A sneek peek into the Adoption of Analytics by the Automotive Industry
There has been much attention and focus on some of the early adopters of analytics in the fast moving consumer goods and other such domains. Proctor & Gamble for consumer goods, Tesco for retail and many others, have well documented success with the use of analytics underpinning key elements of their business strategy. This is a series of blogs which are going to look at the adoption of analytics in the automotive space, some of which are part of SOP and others which are more forward looking.
At the outset I would like to highlight that the application of analytics in this industry does not differ from other manufacturing industries, at least not at the conceptual level. However there can be significant differences in how it is applied in the auto context. Another aspect that I would like to emphasize is that analytics is a tool or an enabler. It works to provide data-based insights on how the company ought to function and should complement the judgement of the persons using it and not supplement it.
Marketing analytics remains one of the earliest areas that companies work on. The implementation of customer analytics is low hanging fruit as most automotive companies have implemented some form of systems of customer relationship management. All systems cloud based or otherwise are tailored to capture detailed records of the transactions carried out at various customer touch points, be it pre-sales or post sales. While quality of data may pose some challenges, being able to determine which customers are most likely to purchase products and services is a key aspect of sales strategy. Mr Mayank Pareek, former CMO of Maruti and widely known as an an analytics-savvy executive in the sector in India has gone on record, and attributed about four percent of sales to analytics. Assessing and evaluating the effectiveness of marketing budgets and the relative performance of various media vehicles is another area though the availability of all the data required for such an analysis is not always available.
After-sales activities of the manufacturers such as vehicle service, repairs and ready availability of spares parts offer plenty of avenues for the application and implementation of analytics. Is my customer likely to come back to my service station after expiry of warranty? Who are those who are most likely to attrite or churn and what can we do to prevent this from happening are business critical questions that most OEMs have to grapple with. At a time when the Indian automotive space is more competitive than ever before and the customer can finally get his pick of the best the world has to offer, product related analyses offer a great opportunity to assess the potential of potential offerings. Companies have to get the product with the features demanded by the market at a price that is palatable for the average price-sensitive Indian buyer, failing which the costs both in terms of loss of customer goodwill and revenue can prove extremely detrimental.
Though the automotive industry may not be pioneers of data driven decision making, immense possibilities do exist. Measurement of business benefits attributable to analytics is a grey area that needs refining but organisations are now convinced that it does provide value and it is being integrated rapidly into mainstream strategy in the automotive sector globally. In India too, the sector has been adopting analytics and implementing it like never before.
Do watch this space and look out for my subsequent blogs which will cover some of these elements in more detail.
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