The spread of the subscription economy

“There’s no reason you should have to buy anything… everything we purchase from transportation, entertainment to groceries will soon come with a monthly plan”, said Zuora’s CEO Tien Tzuo last year.

Zuora is one of many cloud-based companies that have targeted and monetized the subscription economy as a product in itself, helping companies transition their offerings into the full-length subscription model. Stanford Business reported that the subscription market has been growing at a stellar rate of 100% a year, generating billions of dollars in value to these market players.

Many of us have shifted to an experience-driven buying pattern, all but confirming that Everything-as-a-Service (EaaS, or Xaas) is well on its way to becoming the de-facto marketing strategy – no matter the industry or sector. It seems hard to believe that we own fewer things than we used to. We have been possession junkies for generations, but we have seen an ageless transformation in purchasing behavior, as consumers shift their preferences from buying products and services to buying experiences.

Consumers of all ages are hungry for subscription box services. Think of planned diets, or maybe something fun and educational to do with your kids on a rainy day. “It seems there is very little we cannot have delivered to our doors in a surprise-like box, as the industry has ballooned well beyond clothing and razors to delivering everything from dog treats to toys, plants, and even crystals, directly to consumers,” said Forbes in a related piece. According to a Fast Company feature, there were 3,500 subscription box services as of October of last year, an increase of 40% from the year before.

Recurring revenue-based business models are not novel, nor are they fresh-thinking, to be honest. This marketing strategy has indeed exploded in recent years because traditional barriers to entry are vanishing due to the proliferation of cloud-enabled platforms, where the initial capital investments are nearly absent, and new and easy software program languages make disrupting somewhat easy and fun. The subscription economy checkmated us all into making quicker decisions, taking advantage of the buy now mentality without any strings attached.

 

Automotive – an easy target for disruptors

The opportunity consumers have nowadays to try a service without having to commit to a long-term contract has inspired many companies to explore new digital-first subscription model services. We see this right here in a very pronounced way in the automotive and fleet management industries too. With the ever-growing need to reshape how people get around in densely populated cities, people mobility solutions have taken off. Guess what – that also came in a form called Mobility-as-a-Service (MaaS) because that’s how people prefer to buy and exchange services now, on a utility model.

At its core, MaaS relies on digital platforms that can seamlessly integrate end-to-end trip planning, booking, ticketing, and mobile payment services across all modes of transportation, public or private. Such flexibility marks the expectation for the way services will be delivered in the future. And all of that, on a pay-as-you-go plate.

My experience in automotive and fleet tells me that our industry is about to forever change because of these consumer behavioral shifts. Selling, distributing, running and assigning assets and vehicles, and caring for them will be revolutionized in the next few years because of the advent of subscription services and the technology ubiquity that follows it.

An incredible example of this disruptive digital integration hails from Finland. Helsinki’s famous MaaS app, Whim, allows commuters to plan, subscribe, and pay for trips across multiple transportation modes through a single front-end experience. The app launched a couple of years ago, has been victorious in nudging people away from driving their personal vehicles. The volume is increasing with 60 thousand users per month and more than 1.8 million trips as of last October.

Whim’s success stems from a close partnership between government agencies and the private sector. The service is a result of pure design thinking, creating driver innovation through scalable experimentation. By putting city dwellers at the center of the design, and building a flexible digital engagement platform, where data and analytics can thrive, Helsinki has become an example of what can be done for mobility. Uber and Lyft, and many other contenders, like Waymo and Zoox, have shown us the consumer, that we have options: you can buy, or you can rent services for the time you need it for.

 

What’s your future value?

Self-driving cars are coming around the corner (literally), and with them, zero-emissions vehicles which will carry with them a whole new set of challenges. The consequence of all these developments has a direct impact on the world of fleet management, so we (who care for this industry) need to start thinking about what’s next. How do we add and retain value? Will our role change when everything around us seems to be changing?

Imagine a not so distant future where a self-driving car returns from its daily or nightly work right back to its recharging dock, where it will need to be reconditioned for its next shift. Think about filling that car battery with some ions, cleaning the vehicle, thorough inspection, small repairs and maintenance, software updates, etc. Who’s going to do that? And whoever does it, how will the car pay for it?

