Companies are having trouble using customer data.

Ninety-five percent of automotive companies buy customer data from third-party sources to support marketing initiatives, but changing internet privacy regulations mean companies must gather information directly from customers themselves. In the future, customers must explicitly agree to share first-party data like an email address and mobile phone number, along with zero-party data like product preferences and purchase intentions.

And with the customer data they do have, companies across the industry are having trouble putting it to good use. In fact, only 46% of companies report having comprehensive data. Why is there a gap for the rest? In many cases, it’s because their customers’ profile data, transaction history, and customer service cases are siloed in different systems. This limits their ability to analyze data from an enterprise perspective. Making matters more complicated is that 58% of companies report that not all of their customer data is accurate and updated in real time.

These issues also prevent companies from delivering timely and relevant communications. Only 26% of captive finance companies and 22% of OEMs and retailers can personalize communications across channels like email and text — something that 73% of customers already expect. This kind of messaging drives incremental sales and margin, according to 87% of executives surveyed. Yet according to our research, 78% of OEMs and retailers report they cannot customize communications based on specific accounts or even customer complaints.

Connected vehicle data lights the road ahead

Connected vehicles that link to devices or services over the internet are an important new source of first-party data. Today, connected vehicle data helps insurers deliver lower rates to safer drivers and even warns drivers about potholes. But future possibilities are even more tantalizing. Using information like location and speed, for example, vehicles could communicate with one another and prevent accidents or calculate emissions and incentivize drivers to reduce their carbon footprint. Unsurprisingly, connected vehicle data emerged as the top choice among companies surveyed for the type of first-party data most likely to improve the customer experience.

“With the advent of connected vehicles, I see several opportunities to remain competitive and to build and enhance existing customer relationships while creating new ones.” – Anonymous respondent, vice president of sales

Respondent ranking of the types of first-party data that would help improve customer service

In which areas of connected vehicle customer experience is your company investing?

Electric vehicle investments and global competitors are pressuring margins.

Today, entry-priced electric vehicles (EVs) are often loss leaders for OEMs, with models priced for profit out of reach for many consumers. At the same time, environmental regulations are leading OEMs to invest heavily in EVs. As North American and European companies push consumers toward environmentally sustainable transportation, their bottom lines could pay a price: 85% agreed that the research and development cost of transitioning to EVs will be a substantial risk to the industry’s profits for the next five years.

Subscriptions and partnerships offer new revenue opportunities

As companies race to develop reliable, safe, and affordable EVs, they are turning to subscriptions and partnerships as revenue generators: 68% of OEMs and 62% of retailers are already investing in Internet of Things (IoT) applications such as Apple CarPlay and smart home devices. Captive finance companies are also exploring new ideas, like giving customers the chance to buy use-based insurance products, allowing them to streamline the purchase of extra lease miles online and bundle financing and maintenance into a single payment for commercial purchasers.

Auto Finance: In the context of connected vehicles and expanding adoption of electric vehicles, what are the new business models and partnerships that your company is investing in?

OEMs and Retailers: In the context of connected vehicles and expanding adoption of electric vehicles, what are the new business models and partnerships that your company is investing in?

In the context of a connected vehicle ecosystem, which external industry partnerships would provide the best customer experience?

Look ahead: Out-of-sector businesses spot a new EV revenue opportunity

As EV adoption grows globally, the pressure is on companies to solve concerns related to vehicle affordability, charging station availability and compatibility, and the harmful environmental impact caused by mining battery minerals. As companies in the industry adapt to new incentives promised by the Inflation Reduction Act, some out-of-sector businesses are already jumping on a new growth opportunity.

Some retail companies are installing EV charging stations at locations throughout the U.S. The goal? Attract Gen Z and millennial customers who are more likely to drive EVs and make purchasing decisions based on a product’s sustainability. Giving customers the opportunity to charge their vehicles as they shop for groceries or buy a cup of coffee, they reason, will drive loyalty — and revenue for years to come.