Creative Transformation Festival now Live

Explore our new sections and topics

Moving toward a sustainable future: The innovation and transformation of the food industry

Kees Kruythoff

chairman and chief executive officer

Sir Martin Sorrell

founder & executive chairman

Renault on the hunt for digital start-ups to evolve connected car apps

Renault is on the lookout for digital start-ups to partner with on connected car services including mobile apps, according to digital director Patrick Hofstetter.

Speaking to The Drum at Salesforce’s Dreamforce conference in San Francisco, Hofstetter said the car marque is seeking partners from across Europe, including the UK, and has become the official partner of digital-start-up conference Le Web, which takes place in Paris next month, as it looks to kick-start the initiative.

He said the car industry has reached a “tipping point” in the evolution of connected cars, having become a reality after years of being a just a dream.

“We are just seeing the tip of the iceberg in terms of this revolution in where it is yet to go,” he added.

The start-ups will work with Renault on its connected car models R-Link, launched last year, and also its Dacia model, which is its cheaper connected car model.

Hofstetter said the car industry is undergoing a "transformation", accelerated by the explosion in digital, with the result that the entire purchase model has radically changed.

One of the biggest challenges across the car industry currently is the length of the purchase funnel, with people taking between three and six months before making a final purchase, coupled with the fact that maintaining engagement and therefore loyalty with that customer is often neglected, according to Hofstetter.

“When it comes to loyalty, if your engineers are doing a good job then your customer won’t need to come back to you and re-engage with you for quite a while, which doesn’t help – unlike other sectors like telcos, or food or retail, where a company could have the justification to contact and engage with the consumer on a weekly basis,” he said.

The car industry also focuses too heavily on customer acquisition rather than retention and loyalty, with the result that they are seeing huge budget wastage, according to Hofstetter.

“All car makers are overspending on the conquest and underspending on the loyalty, which is a shame because 50 per cent of margins come after the sale. Also because it is very ‘top down’ and not very segmented you end up spending the same money on all consumers regardless of whether they are already a loyal customer or if they are only a prospect.

“That can result in a lot of triple spend because of the whole siloed organisation – too much gets spent on content production or engagement and so on,” he said.

The overspending he cited involves media buying, operations, technology and people, and in total sees car marques spend “way above” one billion euro per year.

“It’s massive so any percentage point on each item that you can reduce will have a major impact on the cash flow,” he said.

Renault is currently undergoing a “massive” data initiative to address this issue, using technologies like Salesforce to rearrange its infrastructure and align its customer data sets. It is eyeing the launch of its own internal demand management platform (DMP) to do so, a decision which it is only a few weeks away from making, according to Hofstetter.

He addressed the issues of transparency around cost of using an agency group trading desk for programmatic media buys and the “lack of control” when it comes to first-party data as a “hot topic” in the media industry and once which is yet to be resolved.

Over the last year it has been closely monitoring site-centric and customer-centric traffic, while its agency partner OMD has been monitoring media-centric data to better unify its data sets.

“We know that by looking at this triangle there is opportunity and a DMP is one way to address that. Should we develop our own internal DMP; what will be focus between our own CRM optimisation or digital buying optimisation – it’s all on the table,” he said.

He also told The Drum that Renault and Nissan will launch a joint RFP this summer, as they look to provide a “global solution” across their entire front-end digital portfolios.