This is Part 6 of a 10-part series of Digital Customer Experience in the automotive industry. Use the links below to navigate between parts:

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Always connected, always leaving behind a digital footprint: the progress of digitalization is changing the game in the automotive industry.

An increasing amount of customer data is generated on a daily basis. OEMs are well aware of the resulting potential: the integration and analysis of customer data generated at different touchpoints (such as customer portals, apps or connected cars) allow OEMs to get to know their customers holistically in a way that never existed before. Therefore, OEMs are getting started to build up big data and analytics skills.

Obtaining a holistic customer view paves the way for a revolution in customer management: being able to offer customers a highly personalized, differentiated and optimized customer experience. The challenges of an inconsistent experience at different touchpoints can be overcome, and customers can be targeted with offers tailored to their needs. Ideally, OEMs will benefit from increased customer loyalty while reducing customer service costs and the uncovering of significant business potential for innovative data-driven products and services. So, why hesitate?

Keep it safe when it comes to legalities

With their big data and analytics initiatives, OEMs are discovering new territory – also from a legal point of view. A large portion of the data includes personally identifiable information (PII) raising complex questions tied to data privacy and data protection. Frequently, ambiguous legal conditions and a lack of guidance and experience regarding the legal framework conditions for big data and analytics initiatives are regarded as a showstopper: Keep it safe when it comes to legalities.

Storing, integrating, analyzing and using customer data is only possible when compliance with the law is confirmed by the legal department. This is also endorsed by a Capgemini study which reveals that the success of big data and analytics initiatives ultimately depends on legal permissions. Procedures for data quality, security and privacy (opt-in, opt-out, anonymization, authentication) need to be developed. In a German Bitkom study, 89% of the surveyed companies indicated that a significant challenge in the implementation of big data and analytics initiative lies in (often unanswered) legal questions.


Taking a look at Germany and the EU: Data Privacy Principles

The so-called German Bundesdatenschutzgesetz (BDSG) is a federal data protection act that governs the exposure of personal data. In simple terms, personal data may only be collected, stored, analyzed and used if this is explicitly permitted by the law (e.g. for the fulfilment of contractual obligations) or if an active consent (opt-in) has been given by the respective person. Traditionally, OEMs considered themselves legally on the safe side when it came to the usage of customer data for advertising purposes after obtaining an opt-in.

However, after the initialization of big data and analytics projects, it becomes clear that the legal questions are far more complex than the law which was drafted in the pre-digital era. Germany is just one example for a country in which the current legal framework does not fully cover the vast variety of real-life, data-related situations. The speed of digitalization exceeds the speed in which the law can effectively be reviewed. However, the General Data Protection Regulation (GDPR) which regulates, strengthens and unifies data protection across the EU will come into force by May 2018 – and (hopefully) provide clarification with a single set of rules that will apply to all EU members.

Why are there special challenges in the automotive industry?

Imagine the following situation: a customer of a German OEM withdraws his/her opt-in online via his/her portal account and assumes that his/her data are generally blocked from advertising campaigns. However, after a few days, the customer receives an unwanted promotional email. Thereby it is not transparent to the disgruntled customer that blocking data for all channels requires the withdrawal of another opt-in – on the dealer’s site.

This is due to the fact that frequently, OEMs and dealers are separate legal entities. The customer data and opt-ins collected by those parties are being stored in fragmented systems, resulting in incomplete information on both sides. However, as the example above shows, customers tend to perceive an OEM and its dealers as a unit, expecting a consistent customer experience. Whenever a big data and analytics initiative includes the integration of customer data from separate legal entities to obtain a holistic customer view, things are getting more complicated.

How to approach big data and analytics initiatives

The bad news first: frequently, there are no ad-hoc solutions and suitable precedents to the complex legal questions that big data and analytics initiatives raise in the automotive industry. That is precisely why it is essential to raise awareness for legal challenges at the very beginning of big data and analytics projects – the sooner the better. The legal department is an important stakeholder of the project and needs to be included already in its early stages in order to work out a legally compliant approach to big data and analytics initiatives. Our project experience reveals that initiatives building on the integration of OEM and dealer data often require an adaptation of legal documents (such as dealer contracts, opt-ins, contracts for data processing) – a crucial step that cannot occur last minute overnight.

Since customer data is the required resource for any big data and analytics project, customers also need to be informed and involved. Our Cars Online Study 2015 shows that fortunately, most automotive customers are prepared to allow access to their data, given they know for what purpose it is collected.

The general objective should always be to maximize transparency for the customer when collecting, storing and working with his or her data. Besides communicating the added value of these activities, high standards of data security and privacy protection need to be implemented and proclaimed to win (and keep) the customers’ confidence. The legal department is responsible for offering a solution that balances out two seemingly contradictory expectations of customers: protection of their personal data on the one hand and a highly personalized, consistent customer experience throughout all channels on the other hand – which requires a 360° customer view.

The prerequisite for a successful implementation of big data and analytics initiatives is that business, IT and legal departments work together closely. This, for instance, can be achieved by a set of pre-defined KPIs that measure all three parties by the success of the project. In this manner, the legal department (oftentimes perceived as a showstopper) can become an active participant shaping the digitalization in the automotive industry.