What if you could accurately predict the type of car a customer in a specific location is likely to buy? What if you had the tools to effectively target your marketing towards car buyers who are more likely to visit the service department after their initial car purchase? How are both of these scenarios possible? The advent of Big Data collection has made it possible for dealers and their marketers to create strategies that reach those most interested in a product or service. Data collection is only one part of the equation; the second is using the information to predict who should be targeted and why accurately.
According to SAS, predictive analytics is the use of data, statistics, and machine learning to identify the likelihood of future outcomes using historical data. Savvy dealers and even OEMs have jumped on predictive analysis to increase sales and customer satisfaction. What benefits are they likely enjoying?
The Benefits of Predictive Analytics
Sharper Marketing Campaigns – Marketing can sometimes be a shot in the dark. Dealers may have a hunch about who will be interested in a specific car model, or the age group most interested in new car tech, but they don’t have conclusive evidence to back up creating a campaign behind it. Predictive Analytics takes the guesswork out of this by going on historical data of buyer behavior.
Reducing Inventory Waste – Predictive Analytics is not just beneficial for the marketing crew; the service department also stands a lot to gain. Collecting information on common reasons customers bring their cars in for servicing, monitoring the average time it takes for a car buyer to come back, and even sending reminders about service appointments specific to various car models can help the service department make decisions about which parts to always have on hand.
Increased Employee Satisfaction – Collecting and acting on historical data can also keep good talent from walking away. Gathering data on employee satisfaction, length of tenure, reasons past workers quit, and retirement rates can help dealers understand what they need to do to recruit and retain good talent. It can even help them put the right employee engagement strategies in place to prevent high turnover. The goal here is to collect as much data as possible on employee preferences and their interactions with the dealership.
Better ROI – Investing in a robust predictive analytics software system made for dealers can give them a better understanding of ROI. It is easy to see how much was put into a marketing campaign, and how many customers were brought in due to these predictive analytics practices. Keeping track of marketing and service budgets are a lot easier if dealers can more easily attach the revenue to the expense of using this tactic.
How to Become Comfortable with Data Collection and Analytics
It is understandable that when many hear about “data,” “algorithms,” “analytics,” and “statistics,” a vision of tough mathematical formulas and complicated software likely enters the picture. However, the rewards are too high for dealers to take a pass on this. Here are ways dealers can become more comfortable with data collection and the world of predictive analytics.
Reach Out to Someone Who is Already Using It – Competition is fierce in the automotive world, but there are tons of articles around that highlight someone who was successful with this technology. If they are in another geographic location, take a minute to shoot them an email and ask them about their experience.
Start with Clean Data Collection – Predictive analytics may sound complicated, but it all starts with collecting clean and transparent data. Make sure that all teams are gathering as much information about customers and their purchases. This will set the foundation for robust predictive analytics.
Find the Right Software – There are tons of intuitive and user-friendly predictive analytics systems out there for dealerships. Many even offer training on how to use the system which will address primary data collection and analytic practices. Make sure they have a responsive support team to answer any questions you may have.
Understand the Benefits – Has there been a minor bump in sales? Is the service department reducing waste? Dealers should take a minute to understand these gains and connect them with predictive analytics. Even if the positives are minimal, having the dedication to stick with it can significantly pay off in the end.
The Wrap Up
Predictive analytics is one of the most intelligent ways to better utilize all the data dealerships are collecting. It reduces the amount of time wasted using multiple systems, taking a shot in the dark, and going on a hunch. Targeting a specific customer group or keep a particular part on hand can now be backed up by historical data. The excellent part is since these data points are dynamic and always changing with the customer, dealers can continue to stay on top of all changes.
Sources: Dealer Marketing, Digital Dealer