Mercedes and BMW introduce subscriptions. But are they taking it too lightly?

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Subscription Case #5

By Niels Vestergaard

This summer, BMW launched a subscription on heated seats which made the installed seat heating in new BMW models accessible only through a paid subscription. This would cost $12 dollars a month. I think it’s safe to say that BMW’s customers were not happy about this proposal, even though BMW was kind enough to offer a free trial period of one month for a feature that was already installed in the car at the time of purchase.

But BMW doesn’t stand alone with the idea of starting a subscription to support its revenue. Japanese Subaru has offered a ‘remote start’ feature on a subscription that lets customers start their engine from a distance, through an app.

The newest addition to these new subscription models came last week, when Mercedes launched their new top model EQS and launched a subscription for their loyal customers. A subscription on acceleration.

Mercedes explains that in order to get full access to the engine power of the EQS, you will have to buy a subscription at the yearly price of $1200 dollars. And if you don’t renew your subscription, well, then your acceleration is limited once more.

The big actors have seen the light in the subscription model. But did they misunderstand the point?¨

It’s great joy for a subscription geek like myself to see that two of the world’s biggest and most recognizable brands are embracing the subscription model, (Mercedes Benz is currently ranked as number #23 at the Forbes Powerful Brands List and BMW comes in at number #27 – just behind the subscription king, Netflix. However, I had hoped for a little more enthusiasm than what they’ve demonstrated until now. Anyone who follows Subscrybe knows that investors today love them some recurring revenue. And it seems that the German carmakers have been thinking “Well, let’s find some recurring revenue” – and then they called it a Friday.

I can’t help but imagine the amazing subscription products that BMW and Mercedes could father, if they truly wanted the best for their customers. I will be contemplating this in this edition of Subscription Case.

BMW and Mercedes already have extremely loyal customers – why don’t they utilize this advantage?

I don’t know if you know anyone who drive a BMW or a Mercedes. I do. My father-in-law drives a BMW 320 and has done so since he was 22. He’s 57 today and the Sedan has been exchanged for a Touring, for practical reasons. He has owned 4 BMW’s, which have defined his work life, and which have served him loyally for many years. He wouldn’t think to change for another brand. Ever.

And then we have the other camp. Perhaps even more religious than BMW owners are the fans of the car with the three-pointed star at the front. My cousin has a Mercedes C-class and he takes care of it as if it was his first-born. For him, it is also a car that he has spent many an hour inside as a salesman on the road from early morning and long into the night. An affiliation that very few subscription companies are able to create.

As a subscription professional, you look at this trend and think: Holy cow, there is a lot of potential for putting all these customers on a subscription – they love the product! But it seems that with subscriptions on seat heating an acceleration Mercedes and BMW has done the exact opposite. Perhaps, with an extended brainstorm, they could have created something that customers would gladly welcome.

When you’re driving German quality, the car is not just a vehicle. It’s a lifestyle that you could easily put on a subscription.

When you buy a BMW or a Mercedes, you’re buying a luxury product. You’ve also purchased a car that can go from 0-60 impressively fast. This means that features like seat heating and fast acceleration is expected to be part of the package – if not in every model, then at least on top models like the EQS.

So instead of taking advantage of loyal customers, why not upsell to them? With the examples from my father-in-law and my cousin, we are dealing with a customer group who spend large parts of their working day in their cars. Isn’t it our responsibility to make the drive as comfortable as possible?

This is where the brainstorm starts: What do you need when you own a car? Here, we can take some inspiration from our innovation case with the Danish car dealership Ejner Hessel. With Hessel Plus, subscribers were offered free wheel changes twice a year to avoid that customers would go elsewhere for service on their cars. This is something that BMW and Mercedes would benefit greatly from, if customers came back to them for wheel changes, opening the opportunity for locking customers on BMW and Mercedes rims all year, both for summer and winter.

If we look into the more technical aspects, the future offers new possibilities and improvements through software. In the future, more and more car service will be handled from afar. And this could easily become part of the subscription.

A virtual ‘Health Score’ implemented in an app could give car owners peace-of-mind when they can see that their car is doing great and sleeping soundly in the garage. And if not, a software update can fix any pressing issues. I definitely think that owners would subscribe to something like that!

The content argument returns. How do we create the world’s best driving experience?

As a content creator, I might be a little biased, but I can think of a lot of great ideas that could be integrated in a car subscription.

Perhaps a pop-up from the radio once a week with the latest news about products and service from Mercedes or BMW? Or articles on the app about performance and the correct maintenance. Or is it possible that you could gain access to an exclusive community of passionate car enthusiasts who share tips, tricks, and issues with each other through the app?

And think of the onboarding process that you could do in an EQS? If you were welcomed with a video and speak as you drive away from the Mercedes dealership, introducing you to features, lights and button functions? Instead of working your way through an 800-page manual that is left in the glove compartment, never to be opened again.

To me, the S-class is the symbol of a luxury car. And an introduction like the above would make me feel a little cooler than everyone else. And just think of the bundles you could introduce! Netflix subscriptions for the kids in the backseat, Spotify subscriptions for long drives and subscriptions on carwash and rust-treatments?

Dear Mercedes and BMW, please try a little harder

I truly believe that the German manufacturers have underestimated the importance of entering the subscription movement with all of us. Because a subscription for fans have a tendency to blow up right away. It happened with the subscription to watch the national team at Parken. It happened with fans of Goodiebox, who would never unsubscribe. And it happened with HBO Max, when new episodes of Game of Thrones were realeased.

I think my point is – Mercedes and BMW… If you’d like some input, you know where to find us!