Mapping the Miles Ahead: The Automotive Industry’s Data-Driven Future
After a year of sheltering in place due to COVID-19, drivers are eager to rev up their engines and get out on the open road again. They don’t just want to get back to their daily routines. They want to escape on vacation. For many, that means road trips.
But beyond summer road trips, what we’ve all experienced—and continue to experience—with the pandemic has changed us. As it has changed the auto industry as we move forward.
So, how might auto industry leaders best position themselves to capitalize on today’s shifts in consumer behavior—and those to come?
By focusing on the data.
Drivers who might have shelved the purchase of a new car during the worst of the pandemic are hitting virtual (mainly) auto showrooms again. Others who plan to hang on to their vehicles a while longer need to get their vehicles serviced before any long hauls.
Automotive companies need to prepare for these—and other—changes by determining the differentiating capabilities they’ll need to thrive. Particularly now, they’ll want to double down on what makes their organization (and brand) unique.
Taking a Closer Look
A Cox Automotive™ report says, 62% of consumers prefer to engage in the online process to complete the steps of automobile purchase . This shows that while some car shoppers may be comfortable making an in-person visit to the dealership, both carmakers and retailers need to look beyond their physical store presence to provide “alternatives” to care buyers.
For those who already own a vehicle, the more miles on the odometer, the more the vehicle needs maintenance and repairs. Vehicles between four and eight years old are prime for servicing and repairs. Older vehicles typically require more parts and pricier service work, which frequently involves an in-person customer drop-off of the vehicle.
As a result, auto retailers, dealers or servicing networks need to design and structure their operations to ensure they:
understand the customer pulse
make the right first impressions
create customer satisfaction with relevant interactions
proactively remove hassles
A Confluence of Factors
You face a new market challenge at this point in the pandemic, but one that your competitors face as well. Staying ahead of the curve by adopting a data-driven customer-centric strategy to deliver meaningful and relevant customer experiences is key to success.
We’ll share some of transformative ideas automotive leaders may want to consider as they think about operating success post pandemic.
Steering Toward Digital First
In the automobile industry, like any other, actual experiences vary by customer. But the general customer journey remains the same.
Thanks to the digitization of sophisticated marketing campaigns, social media adoption by car shoppers, and increased consumer research practices, the car shopping experience journey begins long before a customer steps foot into a dealership.
So, just how can you structure and design your automotive businesses to ensure you’re adopting a customer-centric strategy throughout this journey?
The automotive industry, combined with the aftermarket sector, has access to vast amounts of data generated from their CRM, ERP, inventory management systems and e-commerce ordering systems.
Integrating all these data sources (like supplier, inventory, sales, and customer data and more) enables retailers to perform advanced analytics across multiple data points, resulting in meaningful and actionable insights on how to improve sales, profitability, and customer satisfaction.
Take, for example, a dealership that wants to distribute 5,000 marketing emails in an effort to sell the last five SUVs on the lot. Suppose the dealership has identified 5,000 potential customers from their CRM database interested in SUVs based on the mere fact that they haven't purchased a vehicle in more than two years.
Now, let’s suppose that, instead of simply finding 5,000 people in that situation, the dealership further targets its marketing appeal to a smaller subset of customers—say those who are looking for a grey SUV with beige leather interior, a navigation system, a sunroof, and a price point under $40,000. (Which, by the way, just happens to describe the last five SUVs on the lot available for sale.)
In the first instance, the dealership is presumably unaware that a half of the 5,000 prospects in its original target group can't afford to spend more than $25,000 on a car, and that 1,500 of them don't even like the color grey. If the campaign execution costs $1 per mailing, that's nearly $4,000 in marketing budget lost before a single vehicle is even sold. And if a dealership ran such a campaign once a month, that's $48,000 over-spent annually.
Simply put, an advanced analytics driven marketing campaign delivers the right message to the right prospects at the right time through the right channel. This data-focused analytics ecosystem also empowers the automotive companies in developing hyper-personalized offers and engaging campaigns that not only improve customer acquisition, but also enhance the CLTV for the existing customers.