As we move into a different world, our business models will change too. We need to start thinking about becoming enablers of this new environment by acquiring and developing core competencies such as digital-first design, multi-brand procurement, financing and subscription expertise, as well as holistic service provider management. As the tectonic buying behavioral plates shift all around us to a “Cancel Anytime” frame of mind, how can a company create sustainable customer loyalty by setting them free and expecting them to stay at the same time? Here are three ways to accomplish that:

 

1. Always transform – become a digital services integrator.
In the world we live in, B2C or B2B companies have a clear shot at connecting supply and demand by performing the role of a digital services integrator. Identifying the minimum viable product (MVP) quickly to experiment new capabilities is possible because of the numerous technology accelerators. Building flexible platforms of engagement with internal systems, customers, analytics tools, IoT devices, and external parties, like partners through APIs, is critical to ensure a future digital business has the legs needed to sustain the information flow.

2. Be in constant design mode. And experiment.
Design thinking offers a framework for solving user problems. Design thinking helps build a deep understanding of the consumer of your services for whom you’re designing the products or services. From it, you develop empathy with the target user base for what they need, feel, and want. With this core discipline in house, you can tackle ill-defined problems reframing them with a human-centric mindset. Empathize, define, ideate, prototype and test are phases of this approach, but doing them in an Agile format gets you to launch solutions quickly without spending unnecessary cash before you get validated learnings from your user base.

3. Be ready to pivot or persevere. Always-on listening.
In the spirit of experimentation, subscriptions models must be built on cloud-based platforms that can allow a company opportunities to either persevere or pivot fast – this is the essence of being an entrepreneur in business. Every idea can eventually face a significant challenge: deciding when to pivot and when to persevere. Flexing a product or service has to be based on the ability to listen to customer feedback, from which a company can make financially wise decisions. When dealing with customers who can simply walk away at any moment, active listening skills will make or break your company. The right path should avoid kitting it out your product with tech, but instead, with the user experience, you want to deliver. Product performance should be a function of adoption, not how many features it’s got.

So, before you Netflix the hell out of your business, make sure you understand how people want to consume your services and then create the conduits for change through your core competencies and infrastructure. Make sure you have the flexibility you need to continue your path or change in an instant. We are experiencing change at an unprecedented exponential rate, opening windows of opportunity for business modeling pragmatism. Step back, and genuinely re-evaluate what the future of your business is. Because if you don’t, someone else will.

 

Felipe SmolkaAbout the author:
Felipe Smolka is the Executive VP of Transformation for LeasePlan USA, a global leader in #fleetmanagement services. He’s an Electrical Engineer holding an MBA degree from Emory Goizueta Business School and Digital Marketing at Wharton. Felipe is a #connectedvehicles expert with a strong passion for solving problems with great #ux and #dataanalytics.

 

Read More

 

I love a good evidence-based conversation. I savor words like substantiation, data, relevance, and most importantly – proof. Sometimes it can be challenging to get the information you want, but in most cases, there’s plenty of hard and easy facts out there that helps one to make better decisions. Well, that’s my basis for this article today, and I hope you find it valuable.

 

At the dinner table

A few days ago, I found myself in a lively debate about climate change with some of my family members: brother, father, and brother-in-law at the dinner table. For unexpected reasons, these three highly educated folks were quite hesitant about the whole concept around climate change. As I shared more and more data, stats and information with them, I realized one thing surprisingly quickly in that most people will only share an interest on things they can have an immediate impact on. And for climate change… well, that’s not a low hanging fruit to humankind.

My family’s initial lack of interest on climate change, married with information scarcity out there that can help people understand the core of the problem, makes the climate change "hoax" belief a more natural mental path for many. Denial of man-made climate change also stems from people’s own climate experiences too. Those who have felt a genuinely cold winter recently might find it hard to believe earth’s temperature is increasing little by little. But, why would they neglect the data points I shared with them? How could somebody with their background overlook such evident correlations? And that was my second revelation – we don't talk about it enough.

 

Click the infographic to open a downloadable full-size version.

