Predictive Analytics: It’s Where Dealership Data Is Headed

Do data analytics leave you in the theoretical, unsure what actionable steps to take next?

It seems like every industry conference features speakers and attendees who are buzzing about data and analytics. But too often, dealers end up trapped in the theoretical, and walk away unclear about actionable steps they can take to use data for their dealerships.

Or, they attempt to implement analytics solutions, but misuse their data in a way that actually ends up misleading their efforts. It becomes an impediment, not an asset.

As the industry continues to evolve in its use of data, dealers have opportunities to harness the power of robust analytics—as long as they ensure they understand how to get the most out of their efforts, and actually drive profits.

Keep your data clean

Dealers who have tried their hand at using analytics may have ended up frustrated by the outcomes. One of the most common culprits is using inaccurate data.

“Garbage in, garbage out” is a ubiquitous expression among data scientists—the idea that your insights are only as good as the data that you’re using. It’s very common for dealers to misuse (or not use) a CRM tool, or rush through processes that aim to capture relative data points, sacrificing valuable data for speed of task execution.

Data transparency gives dealers relevant raw information to make decisions (think about online wholesale solutions that provide real-time data), but it’s on the dealers to make sure the quality of the data that’s harvested is as clean as possible.

Right price, right buyer

Toward the beginning of the decade, dealer analytics came in the form of vehicle pricing tools, which allowed dealers to see vehicle pricing information within their markets and price the vehicles on their lots relative to their competition.

Pricing analytics are fairly prevalent today, so we must focus on the next wave: buyer analytics. Understanding the right buyer for your specific dealership, plus aligning the right inventory in front of the right buyer, will be critical to keeping customers moving down the purchase funnel.

E-commerce providers such as Amazon have been doing this for years, and we should be applying the same level of insight to dealerships. The innovators who get ahead in doing so will be best positioned to get ahead of the competition and improve their bottom line.

Predicting what’s next

As I reflect on the state of the industry and where we’re headed, it’s clear what the next wave of innovations revolve around: predictive analytics.

What vehicles should you be stocking, based on who your target buyers are? Are there vehicles you’re currently stocking that are not likely to drive demand, either because they don’t match your dealership profile or align to your target customers?

Understanding the direction the market is moving—not where it is or was—will be key to anticipating opportunities that drive additional business to your dealership.

One important reminder: data is not a replacement for experience—the two complement each other. If dealers combine their years of experience with the right actionable data outputs, they can pinpoint the suggestive actions that will guide the decision-making process.

This is the true power of predictive analytics: It provides leading indicators based on market movements, competitive actions, and inventory shifts, allowing dealers to make informed decisions that will lead to a significant business impact.

John Manganaro is the vice president of analytics at DRIVIN, where he is responsible for combining data analytics with the company’s online solution, Marketplace. DRIVIN is focused on helping dealers manage their used-car inventory effectively by leveraging advanced analytics. Previously, Manganaro was a strategy consultant for PwC and a product owner at

John Manganaro

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