"Mining" Your Own Business
By Jim Roche
Thanks to Internet-generated databases and readily available software, dealers now have digital tools to sift through information about their customers and use this information to enhance the profitability of their dealerships across all departments.
So what does this technology mean to you, an auto dealer who just wants to increase business without having to learn everything about the Internet? Put simply, database mining or the use of analytical one-to-one marketing tools can help with market segmentation, customer profiling and development and evaluation of dealer promotions, among other vital fixed operations and sales activities.
The relationship marketing group Pepper & Rogers in Stamford, Conn., offers the example of a car rental agency that uses its various databases to better serve its customers and foster repeat business. If the agency's weather database points to snow on a given day for a certain location, it will switch the customer who has rented a sedan to a vehicle better suited to the forecast, for example, a four-wheel drive SUV.
Similarly, auto dealerships can use their own transaction data to "mine" opportunities for repeat business and more effectively allocate marketing resources.
Creating Opportunities for Repeat Business
Rest assured, blitzing former customers with $500 discount coupons toward the purchase of a new car is not what I mean by suggesting that you pan for gold within your customer base. What I'm suggesting is that you build a customer database or warehouse of prospects and then cleanly target the best candidates for a particular promotion or communication. But in order to do so, you must turn the data you have into information you can use for high-response, cost-effective marketing programs.
Turning Data into Valuable Information: The Importance of a Purified Database
Traditional customer relationship management (CRM) applications gather data from customer interactions (such as service calls, complaints made to a call center, sales transaction, visits to the dealership), with no integrated follow up. The new analytical forms of CRM-which comprise $414 million of the $8.45 billion CRM market-offer analysis and an ability to take action in a single suite. The result is a system that helps a business better understand, target, and interact with its customers.
Unfortunately, maintaining complete information on customer contacts and demographic data is often difficult to do at the dealership level. This is a damaging oversight, especially when you consider that 30 percent of a dealership's customers change addresses every year. In addition, dealers who want to use CRM methods to boost sales must also keep track of prospect information from multiple sources: the Internet, telephone queries, showroom traffic, lead generation services, and the like. Delegating this activity to the sales force is generally not feasible; first, because salespeople concentrate on selling rather than following-up and second, because there is a high turnover among sales staff. Any CRM performed by a salesperson who leaves a dealership is lost during the transition. For this reason, many dealers prefer to have database management, purification and update done by a centralized service specializing in that function.
But as already mentioned, a data warehouse alone is not enough-it must be "mined" and analyzed using business intelligence tools which reveal patterns of consumer behavior, make predictions of customer activities, and deliver analyses of the market and competition.
Targeted, One-to-One Marketing
Online and offline marketing that brings consumers into the dealership for sales, service and after-market products can take many forms: service notifications or reminders, communications about special order parts, promotions and incentives, updates on retailer information, surveys, and prospect and customer follow-up. Your customized outbound communications can be distributed by traditional methods or by e-mail, with automatic follow-up by teleservice or electronic mail. Not only does this type of "pull" marketing give you, the dealer, control of the process, it also allows you to tally your responses (visits to the dealership) and calculate the return on investment.
Mining for Those Gold Nuggets
Here are some ways to turn your customer and prospect data into a gold mine of opportunities:
Send out targeted monthly mailings or e-mails to customers who will most likely need a new battery, timing belt, or set of tires, based on vehicle mileage or repair and sales data.
Look into your database and find those customers who are 60 days away from warranty expiration; target them for a last-chance extended warranty contract.
Introduce a new model to your customers who drive a two- to three-year old model by identifying those who own them within the dealer database. What better prospect than one who already owns that particular model?
Focus on candidates for used car repurchase by identifying those in your database who own the most popular and saleable used vehicle. Then send a repurchase letter offering free appraisal and top dollar for their used car. Doing this creates a selling opportunity of a new unit and brings a desirable car back into inventory.
Introduce OEM rebate programs (0.9% financing, etc.) to those customers who might respond to trading up to a new car due to improved financing.
Market slow-moving parts with special promotions. For example, offer bedliners at a reduced cost to customers who have recently purchased trucks.
Regardless of approach, communication is the key. To be effective, once the communication channel is established, the relationship must be built via appropriate, targeted messages.
Jim Roche is president of carabunga.com, a wholly owned subsidiary of Newgen Results Corporation. jroche@dealeronline.com
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