Starting the conversation

This past April, at NAFA 2019, I gave a talk with John Ciarlone (one of our product leaders at LeasePlan USA) on Carbon Footprint called "Eliminating Big Foot." Like at my family dinner, I had started that presentation by bringing up that it wasn't until the Apollo 8 mission that we had a chance to see earth from orbit and relate with our planet in ways never possible before. The Earthrise picture is a photograph of earth taken from lunar orbit by astronaut William Anders on December 24, 1968. Some renowned photographers called it “the most influential environmental photograph ever taken”, and not long after those incredible pictures were shared, more than 20 million people were inspired to take to the streets in peaceful protest for the first Earth Day, on April 22, 1970.

Professor Barry Commoner, labeled by Time magazine as the "Paul Revere of ecology", remarked that "this planet is threatened with destruction and we, who live in it, with death." He called it:

"a crisis of survival."

Earth Day was a dedicated day to enlisting citizens nationwide in a common cause of saving life from the harmful byproducts humankind had created. People, mostly young students, were fed up.

 

Our planet is warming up

Climate change is a significant issue facing the world. Earth’s temperature is rising, and that’s a fact. But even as we approach Earth Day's semicentennial celebration, recent surveys indicate that two-thirds of Americans never talk about climate change at all, and even more surprising is that over three-quarters never see or hear the media talk about it either. With some attention, we can observe the planet getting warmer. We experience more torrential precipitations, heat waves, stronger hurricanes, and sunny day flooding. According to NASA, 2018 was the fourth warmest year in a continued warming trend. Global temperatures in 2018 were 1.5 degrees Fahrenheit warmer than the 1951 to 1980 mean.

You and I know people who have expressed concerns that climate change is a farce, somewhat of a fib because our planet has its own God-given natural evolution cycle.Climate change, in its essence, calls out variations in the planet’s temperature and weather conditions experienced by people all over the globe.

As I talked to my family, I exposed to them that nearly all publishing climate scientists (97-98%) support the consensus on man-made (anthropogenic) climate change. The number to watch is the Carbon Dioxide (CO2) levels in the atmosphere, which alongside other gases like water vapor, methane, nitrous oxide, and ozone, forms the leading group of greenhouse gases. Being the most notable of them, CO2 is produced by natural processes and everyday human activities, especially the burning of fossil fuels. We need earth’s atmosphere to be in balance to avoid a warming planet because those gases have the damaging ability to trap the energy from the sun consequently overheating our planet. A hotter world means a much harder life for us in the long run, meaning that future generations will hurt badly.

On Apr 25th, 2019, CO2 levels reached 413.68ppm (parts per million) in the atmosphere, which is 30% higher than 50 years ago on a trend that looks like a massive hockey-stick. Many agencies collect this sort of data – NASA being one of them. The data is plotted on something called a Keeling Curve, using a combination of data derived from the sample and analysis of gas contained from air examined at Mauna Loa Observatory in Hawaii and paired with ice-core data from Antarctica. In these ice-cores, there are ancient air bubbles confined in the ice that has allowed NASA to observe what earth's atmosphere was like a long time ago. The scientific community found a spot in Antarctica where the ice is thick enough to reveal 1.5 million years of climatic history. It will take another three years to drill down that far – a single meter-long piece could contain 10,000 years of climate history if selected carefully.

Breaking the 400ppm CO2 threshold, up from around 280ppm before the industrial revolution, represents a 42.8% increase in emissions. The problem with the rapid rise in CO2 emissions is the established correlation to earth’s rising temperature. Statistical significance, a fundamental concept in applied science, is the likelihood that a relationship between two or more variables is caused by something other than chance, and this is what climate change science is based on. According to ongoing temperature analysis conducted by scientists at NASA's Goddard Institute for Space Studies (GISS), the average global temperature on earth has increased by about 1.4°F since 1880. Two-thirds of this warming has occurred since 1975, at a rate of roughly 0.27-0.36°F per decade.

 

Skeptical about skepticism

My brother asked: "We have added 42% more CO2 in the atmosphere, but that doesn’t mean the temperature will go up by 42% too, right?". No, obviously, but a lack of education and in turn understanding leads many to skepticism, thus leading many to the belief that climate change is a hoax. Doubling the amount of CO2 does not double the greenhouse effect. The way the climate reacts is complex, and it is difficult to separate the effects of natural changes from man-made ones over short periods of time, as per skepticalscience.com.

The research shows that as the amount of man-made CO2 goes up, temperatures do not rise at the same rate. The last report by the Intergovernmental Panel on Climate Change (IPCC) described the likely temperature variation range as between 3.6°F to 7.2°F, for double the amount of CO2 compared to pre-industrial levels, which we have regrettably accomplished.

