The fact that satellite radio comes installed in many GM cars is not anything new. GM was among the first car manufacturers to include satellite radio installations and promotional subscriptions in cars, and there are perhaps more GM cars with satellite radios in them than any other brand. The relationship has been good for both companies.
Typically GM cars equipped with satellite radio come with a three month trial subscription that allows consumers to get a taste of all of the content Sirius XM has to offer. GM pays for a portion of the three month trial, and receives a revenue share if the subscriber elects to become self-paying at the end of the trial.
It now appears that GM is sweetening the deal for consumers and using satellite radio as a hook to get people to buy the 2011 GMC Sierra as the company gets to the business of rolling out the newer model. Right now consumers who buy a 2011 GMC Sierra get a full year of Sirius XM. Better yet, they get the XM Premier package, which allows these buyers to get the likes of Howard Stern and the NFL as well. If a vehicle is equipped with their DVD based navigation system, one year of XM NavTraffic is included as well.
We are finally seeing Sirius XM and automakers take these deals to the next level, and hopefully we will see more of this in the future. Longer promotional periods have happened in the past, but the addition of the Premier package and Navtraffic benefits are something new. From a marketing standpoint this makes perfect sense. Why not let the consumer experience everything so that you have a better chance of getting them to buy it all when the promotion expires?
For decades cable and satellite television have implemented such a strategy. They give you nearly every channel possible for a period of time in hopes that you will find that premium content compelling enough to keep when the promotion expires. Certainly some will keep the premium, while others will simply keep the basic plan, but the key is getting as many to the premium as possible. One of the best ways to get people to a premium package is to let them fall in love with some content that is only available on the premium tier. When it comes time to become a self paying subscriber, they will want to keep the services they are used to.
Another interesting thing about this deal is that it is being heavily marketed to consumers with advertising spots on television networks across the nation. The tag line is that you will get one year of Sirius XM including every NFL game of every team. Great concept here. Promote top notch content like the NFL, and when the promotion expires next year the NFL will be just getting into gear again, making it a harder decision for the consumer to downgrade.
It is not clear whether it is GMC or Sirius XM that is "paying" for this program, but from my perspective it looks like GMC is paying more to Sirius XM to sweeten the deal on a 2011 model. Hopefully we will see more campaigns like this with additional GM models as well as other manufacturers.
Position - Long Sirius XM, No Position GM