Dealers are searching for new ways to source inventory, sell cars and meet customer needs. Data can be the key to meeting and capitalizing on these issues.
Traditionally, dealers invested millions of their marketing budgets on lead-generation tools to help drive showroom traffic. This method of targeting from their own CRM or DMS can often lead to overlooked opportunities for conquesting beyond their brand or prospecting in-market customers to a new pool of potential customers.
To mitigate the lingering effects of ongoing supply-chain issues and a lean inventory environment requires new and innovative strategies.
The ability to accurately target consumers with the highest statistical probability of transacting, such as off-lease consumers, while also feeding the used-car department with late-model, low-mileage used cars is essential.
Many dealers continue to relax their marketing spending and plans because of inventory supply issues. As marketing budgets have decreased dealers’ investments are vitally important to maintain their presence and branding. Effective brand advertising to the right audience can increase a dealer’s share of voice in the marketplace, generate more interest in the brand and ultimately help find the best customers to match with vehicles as soon as inventory becomes available.
According to the National Automobile Dealers Assn., U.S. retail gross profit per new vehicle averaged about $3,928 for 2021, whereas used vehicles averaged $3,651 per unit. To continue selling vehicles and realizing these profit levels, sourcing the right inventory is a central strategy for success.
While dealing with market pressures and challenges, dealers must find ways to evolve their marketing strategies, such as working with partners that leverage new approaches to using anonymized differentiated data assets and proprietary propensity scores to identify and target “perfect-time” shoppers – individuals who are credit-qualified and most likely to buy a vehicle now.
Off-lease customers are valuable targets for dealers to source inventory for their used-car departments and also sell newer models. Recently, some dealers have tested a new campaign approach to capitalize on off-lease audiences through coordinated communication that blends mail and digital targeting served as early as 12 months before lease-end. Results from this type of campaign suggest 50% of consumers who lease vehicles will lease again with the same brand/dealer. That leaves the other 50% off-lease customer pool as the perfect target audience for conquesting efforts.
Through this approach, dealers in coordination with partners have created new audience models to identify high-probability customers with the highest statistical probability of upgrading to new cars. Dealers can further enhance their “perfect-time” strategies by prioritizing consumers with a higher likelihood of loyalty and greater overall lifetime value to their dealership. This can ensure dealers have the most refined list of qualified customers to target, providing a new strategy to conquest different brands when vehicles are coming off-lease.
Equally important to the right audience is the right messaging as consumers look to brands for reliability during uncertain times and reward those who meet their needs. For these reasons, dealers have shifted messaging to emphasize customer service, leveraging consumers’ desire for support from trusted brands.
To achieve this, dealers and their partners must tap into advanced expertise in expanded data assets to improve personalization and engagement in the right channels with their preferred audiences. They also match offline data to target consumers online through prominent touchpoints such as over-the-top, social and display, allowing for a more holistic marketing approach and reinforcing consumer loyalty.
With these new strategies in place, dealers and their partners will be well-positioned to thrive in today’s challenging environment, while being well-prepared for the return of more normal inventories in the future.
Angelica Jeffreys (pictured, above left) is a visionary sales leader-automotive financial services executive at Equifax. Scott Fletcher (pictured, left) is co-founder/partner of Team Velocity, which offers technology that digitizes the car-buying and vehicle-ownership process.