Climate skepticism varies broadly. “Climate’s changed before". Climate reacts to whatever forces it to change at the time. From the vastly available research, we can assume humans are now the dominant force. Or: "it's the sun!". Temperature and Sun radiance are going in the opposite direction. Data tells us that over the last 35 years the sun has shown a cooling trend. "If the sun’s energy is decreasing while the earth is warming, then the sun can’t be the main control of the temperature."

The myth list goes on and on with surprising ideas about what is right and wrong, but one suspicious statement often catches my attention: nonbelievers will claim "climate models are unreliable". Because of my background in data analytics and the work I do, models are a big deal to me. Having a precise forecast of how earth's temperature and climate might look some 100 years from now has long presented a challenge to the scientific community. However, with an ever-more-refined understanding of the climate system around the globe, improved tools, and rapidly improving computing power are all leading to more reliable forecasting systems.

Scientists have been making projections of future global warming figures using climate models of increasing complexity for the past four decades. Carbon Brief has collected prominent climate model projections since the year 1973 to see how well these models project both past and future global temperatures, as shown in the animated graph below. The graph curves are similar in nature confirming the projected rise in earth's temperature.

Projected warming from Broecker 1975 (thick black line) compared to observational temperature records from NASA, NOAA, HadCRUT, Cowtan and Way, and Berkeley Earth (thin colored lines) from 1970 to 2020. Baseline period of 1970-1990. Chart by Carbon Brief using Highcharts.

Talk about it – let’s break the vicious cycle

So, there's an incredible amount of data out there about climate change, but what do we need to do to confront this problem? Katharine Hayhoe gives this inspiring TED talk about breaking the vicious cycle of not talking about climate change. She says people don't need to be scientists to talk about this subject – "how I am supposed to talk about cloud parametrization in climate models or radiative forcing?". Katharine goes on to say we don't need to be talking about science that much more because we have been promoting the topic for over 150 years. It was in the late 1850s that climate scientists first discovered that digging up and burning coal and oil was producing heat-trapping gases that are wrapping an extra blanket around the planet – "that's how long we've known."

As I experienced at the dinner table a few days ago, merely talking about the issue of climate change allowed my family to voice their concerns and disbelief, and I'm happy to report that since then they each seem to have become more curious and interested in the subject. But I learned that it takes time (and lots of talking) to get people moved across the line of total doubt and mistrust to igniting their curiosity. Hopefully one day they see the climate problems that the rest of us see.

Now… what does climate change have to do with the world of #Fleet and #Automotive, and what can we do about it? Stay tuned for follow-ups to this article coming soon. If you're interested in getting more information on our #NAFA2019 session called "Eliminating Big Foot" – which brings to light details on how fleets of all shapes and sizes can attack the CO2 emissions challenge – please click here.

 

About the author

As executive vice president of transformation at LeasePlan USA, Smolka is leading the strategy to drive modernization and innovation across the U.S. subsidiary and launch the company further into its journey to deliver what's next for fleet, mobility and connected vehicles. Smolka's career has consistently revolved around digital transformation, developing cutting-edge technologies and leveraging the power of big data to create and deliver value. With a strong history of successes, Smolka is a proven leader poised to transform the fleet industry. Smolka has an MBA from Emory Goizueta Business School.

 

 

*LeasePlan is committed to ensuring we handle customer, business partner and employee data to a high and compliant standard. We were one of the first companies to introduce a set of binding privacy rules across the whole of our organization, and we have established a dedicated Privacy Office to make sure those rules are upheld. But this does not make us complacent. As technology develops and our use of data changes, LeasePlan is continuously working to improve our data protection policies, processes and systems.

Read More

Over the last two weeks, my fellow bloggers, Kris Bush and Maggie Leark, have both talked about our driver scorecard called OneScore from the perspective of the driver and the fleet manager. This week, I'm going to lift the hood on OneScore a little more and give you a taste of where it's headed.

With ever-rising operating costs, fleet managers are often on the lookout for savings and more efficiencies. The typical challenge revolves around the diminishing returns of going through the same variables repeatedly to no avail, with marginal returns. You can only squeeze a budget so hard before it starts to hurt!

