Making the Case for Driver-Centric Location Solutions in Cars of the Future
This post is the latest in our “Driving Local” series. It’s our editorial focus for the month of August, including topics like autonomous vehicles and the car as the ultimate “local” mobile device. See the rest of the series here.
Tune into any automaker’s discussions with Wall Street these days, and you’ll notice a consistent pattern of observations on the industry. Vehicle sales are declining, and it’s harder than ever to turn a good profit selling a car. The pressure to innovate is intense, tying up more working capital in exploratory R&D. And the innovations that are presumed to emerge would have looked foreign a generation ago: autonomous driver assistance, long-range electrified powertrains, over-the-air software updates, advanced infotainment, even subscription and shared-ownership pricing models.
The industry has traditionally been in the business of sourcing raw materials and assembling them in such a way that is responsive, intuitive, safe, and hopefully looks cool. Do it a little cheaper than the competition, or justify charging a bit more, and a tenth of a point of market share is the reward.
But the book has closed on that business model. Dealers are making barely 2% profit on new car sales, and the manufacturers are not much better. As these vehicles move throughout the physical world they generate insightful data, and soon those assets will become more valuable than the cars themselves. That’s why Morgan Stanley analyst Adam Jonas, who has spoken early and often of the industry’s evolution toward the mobility business, has said that miles traveled will be likely a more appropriate metric to gauge the health of an automaker, versus unit sales.
Traditionally, a lot of discussion around location tech as it relates to auto is for marketing and media applications for the dealerships and automakers themselves, where the goal is to sell more cars. That helps the OEM and the dealers, but it leaves an enormous opportunity on the table. We also need to be customer-centric, which means providing an experience that decommoditizes ownership and makes the journey itself a little more interesting. That’s how to keep the miles-traveled metric high, even when fewer cars are being sold.
Applying user data in this fashion requires adherence to a code of data privacy and ethics — starting with a clear and obvious value exchange to the end user (the driver). An owner of a vehicle should clearly understand the benefit in having location data collected. Location data can improve the driver’s experience in three ways.
1. Delivering more context
For years, in an effort to build iconic brands and sell millions of cars, automakers shunned mobility in favor of more emotive selling points. Ads hailed the car’s edgy styling or its exhilarating performance. These qualities were deemed to be of greater commercial value than what happens when moving from point A to point B.
But if the vehicle’s data becomes its most valuable asset, then a more personalized, contextualized driving experience will soon lead the way. An individual’s location history could absorb intelligence about mundane activities (e.g., the frequency of dry cleaning dropoff and pickup) and better integrate them into the daily commute via in-car notifications that remind a person of the best time to run their errands. OEMs are experimenting with their own ride-sharing and carpooling alternatives to Uber and Lyft; what if they could use individuals’ location history to facilitate a match? A ride with a stranger is more likely to be memorable once you find out you both are regulars at skate parks or enjoy trendy Korean restaurants or frequently visit art museums.
2. Increasing perceived value
Greater context then gives way to a higher perceived value of the ride, especially in proportion to the value of the vehicle.
The economics of vehicle ownership are most unfavorable when the car sits idly in a garage, driveway, or parking spot. Hard-earned savings are tied up in the car purchase, paying down borrowing costs and foregoing returns, without rendering any benefit to our lives. Unfortunately, that describes 95% of the life of a typical car.
As OEMs tinker with shared ownership models, location data could be utilized to make intelligent, lifestyle-based recommendations about which terms are most appropriate to the end user. Would this person mainly use the car to drive to and from the train station, and for shopping runs on the weekends? Maybe co-owning the vehicle is more financially sound than owning it outright, and the value can’t be beaten. The automaker, meanwhile, could spare excess manufacturing capacity and instead convert the customer to a more profitable model.
Car ownership is not always rational; sometimes it is about pure indulgence. Here, too, location awareness becomes a differentiator. Foursquare ran a campaign with Land Rover promoting the Discovery Sport launch, supporting the brand’s tagline “Discover the Undiscovered” with an interactive ad unit showing trending venues in the user’s vicinity. A well-executed creative concept can help sell a car — and it can also reinforce the experience post-sale. What if a community of Land Rover “urban explorers” competed every month to collect badges by visiting undiscovered venues — a bohemian coffee roaster, a happening music venue, a botanical garden off the beaten path?
To the skeptics who don’t believe gamifying mobility is commercially viable, look no further than Waze, which as part of Google has now built a business on 100M+ monthly active users across 185 countries — by doing basically that.
3. Adding more utility to existing data
Connected vehicles already send a wide variety of data points up to the cloud. They aggregate a steady stream of signals about vehicle performance (e.g. speed, fuel economy), diagnostics (e.g. technical malfunctions, sensor reports), even road conditions.
Early innovators have already begun exploring new applications for this data. Insurance companies, for example, have caught on that some of these indicators could more reliably predict aggressive or dangerous driving habits than, say, a clean driving record or a zip code of residence. So, policy applicants who live in a safe neighborhood and drive under the speed limit might qualify for a lower premium. Maybe one of them is a grad student who spends a lot of time in lecture halls and libraries, whereas the other is a socialite frequently seen at whiskey bars and marijuana dispensaries. The grad student represents a lower risk to the insurance company, so shouldn’t they get a lower price on an insurance policy? That certainly sounds like a more pleasant user experience. (Of course, this new business model would require clear, opt-in consent and transparency between the automaker and the driver.)
The growing penetration of battery-electric vehicles on the roads has also driven demand for charging infrastructure. Today’s vehicles are smart enough to collect and synthesize battery usage data, but when overlaid with location data, new utilities could emerge. ange anxiety is a very real user concern, so which scenario sounds better: veer off course to a charging station and twiddle your thumbs for an hour while you recharge? Or drive to your favorite retailer, who has outfitted its parking lot with subsidized charging stations — knowing from your location history that you’re a loyal customer?
Automakers and dealers will continue to sell cars, but retaining loyal customers is where the battles of the future will be won. Combining user-centric location solutions for automakers in fresh, new ways will drive us all of us towards a future that’s more compelling and pleasant no matter how we choose to get around.
Paul Burani is Sales Director and Head of Automotive at Foursquare, the leading independent location technology platform, powering business solutions and consumer products through a deep understanding of location. Prior to Foursquare, Paul led global automotive industry development at Google.