How Data Mining Creates Resale Opportunities With Existing Customers
Tougher times could be on the horizon for the automotive industry. When margins compress and sales volume slows, many dealers wonder how to acquire enough new customers to stay profitable. But those dealers already have a gold mine of sales opportunities at their fingertips: their existing customers.
Selling to existing customers is six to seven times less expensive than selling to new ones. And it’s easier, too. According to a Marketing Metrics study, you have a 15% chance of selling to a new customer, but a 65% chance of selling to an existing one. Not all customers are ready for resale at the same time, however. You need an easy way to find ready-to-buy customers in your database so your sales team can focus on managing relationships instead of searching for opportunities.
Data mining — using technology to find specific signals that someone’s a good candidate for a sale — is the best way to do it. It gives you the insight you need to make timely, relevant offers to customers you already know, and who already know you. These customer offers prove that you understand and care about their needs, which is a major competitive advantage. I can’t tell you how many offers I’ve received that aren’t relevant, refer to vehicles I no longer own, or even get my name wrong. Data mining lets you avoid these pitfalls and match the right offer to the right customer at the right time — every time. Here’s how to get started.
Use the right data, database, and partners
Data hygiene should be your top priority. Without an accurate view of your customers, you’ll waste time and money marketing irrelevant offers. According to business management consultant TDWI, inaccurate customer data costs U.S. businesses $611 billion a year. Your data should live in a robust CRM with an integrated data mining tool. The right tool will search a number of factors: sold, unsold, equity, service history and activity, website behavior, and many others.
Consider integrating a data appending tool also — it will automatically keep customers’ contact information up to date. Of course, don’t forget to sync your CRM to federal and state do-not-call listings. Integrating your CRM and DMS creates a more complete picture of your customers. Consider integrating with third-party data providers for more insight, from service records to whether a customer still owns a certain vehicle. Also, some CRM providers can help configure your system, or even segment your data for you.
Find resale opportunities
Once you’ve built your foundation, make data mining a team effort. Your service department, internet sales manager, and dealership management should all use your data mining tool regularly. At bigger dealerships, your BDC will likely take the lead. Regardless of who uses the tool, you’re looking for one thing: ready-to-buy customers. The following are the three biggest indicators of a resale opportunity.
1. Equity standing
Customers who’ve been making payments on the same vehicle for several years could be excellent resale targets. If they’re in positive equity, you can get them into a newer vehicle without increasing their payments — which could be too good a deal to pass up. Integrating third-party lender and APR data can help sweeten the deal. If customers’ credit scores have improved, you may be able to get them a lower APR on their next vehicle loan, which could make a new vehicle even more attractive. To measure customers’ equity position, use DMS data to determine their place in their payment cycle. If you build a customer profile of your ideal equity standing, clone that profile in your database and use it to spot customers who could be in-market again soon.
2. Service activity and history
Another strong source of resale opportunities is your service department. Service lets you build an ongoing relationship with customers after the sale. It proves that you can deliver long-term value, and it keeps you top of mind when they’re ready to buy again.
Using DMS data or integrated third-party data, segment service customers based on their last visit and engine type. This will help you send tailored and relevant service offers that bring customers through the door, so you can start building that critical relationship. This works for customers you’ve sold to in the past, but it’s also a great tactic for winning unsold service customers. Even if they didn’t buy a car from you, they had to buy it somewhere — and they’ll have to buy again in the future. If you can win them back for service, you’re more likely to win their sale the next time around.
3. Website activity
Today’s customers spend 60% of the car-buying process online, according to Cox Automotive data. So when they’re considering their next vehicle purchase, one of the first places they go is your website. And if they’re browsing specific listings, you know things are getting serious. Integrate a web behavior tracking tool in your CRM to see when customers in your database visit your website, and what they’re looking at.
That’s a direct trigger for you to send relevant follow-up offers to catch their attention when they’re in the market to buy. For these resale targets, time is of the essence. Cox Automotive reports that 45% of car shoppers are in the market for less than two months before they buy, so if they’re on your site, they could make their decision at any time. CRM alerts notify you when specific customers are browsing your site, so you can follow up right away — and never miss another opportunity. Even if winning new customers becomes more difficult, there are more sales opportunities already in your database than you might think. And if you search for these three signals of ready-to-buy customers, you’ll find them in no time. Happy mining!
Mo Zahabi has applied his strong foundation in technology-based applications to the automotive industry for the past 18 years. Mo is the director of product consulting at VinSolutions, where he educates dealers on VinSolutions’ offerings. He also serves as a liaison between sales and product management to ensure products continue to exceed industry expectations.