Fleets are hungry for ways to increase productivity, reducing operating expenses and lessening downtime for drivers, that's a fact. OneScore is here to help identify where these tough-to-find- opportunities may be hiding. OneScore is made up of three major buckets of data points – driver safety, efficiency and compliance, where each and every variable is scored against our aggregated internal benchmarks. This framework helps us have more intelligent discussions on what to focus the fleet on to unlock savings.

Our data-centric approach has proven that one of the most neglected fleet-cost villains is in fact the driver behavior itself, regardless of the size of the fleet.

OneScore today – Safety and Telematics

If we are not watching driving behavior carefully, it can easily have a negative impact on a company’s bottom line. Better understanding of key data points can help bring clarity to poor total cost of ownership (TCO), and bring to life agonizing trends and enable fleet managers to take action to stop the "bleeding."

Many of us were awestruck by some of the figures shared by our telematics partner, Geotab, not too long ago. They said employers in the United States collectively pay $60 billion annually for motor vehicle crashes involving their employees in direct expenses – wow! The Occupational Safety and Health Administration (OSHA) reported that each fatal car crash averages a payout of $500,000. This loss can exceed $1,000,000, depending on the severity and legal outcome.

Sadly, it doesn’t end there. Poor driver behavior can also adversely impact the number of vehicle incidents, driver productivity, vehicle downtime and replacement. Poor driving can also increase fuel and maintenance costs by large percentages, hitting a fleet’s efficiency performance levels. As the saying goes, more is NOT always better. However, in this context, data abundancy bodes well with what we are trying do with OneScore.

Though the world at large is still getting used to the advanced features in today’s cars to keep people safe, more Adaptive Driver Assistance Systems (ADAS) data points will bring additional opportunities to connect vehicle data with TCO. With advanced tech like lane and steering assist that beeps [loudly] every time you take your eyes off the road, or when there’s a car right in your blind spot, drivers can get real-time car feedback for corrective action, but so can fleet operators! With embedded technologies becoming more common, carmakers are collecting massive amounts of data from every make and model out there.

A whole bunch of data

It wasn’t too long ago, in the late 1990s, when the first vehicle tracking systems began to emerge with single client-server connectivity. But with the speed of technology advancements, telematics is a prevalent resource to gain insight from fleet drivers and the vehicles they are riding.

It's not hard to gain access to a flood of historical and real-time data these days, but the challenge is how to adequately unpack these vehicle and driver data points while marrying them with other sources of information to make the effort worthwhile.

Connecting the dots – Let's get some actionable insights PLEASE!

It is with enthusiasm that we believe in the opportunity to promote fleet safety and greater fleet efficiencies through gaining a deeper appreciation of this daily “data-rich” alliance between drivers and their wheels. With the MyLeasePlan mobile app, we are gathering relevant connected and non-connected driver and vehicle data and weaving them into OneScore. This is unique in our industry. Some scorecards out there are still static reports – we think that's just not good enough for the modern fleet.

With OneScore, we empower fleet drivers to be the best fleet driver they can be. Because we aggregate OneScore data from any departmental structure or organizational model our clients need, OneScore is also fleet branch friendly. It goes without saying the tool can be seen at an enterprise level, too. Our algorithm-based method tracks, scores and provides feedback to drivers and fleet managers on their performance – and it's more than just safety data. OneScore cuts across performance indicators in three categories – safety, efficiency and compliance – and lets drivers and fleet operators know how they can be safer, more efficient, and in turn, reduce fleet costs.

The process of seamlessly joining all fleet activity into one easy-to-read score with the ability to drill down to see how drivers compare to their peers gives us an opportunity to better communicate with our drivers and determine focus areas.

A window into the future

At LeasePlan, we have taken the extra steps with our development teams to ensure our fleet analysis and data models are permeating into the business rather than nurturing siloed data sources. It is impossible to fully search the data points when you can't work horizontally between different data sources.

Recently, my buddy Greg Buckland, LeasePlan USA's CIO, and I spoke at an AFLA conference about “The Problem with Big Data” and how to turn information into a strategic asset. We discussed a rather healthy approach to “getting dirty” with big data. Talking from experience, we suggested the audience start small. Start by working out what you want to know first, then work out how you're going to get the information. This approach has helped us continue to evolve OneScore into a consultative tool. By elevating fleet performance into a dynamic scoring mechanism, it enables a simple conversation about what matters the most for our clients.

