No dealership leader could have anticipated the unprecedented events seen in 2020 – much less prepare for the challenges they would face as a result. However, the automotive retail industry is proving to be resilient, and the dealerships faring the best are the ones who embraced change and industry trends and adapted their sales and marketing processes to meet new consumer demands and deliver the experience buyers want.
While what the 2021 auto industry will hold is yet to be determined, by continuing to adapt to industry and dealership trends, evolve to changing customer demands and focus on driving profitability, dealers are already beginning to take control of their future success.
In this blog post, we share three ways dealerships of the future are already thinking ahead and preparing for success in 2021 by:
Cultivating Homegrown Inventory
Faced with increasingly fierce competition and little room to raise prices, dealers everywhere are directing their efforts toward maximizing profitability at every turn. As margins tighten and new vehicle inventory dwindles to historic lows, some dealers are finding new opportunities to drive profitability throughout the entire dealership by focusing on a single strategy: Cultivating their homegrown inventory.
This strategy, and future trend of the automotive industry, seeks to maximize the profitability of a single vehicle. Homegrown vehicles originate as new sales, return for regular service and maintenance, are eventually traded-in and reconditioned and are later sold as a pre-owned vehicle. This process not only supplies a steady stream of high-quality pre-owned vehicle inventory, it also offers dealers numerous opportunities to drive profitability throughout the vehicle’s lifecycle, starting with that first new vehicle sale.
This strategy is ultimately dependent on delivering an exceptional customer experience to engage prospective customers and to keep them coming back after that initial sale. To support your dealership’s homegrown strategy, take a data-driven approach at personalizing the customer experience – starting from their very first marketing touchpoint.
By utilizing behavior prediction technology to craft personalized messages that can be delivered to customers at the right time and in the right format, dealers are empowered to set the tone for an exceptional customer experience and inspire buyers to take action before they enter the buying journey. This benefits a dealer’s bottom-line in numerous ways, starting with converting prospects more efficiently at a higher ROI.
Applying this approach to maintaining communication with customers after that initial sale also enables dealers to build life-long loyalty. This both supports a homegrown pre-owned inventory strategy and drives future purchases, with those who service their vehicle at the dealership being more than 2.5x more likely to purchase their subsequent vehicle from that same retailer vs. those who did not.
Leave Third-Party Lead Providers
With high-quality data and intelligent marketing technology available at their fingertips, many dealers are re-evaluating their relationships with large third-party lead providers – and with good reason. Beyond the obvious disadvantage of these leads being distributed to multiple dealerships at the same time, by the time a prospect is even defined as a lead, they’re already deep into the buying cycle – and likely already being contacted by your competitor.
Of course, competition is great for motivation, but not when it comes to turning a profit. To maximize ROI, it’s critical dealers engage prospects before the competition – which means reaching prospects before they enter the buying journey. Rather than compete for leads and sales and deal with shrinking margins, dealerships have the opportunity to proactively create their own leads through comprehensive data mining.
By utilizing behavior-predicting technology, dealers can eliminate the time-consuming task of weeding through leads by automatically analyzing data from their CRM, DMS and sales platform to identify prospects who will likely be ready to purchase soon. From here, dealers can automatically engage prospective buyers before they’ve had a chance to start shopping around. This intelligent, low-touch marketing improves the efficiency of a dealership’s prospecting efforts while improving ROI.
Increase Focus on Conquesting
In a surprising turn of events, customers are returning to the market much faster than previously anticipated. While industry experts anticipated households would delay new purchases as the uncertainty surrounding COVID-19 continued, buyers were actually looking for new vehicles quicker than they were before the pandemic.
According to data from IHS Markit, in April 2020, average customer re-entry time dipped to 42 months compared to an average 44-45 months reported from January 2018 through February 2019.
Additional research from IHS Markit finds today’s buyers are also much more likely to purchase instead of lease, influenced by aggressive OEM incentives. This offers a major opportunity for dealers who can take a data-driven approach to their conquesting efforts by using behavior prediction technology.
These tools allow dealers to effectively analyze their entire local market to automatically identify their highest quality conquest opportunities. These tools also empower dealers to make a great first impression by creating targeted messaging that taps into each prospective buyer’s unique wants and needs, nurturing them through the buying journey and winning them over from the competition. With this type of data-driven approach, dealers who leverage Market EyeQ’s Market Conquest gain up to 15 incremental new conquest sales a month.
While whatever our “new normal” will look like in 2021 is still anyone’s guess, dealers can start planning for their future success now by taking a proactive approach to their sales and marketing efforts.
If you’re interested in learning more about how predictive car dealership analytics tools can empower your dealership to improve sales, marketing and customer relationships in 2021 and beyond, contact us for a free demo.