There is currently much talk in the industry regarding automotive subscriptions as a new innovative ownership model. The fact is, the subscription model has been with us for a long-time. However, most models merely fill the gap between short-term subscription (daily rental) and long-term subscriptions (leasing).

This increased interest in auto subscriptions seems to be spurred by autonomous vehicles. However, while autonomous vehicles can reduce the inconvenience of returning the Enterprise driver to the lot, this technology does not change the fundamental economics. Mass adoption of medium term subscriptions must address the steep early depreciation curve and high remarketing costs, which require high fleet utilization and rapid, frictionless vehicle redeployment from customer to customer.

There is also a hidden assumption that subscriptions will be the demise of the franchise dealer model. Some prophesize dealers will be replaced by fleet management companies who buy direct from manufacturers. Well, not only do these arguments underestimate franchise law resilience, but they also fail to appreciate certain natural dealer group advantages in executing a subscription model.

Let’s look at those advantages for a minute: First, dealers have the local footprint to allow consumers to view and test drive vehicles. While perhaps less important, because one doesn’t need to live with mistakes as long, many consumers will still like to try before they buy. Second, dealers are better equipped to service vehicles throughout the vehicle useful fleet lifespan. Third, and most importantly, dealers have several mechanisms to manage utilization more seamlessly by shifting vehicles from fleet, to service loaners, to used vehicle inventory, to maximize asset value at any given time.

Mike Jackson described the underpinnings of this strategy in a recent Automotive News article. AutoNation is accumulating assets to maximize customer and asset values over time (more on this strategy in a future blog). Large dealer groups can offer consumers any vehicle that meets their needs, new and used, service those vehicles according to OEM standards and efficiently transition vehicles to other owners, or outside the ecosystem when needed.

This economic model is compelling, and it will be difficult for pure fleet management companies to replicate. Smaller dealers do not necessarily go away, but may need to partner with larger fleet operators to service and sell pre-owned vehicles no longer meeting the fleet standard, or for help adjusting fleet mix and size.

Shifting from a traditional model to supporting large consumer fleet operations involves many significant changes, including service operations. Effectively, fixed operation changes from a profit center to a cost center, with new demands. Subscriptions rates will likely include depreciation, capital and maintenance charges, so essentially service revenues get “locked in.”

Dealers will still need to reach consumers and invite them to service, but consumers may be less committed to regular service because they do not own the asset. Dealers will need to address convenience issues, as well as better identify preventive maintenance issues during scheduled idle time.

In this scenario, service operation efficiency becomes a key differentiator, as maintenance cost per mile becomes more explicit. Dealers who have relied on high margin dealer recommended

items to drive service profits will need to shift their focus to increasing throughput, maximizing labor effectiveness and reducing rework. Industrial engineering will trump salesmanship.

How pervasive automotive subscriptions become will depend greatly on the how well innovators address the fundamental economic barriers. However new ownership models evolve, as a dealer you will have the opportunity to benefit from new subscription models as you have with leasing, you just need to think through the implications on their operations and evolve with the market.

Predictive analytics engine allows dealers to leverage their data and conduct multi-channel campaigns designed to increase customer retention

Chicago, IL—Dec 5, 2017— Affinitiv, a leading provider of marketing and technology services to automotive manufacturers and dealerships, today introduced the Connectiv1 Platform, an end-to-end loyalty marketing solution designed to create connected customers for life. Connectiv1's advanced predictive analytics engine makes it easy for auto dealerships to leverage their customer data and target customers with the right message at the right time on the right communications channel.

“Every dealer knows that it's critical to keep customers engaged throughout the ownership lifecycle, but the question is how to effectively do that," said Scot Eisenfelder, CEO of Affinitiv. "Connectiv1's analytics engine connects data across the entire customer journey, providing dealers with a 360-degree view of their customers, vehicles and campaign effectiveness all in one place."

Connectiv1 allows dealers to create and manage marketing campaigns using a multi-channel approach proven to increase reach and frequency, boost response rates, lower marketing spend and improve customer retention. The platform provides dealers with a cost-effective way to implement their manufacturers' customer loyalty and retention marketing programs, and can also be used by individual dealers to create their own retention programs.