As for what's next – we will be taking OneScore from the responsive to the predictive. It will become not only a window into the present of your fleet, but somewhat of a crystal ball giving you insight into where your fleet's performance is headed, and where to make improvements to change that trajectory!

If you'd like to learn more about our telematics, safety and OneScore solutions just contact us!

About the author

As executive vice president of transformation at LeasePlan USA, Smolka is leading the strategy to drive modernization and innovation across the U.S. subsidiary and launch the company further into its journey to deliver what's next for fleet, mobility and connected vehicles. Smolka's career has consistently revolved around digital transformation, developing cutting-edge technologies and leveraging the power of big data to create and deliver value. With a strong history of successes, Smolka is a proven leader poised to transform the fleet industry. Smolka has an MBA from Emory Goizueta Business School.

 

 

 

*LeasePlan is committed to ensuring we handle customer, business partner and employee data to a high and compliant standard. We were one of the first companies to introduce a set of binding privacy rules across the whole of our organization, and we have established a dedicated Privacy Office to make sure those rules are upheld. But this does not make us complacent. As technology develops and our use of data changes, LeasePlan is continuously working to improve our data protection policies, processes and systems.

Read More

I want to start this blog with a short tale of my own UX (User Experience) superhero, the iPhone. The smart device that got everyone to do a "180″ and rethink UX in its essence. Is it time for the invincible superhero to grow up? Well, maybe, just maybe, some help from cars could be of use

Imagine the scene as a young dad rushes into a Whole Foods store, on a sunny winter afternoon, in Georgia. In his hurry to grab this new high-end red blend and a gluten-free ham-and-swiss quiche, he has left his phone in his car – then, the two devices start to chat.

As the global market for smartphones has become besieged by devices of all shapes and sizes, a stressed post-pubescent iPhone talks with its older mobile device cousin, the car. They begin to discuss the challenges of reaching adulthood (yes – our automobiles are indeed centennial devices that are mobile… they come with wheels).

iPhone – “I am like a superhero, they said.”
Car – “You are …you are… aren’t you?”
iPhone – “I thought I was irreplaceable.”
Car – “Exactly…”
Car's inner thoughts – “That’s funny… it's like the 1970s for us. That poor young telephone, it'll learn!”

Much like a frightened grown-up, the iPhone and its family of similar gadgets are facing a new stage in their lives. Almost everyone has one in their hands, and they don’t switch them as frequently as they once did before. But irreplaceability is still the case, isn’t it? We can’t substitute our smartphones because there’s nothing to change for. Smart devices need to believe that life doesn’t get dull when you get more responsibilities and different expectations.

iPhone Slowdown?
Last quarter, when Apple warned of cuts in revenue projection because of surprisingly sluggish sales of iPhones, mortals felt like their coronary arteries were getting blocked by an 18-wheeler. Suddenly, people had difficulty breathing. The news of declining sales sent shock waves to other players in the industry, like Samsung for example, and even usual supply chain comrades. But is the most successful device maker failing, or is it going through a life transition – are these devices just reaching maturity?

Humans around the world have chosen smartphones as their most inseparable piece of tech with about 4 billion of all 5.5 billion adults on earth having one (or two, or many) in their pockets. Jaw-breaking figures are often published for smart devices in every geography, like how many apps are downloaded every day or time spent on social media through these platforms. The point is: these devices are everywhere to be seen. People around the world hold more than 14.2 billion mobile devices according to market researcher, Gartner. From streaming, banking, gaming, chatting, etc… men, women, and children found meaning and applicability in carrying these things.

What would my “digital persona” say about me?
All previous UX boundaries have been broken by the smartphone ecosystem. These advances have played a significant role in how the [older] auto industry has found inspiration to 'fuel-inject' the passion back into their developers and designers to deliver unique driver and passenger experiences in cabins. The automotive industry is older than a century. Fleets of all kinds have been living in developed markets for a long stretch, where saturation is as common as long replacement cycles. In its most basic definition, market saturation is the state that emerges when the volume of a product or service has been maximized in a marketplace.