Data- and Predictive Analytics-Driven Sales & Marketing Efforts
With vital data available from car manufacturers, vehicle dealerships, retailers, regional marketing networks and other stakeholders, automotive retailers can stitch together an advanced analytics solution. In so doing, they’ll not only deliver a seamless customer experience, but create the knowledge arsenal necessary to target relevant prospective customers and propel them to act.
Marketing analytics solutions empower you to market the right offer, at the right time, to the right customer, through the right channel to attract more potential business with a smaller marketing budget. You can gain glean competitive advantages by knowing vehicle ownership and purchasing trends. You can target specific audiences with predictive intelligence.
Performance analytics solutions allow you to track both the quantity and quality of demand to drive your market analysis and sales strategy more strategically. Solutions like capacity planning, demand planning, distribution optimization, production planning and enterprise performance management help drive operational efficiencies.
Sales analytics help you take command of your inventory. They let you get value from SKU data, make inventory recommendations, and facilitate team collaboration to optimize inventory assortments and pricing. From a customer’s standpoint, sales analytics solutions - like lead scoring and customer segmentation - help drive effective campaigns and improve customer acquisition rate.
Customer Analytics drive customer engagement and increase customer loyalty, CLTV and profitability by improving customer relations and maximizing marketing ROI across multiple media channels.
Driving Customer Retention and Loyalty
The auto service and repair industry has a long history of low confidence, owing to a lack of transparency in the repair process aggravating prior bad customer experiences.
Customer retention begins with a trusted customer relationship. Repeat business is often the byproduct of a mutual sense of trust between the store and the client. By keeping up with your customers after they’ve made a purchase, you’re not only demonstrating that you care about them, but you are also showing them that there are more ways to further simplify and add value to their purchase. There are as many ways of doing this as there are types of customers.
For example, you can provide software and hardware updates, maintenance, warranty extensions, courtesy calls, and other correspondence like event invitations, etc. Just a 5% increase in customer retention can increase company revenue by 25%, often more.
That said, keeping track of each customer's individual vehicle maintenance needs and sending timely reminders can be challenging. But with a know-all data driven system in place, you can segment your data based on where each customer is in their journey and automate communication personalized to them.
Customers with vehicles between 0 and 3 years old can be targeted with:
Explanations of why your service department is the right choice for them and their car
Upgrade and trade-in options
Requests for feedback to suggestions for improvement
Customers with vehicles between 4 and 6 years old can be targeted with:
Offers to keep the car interior looking as good as new
Invitation to trade-in events offering discounted prices
Customers with vehicles between 4 and 6 years old can also be targeted with:
One-of-a-kind offers to rekindle interest in your dealership
Reminders of why upgrading their vehicle after a period of years makes sense (along with incentives, discounts, and special pricing)
Customers of automobile repair shops don't always look out for necessary repairs or the ongoing need for servicing, which is why it's important to promote repeat business. A loyalty program integrated into your point-of-sale system can help. It allows you to:
Curate special offers based on customer loyalty,
Capture email and text permissions to keep customers updated,
Award redeemable bonus points
Develop a customer portal for browsing past transactions and referring family and friends.
Loyalty programs benefit both the business and the customer. Research suggests that the average loyalty program member spends between 12 and 18 percent more each year than other customers.
Driver Experience in the World That’s Taking Shape
In today’s world where the pandemic is improving in some places while worsening in others, customer experience is every bit as important as the quality and value of the underlying good or service.
So much right now is simply unknown. But building a relationship of trust with customers starts early and keeps going. It’s more critical than ever to treat customers well so they'll keep coming back.
Unsurprisingly, adapting to the future will demand change for the automotive industry. It will require both innovation and transformation. And that means reimagining an industry and retooling it for online customer interactions and advanced analytics solutions.
At a moment when small advances can become critical success factors, now is the time to focus on digital first technologies and robust data analytics.
The future depends on it.