of the subscription, the customer may receive an unpleasant surprise. If he or she has exceeded the base mileage limits, there will be an additional fee to pay. The mileage has rolled silently over to preceding months. It is undesirable because the customer may have been unaware of the terms. It will undoubtedly feel like the subscription service has gone back on its promise of a flat monthly fee, even though well within its rights.
A broken promise is likely to lead to a disappointing user experience for the customer and potential loss of future business for the car subscription provider. After all, in the minds of customers the promise of the service was a flat monthly fee, not a flat monthly fee plus additional costs.
But what if all this could be avoided?
That is exactly the opportunity with connected cars. It provides an effective means to track the mileage regularly and then making it easy to offer customers to pay the excess monthly. This way, it would be a very similar experience to a mobile data plan for the customer. Now the customer receives the automatically generated invoice which details the month, the base mileage included in the package and, finally, the extra distance travelled. Arguably a much better experience.
What the new car data integration enables then is the ability to deepen the relationship with customers. A smart business would even design premium packages with more miles included, along with other perks that enrich the experience with the subscription company even further.
The developer experience
Manually tracking the mileage of the car would, however, be too tedious. Fortunately, most modern cars upload a multitude of data points into a cloud regularly, which can then be retrieved by third parties through an API. Once set up by the service provider, all the driver has to do is connect the vehicle they are using to their car subscription app.
Granted, working with car APIs has been quite complicated. The data platforms work hard to make this new car API integration process as smooth as possible. At HIGH MOBILITY, we have seen that the most important thing for developers is to maintain one powerful interface to multiple car brands while keeping the legal and price complexities to a minimum. For instance, connecting the cars to the service via the Auto API enables tracking vehicle condition, location and odometer values from BMW, MINI, Mercedes-Benz cars already. A volume OEM is being added to the mix any day now.
While there is no dedicated dataset yet for the car subscription service, a very similar one in functionality is a logbook dataset. Companies that provide automatic driving journal use this solution. In the visual below this dataset has been taken as a sample to illustrate what data is available through the cloud and how brands differ.
You’ll notice that all brands offer odometer data (found in diagnostics capability for Auto API), but BMW, MINI and the volume OEM also offer coordinates and ignition status data points. Mercedes-Benz, on the other hand, does not support single driver consent for logbook applications but does provide a particular fleet clearance dataset that works slightly differently.
In addition to a wider reach, this offering is starting to be in price-parity with the currently popular aftermarket of hardware solutions while offering significant scalability.
Final Words
With our quick thought experiment we have seen that a standardised API for car data enables car subscription services to keep their promises to customers: a flat monthly fee for base usage and potential for upselling when the included mileage is exceeded.
The significant difference here when compared to today’s operating model is that rather than surprising customers with unexpected charges when the car is returned, the customer instead pays the extra for those miles immediately. Rather than a one size fits all option, this seemingly small tweak to service delivery further emphasises the subscription model’s prospects. The customer is always informed and can decide to reduce driving or pay a little extra in some months.
