Auto sales changed when we entered the digital age. Instead of just competing with local dealerships, dealers today must compete with hundreds of sellers, all accessible to customers with the click of a mouse.
With the Internet offering so much choice and convenience, getting customers to leave their homes and come into your showroom is more challenging than ever. Worse, online competition is causing already declining retention to sink even lower.
In working with more than 1,500 dealers over the past decade, I find many consider their customer database as a source of almost guaranteed repeat sales. In the past, that may have been true, but that's not so any more.
In today's highly competitive market, a customer database is only a starting point. Knowing how to leverage its potential as a marketing tool has a huge impact on the repeat sales you make, or lose.
Too often dealers assume their customer database provides better market intelligence than it actually does — or can. On its own, your database can likely tell you how many customers are repeat sales and when they might come in to your service department.
While that's good information, it's not nearly enough to help you reach the customers you need to reach when they're ready to buy.
I meet many dealers who market their “offer of the month” to their entire database. Unfortunately, customers who are not in the market — even those who have bought from you before — see this as junk mail with no value. And when your mailers end up in the trash, so do your marketing dollars.
Rather than making one offer to all customers, dealers should focus on touching customers who are in the market with offers that drive them to the dealership.
Customers not currently in the market should get relevant information that establishes you as their authoritative source for all things automotive, and makes it more convenient to obtain information from you than anyone else.
Key to making this work is being able to tell who is in the market and who is not, but may be soon.
Fortunately, the same Internet that has increased competition for your customers also provides a wealth of publicly available data about them — including known behaviors, household buying patterns, demographic information, and much more. That can provide a more detailed picture of your customers than ever before.
Even better, applying these analytics to your database can provide the critical information you need to increase retention: why customers defect, how many customers buy their next car from a competitor, and who is most likely to rob you of sales and why.
Armed with this level of information, necessary adjustments in marketing focus and inventory become clear quickly. After all, knowledge is power.
In the digital age, increasing retention requires more than sending a blanket offer to your customer database or putting your inventory online.
To remain competitive, demographic and behavioral analysis of your customer database is essential — and can help get the results you want: greater loyalty, fewer wasted marketing dollars and a measurable increase in repeat sales.
Jonathan Lucenay is founder and CEO of Summit Resources, LLC, an Atlanta-based direct marketing company. He can be contacted at 1-888-786-6489.
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