March 25, 2016 at 2:07 PM
Telematics is a relatively new field, combining telecommunications and vehicular technologies with the insights of information processing. While the term was coined in 1978 in a French government report on the rapid development of computer technology, it now nearly exclusively refers to the technology that tracks vehicles in real time using GPS. Through this technology, telematics companies have access to a large amount of data that, with the help of data analytics, can be extremely useful.
Three big ways companies are combining telematics with data analytics to improve their business processes.
1. Driving innovation and growing market share
The insurance industry is fundamentally based on analytics and probability. As such, it’s always in an insurance company’s best interest to have access to accurate, in-depth data that relates to each client’s lifestyle and risk. This is where telematics has been adding significant value to both insurance companies and customers alike.. Telematics and analytics eliminate much of the guesswork in calculating insurance premiums for any given client and enable insurance companies to reward customers who exhibit good driving behaviour with lower premiums and discounts on partner offerings.
South African financial services group, Discovery, is setting an example of how telematics and analytics can be used together to drive innovation and grow market share in the insurance sector. Through an app called Discovery Insure, they’re able to track their customers’ road behaviour and determine how good a driver they are. The data, which provides information on driver behaviour such as speeding, cornering and braking, is also made available to the user, so that they can better understand their own driving and focus on areas that need improving. Rewards such as lower premiums and benefits such as a rebate of up to 50% on fuel spend every month is incentivising customers to change their driving behaviour to fall in line with Discovery’s standards for good driver behaviour. The ability to track and report on driver behaviour is increasing the value and significance of telematics in an incredibly lucrative industry.
2. Creating new revenue streams
When a telematics company collects the data of its various sources, such as private vehicular tracking, they end up sitting on a highly valuable repository of information and insights that many companies would gladly pay for. While each case needs to work within the realms of their local privacy laws, there are always bound to be buyers for any data that can improve a third party company’s understanding of the market and their customers. Fleetmatics is a Dublin-based fleet management company that has recently looked at selling its fleet data to insurance companies as a way to monetise their data and create a new revenue stream. The company sees their data as invaluable to insurance companies in helping them price risk.
The type of data offered by a telematics company can potentially create many marketing opportunities for both retail and service-based organisations. For example, with the extent of sensors and telematics technology on board new BMWs it would be possible for nearby restaurants to know there’s a child in the car (based on weight) who is likely quite hungry (based on the engine running for three hours straight) and send a push notification to the driver as they are approaching the restaurant. It’s worth noting that BMW has thus far declined selling its telematics data, primarily due to concerns over data privacy. That said, the company is undoubtedly using data analytics internally to better understand their customers and vehicles.
3. Helping companies address internal issues
Volvo Group is a great example of a company that uses a combination of data analytics and telematics to improve its internal processes while driving down costs and improving profitability. Being one of the world’s largest suppliers of trucks and industrial vehicles, they have unique access to reams of data involving vehicles. By analysing data with linear and logistic regression modelling, they are able to visualise broad situations and find data-based solutions. For instance, the company recently introduced new sensors and software for its trucks, but quickly saw a rise in sensor replacements. By combining the telematics data from the sensors with demographic, truck info and location and meteorological data, they were able to determine the various causes of the rise in replacements required. With this knowledge, they could prioritise causes and efficiently improve the fleet’s sensor quality.
Telematics companies are sitting on a data goldmine that, with the power of data analytics, can help them grow as a business and better serve their clientele. Are you a telematics business interested in maximising the value derived from your data? Contact Principa to talk about how data analytics can unlock more value for your business.