Connectiv1 is a cloud-based, mobile-first platform that dealerships access through a user-friendly, modern and personalized portal. The portal, dashboards and reports can all be used on smartphones, tablets and PCs. The platform includes an advanced predictive analytics engine that allows dealers to leverage the customer data they already have in their dealership management system (DMS) and CRM.

"Big data has been a buzzword for a while but the challenge for dealers is how to analyze the data and what to do with it," said Eisenfelder. "Connectiv1's analytics engine removes that challenge by creating models that automatically determine the best timing for communications, best offer types, amounts and best channels to reach customers."

In sales, these in-market timing models can be used to target customers most likely to purchase. In service, timing models can be used to target customers in the service consideration phase and give dealerships an edge over local independent repair shops.

The Connectiv1 Platform manages communications delivery by determining which channels the customer is most likely to see a dealership's offers. Multi-channel marketing campaigns are implemented across mobile/text, digital ads and PPC, social media, direct mail, email and voice channels. The platform supports OEM branding and content management.

Only Connectiv1 allows for digital and social to be treated as a channel for any marketing message. "Typical email and print programs reach about 80 percent of a dealership's active customers," said Eisenfelder. "Leveraging digital and social media channels can effectively capture customers that have partial mailing addresses or have opted-out of traditional channels."

The Connectiv1 Platform includes Affinitiv's groundbreaking Social Roots program, allowing dealers to leverage trigger-based targeting algorithms to drop service reminder notifications and other messaging directly into a customer's Facebook and Instagram feeds.

Through Affinitiv partnerships with auto manufacturers, Connectiv1 is also integrated with vehicle telematics technology. When it's time for a scheduled service, this enables customers to receive in-vehicle notifications and schedule an appointment at their local dealership.

Connectiv1 is the only marketing solution with an integrated service appointment scheduling feature that allows dealers to send promotions, offers, real-time notifications and easy online payment options to customers via email or text. Customers can schedule appointments using their mobile devices and also decline or approve work in seconds from their mobile device.

The Connectiv1 Platform offers dealers unparalleled reporting and dashboard capabilities. Dealers can access a library of reports pre-configured by their manufacturer, as well as create their own custom reports. Reports can be scheduled for daily, weekly or monthly delivery and can be exported to PDF, Excel or image formats for sharing and presentation.

Rich visualization of key performance indicators (KPIs) can be viewed through the integrated Dashboard application, allowing dealers to easily monitor and analyze campaign trends and performance. Connectiv1 has a core library of hundreds of KPIs, charts and tables that are aggregated to the regional- and OEM-user levels.

Additionally, a built-in notifications engine allows users to subscribe to key alerts with a directed response path. This creates greater marketing campaign collaboration, simplifying processes such as campaign order approvals and proofing.

Connectiv1 also has a built in marketing calendar, providing a visual guide to campaigns fulfilled in the past and information on upcoming campaigns.

Currently a dozen OEMs are using Affinitiv aftersales marketing solutions to create loyal and repeat customers. Affinitiv's current OEM partners include BMW, Kia, Lexus, Chrysler, Volkswagen, MINI, GM, Porsche, Mitsubishi, Volvo, Rolls-Royce Motor Cars and Maserati North America.

Headquartered in Chicago, Illinois, Affinitiv has seven offices across North America and India and employs more than 500 team members. Affinitiv solutions are currently in more than 5,500 dealerships across the U.S.

For more information, visit www.affinitiv.com.

About Affinitiv:

Affinitiv is a leading marketing technology company exclusively serving automotive manufacturers (OEMs), dealership groups, and individual dealers. Affinitiv enables its customers to produce, manage, measure, and optimize multi-channel communications to drive brand loyalty and increase revenue across the dealership. Affinitiv’s digital and analytic capabilities offer an end-to-end solution that supports a consistent experience across the entire consumer lifecycle. Affinitiv was formed through the strategic combination of DPS, Peak Performance, OneCommand, and TimeHighway.com. Affinitiv is headquartered in Chicago, IL.