On the surface, this year’s summer sales season is sure to look and feel a lot different from last year. While the threat of pandemic-induced closures and dealership shutdowns shouldn’t be an issue this year, auto dealers will still face significant challenges.
Americans’ appetite for the purchase of new cars and trucks this summer has been fueled by federal stimulus money, healthier family balance sheets and a desire to replace vehicles as people make their way back into offices.
However, the short supply of new vehicles, which also has significantly impacted the incentive dollars dealers typically receive from OEMs, means dealers will need to more closely scrutinize their customers’ financial capacity to make a purchase to maximize profit potential on each transaction this summer.
Every Customer Adds to the Bottom Line
Identifying financial capacity is crucial for automotive transactions. During the first quarter of 2021, the average financial incentive on new vehicles fell 20% from a year earlier, according to research firm J.D. Power.
With fewer incentives and more competition for the same shoppers, dealers and OEMs must have a clear picture of each customer’s financial capacity to capture potential sales without leveraging traditional incentives to obtain final approval.
In response, automotive brands and agency partners are combining traditional vehicle promotion data along with audience targeting segmentation data and insights. This data will help brands and agency partners better target consumers who are not just in-market for a vehicle, but also those who have the financial capacity to make a vehicle purchase this summer.
This advanced set of data and insights provides the ability to target in-market make/model intenders along with their estimated financial capacity. OEM brands and agency partners can then run more effective retention, acquisition and conquest campaigns across digital channels.
Extra Layer of Audience Segmentation Data for Stronger Campaign Targeting
In the past, OEM brands and their agency partners have leveraged data sets based on unverifiable survey or panel data. This is where audience segmentation comes in. Today, sophisticated and differentiated data is uniquely built using robust data sources, including anonymized, direct-measured data, estimated income and asset data, as well as aggregated credit information. This data is critical to predict a potential shopper’s financial capacity.
Why is this important? Not all high incomes are the same. Every household leverages debt differently. Differentiated data assets such as audience segmentation can help OEMs gain fuller visibility into a person’s or household’s financial standing by taking credit-income spending behaviors into account. With this additional information, OEMs can target people differently based on their unique financial situation – all while maintaining user privacy.
This level of data enables OEMs and advertisers to differentiate and reach online consumers who are more likely to have the financial capacity to purchase their products and services. Anonymized household economic data combined with discretionary spending, credit, demographics, buying behaviors, and insights into make and model preferences, deliver better-matched auto audiences that are more receptive to summer campaigns and offers.
No doubt, the summertime buying season will feel much different this year. As the country relaxes pandemic-fueled restrictions, the automotive industry now finds itself coping with inventory challenges to meet increased buyer demand.
However, with the right data and insights, automotive brands and agency partners can ensure they’re getting the most out of their creative campaign investments by identifying the right customers who have the spending power to maximize each and every dealership or website visit during the summer.
Joey Watson (pictured above, left) is vice president of the auto direct and marketing services team at Equifax.