When it comes to in-vehicle UX, part of the OEM play here relies on building “digital personas” for drivers and occupants so that user's preferences are captured, dissected and insights, then, provided. All the data gathered and the mining of analytics through ever-more-complex algorithms is aimed at connecting operators with their vehicles in more meaningful ways.

Substantial investments by automakers are flowing into designing mechanisms to allow drivers to engage with their cars (and be engaged) in touchless conversations with voice-enabled virtual assistants. By doing so, the hope is buyers will factor in the switching costs when considering another Automotive brand. Buyer: “I am kind of torn…this car knows me so well, and it took a while to get here… I will probably stick with my brand.”

Having learned much from decades of genuine development in mobile tech, OEMs have been inspired by smartphones to build and/or acquire new technology to deliver on the promise to make drivers and passengers' daily routines more meaningful. The challenge has been how to adapt and adopt the schizophrenic one-year consumer electronics change cycle (let’s call it “CES ready." Here we go, Vegas!) without giving up much of their heavy-labor margins to the electronics industry.

Superior UX is non-negotiable. Period.
“Cars” have always looked up to the “iPhone” (and its colossal universe of creative think designers, marketers and developers) to mimic what is now labeled as “minimum user expectation.” If you have a smartphone – and I am sure you do – and have taken an Uber before – you know what clean and compelling user experience is. Consciously or unconsciously, we demand superior user experience – frictionless, practical and easy. What is now regarded as the expected level of features has carried itself deeply onto how we choose our new vehicle purchases, too.

But can the “iPhone” get inspiration from a mature industry to get the depth needed and find meaning post-market congestion? As per BayStreet Research, iPhones were being replaced on average after two years in 2015, but that period has jumped to roughly three years now and is anticipated to increase. With increasing water resistance and stronger glass for its screens, smartphones are more resilient than they used to be, so that adds to keeping the device longer, too. The parallel with the Auto industry here is: the replacement cycles for smartphones have been lengthening as brand new models offer only minimal changes and improvements. This is logical when thinking about vehicle purchase cycles.

The Economist said the smartphone market slowdown doesn’t symbolize disenchantment, “quite the contrary…After a decade of rapid adoption, there is much less scope to sell handsets to first-time buyers as so few of them are left.”

iPhone – “People are keeping me longer.”
Car – “That’s a good sign, bud.”
iPhone – “I thought I was irreplaceable, and they will keep wanting me.”
Car – “Exactly… – I said that before.”

What can the iPhone learn from cars?
A large part of an OEM’s success comes from its vehicle's trade-in value. Removing shortages from the equation, the highest resale value usually means a high perceived value for the brand. It depends on how desirable the vehicle is on the used car market. Automakers understand the importance of the second-hand market because the market can only take so many new vehicles a year (around 16 million in the United States alone). With that, more mature thoughts involve warranty services, performance, reputation and adaptability with green technologies such as over-the-air updates.

So, what is next for the "iPhone" and its alike gadgets? Will it consider how trade-in affects its future resolution? What can it learn from its (not so) distant mobile cousin? Will there be a time when the used market for iPhones will behave like the automotive sector? If it’s in excellent condition and has a clean history and few owners, is it more likely to be sold on the dealer's used car lot for a good profit?

Who knows… change is undoubtedly coming fast, and that's always exciting!

 

About the author

As executive vice president of transformation at LeasePlan USA, Smolka is leading the strategy to drive modernization and innovation across the U.S. subsidiary and launch the company further into its journey to deliver what's next for fleet, mobility and connected vehicles. Smolka's career has consistently revolved around digital transformation, developing cutting-edge technologies and leveraging the power of big data to create and deliver value. With a strong history of successes, Smolka is a proven leader poised to transform the fleet industry. Smolka has an MBA from Emory Goizueta Business School.

 

Sources:
• https://www.nytimes.com/2019/01/05/technology/apple-iphone-replacement-mom.html
• https://www.economist.com/leaders/2019/01/12/the-maturing-of-the-smartphone-industry-is-cause-for-celebration
• https://www.strategyand.pwc.com/trend/2017-automotive-industry-trends
• https://www.bloomberg.com/news/articles/2018-08-13/how-global-smartphone-sales-growth-ground-to-a-halt-quicktake
• https://www.aaautowarranty.com/extended-car-warranties-increase-trade-in-value/

Read More