Current Industry Challenges Drive Need for New Strategies and Solutions for Automotive Dealers
TO MITIGATE LINGERING EFFECTS OF THE PANDEMIC, auto dealers today are leveraging new strategies and technology resources from Equifax and partners like Team Velocity to find, win and retain customers and acquire inventory.
“Dealers are looking to drive demand, while keeping gross margins and turn rates high to increase market share,” said Angelica Jeffreys, Vice President of Enterprise Alliance Partners for Automotive at Equifax United States Information Solutions (USIS).
Traditionally, dealers have invested a large portion of their marketing efforts on retaining customers by spending millions on lead generation tools to help drive showroom traffic. This method of targeting from their own customer relationship management (CRM) or dealer management system (DMS) can often lead to overlooked opportunities to expand beyond their brand or prospective in-market customers to a new pool of consumers that might be interested in their offers.
Dealers’ current dilemma
As marketing budgets have decreased since the onset of the pandemic, the investments they do make are vitally important to maintain the dealer's presence and branding. Even so, they are realizing significant per-vehicle profits on every sale. According to the National Automobile Dealers Association (NADA), the U.S. retail gross profit per new vehicle was averaging around $3,928 for 2021, whereas used vehicles were averaging at a very close $3,651 per unit.
“To continue selling vehicles at these profit levels, sourcing the right inventory is a central strategy for success.,” added Jeffreys. “Leveraging advanced target marketing technology combined with the right partners can ensure higher profits today.”
A new approach to targeting
While dealing with market pressures and challenges, dealers must find ways to evolve their marketing strategies. Working with Team Velocity has helped uncover new approaches to using anonymized differentiated data assets and proprietary propensity scores to identify and target "perfect-time" shoppers – individuals who are credit-qualified and most likely to buy a vehicle now.
“Off-lease customers are a valuable target for dealers to source inventory for their used car department and at the same time sell newer models,” said Scott Fletcher, co-founder/partner of Team Velocity. Recently, dealers have been testing a new campaign approach to capitalize on off-lease audiences through coordinated communication, blending mail and digital targeting served as early as twelve months before lease-end. “Results from this type of campaign suggest that 50% of consumers who lease vehicles, will re-lease with the same brand/dealer leaving the other 50% off-lease customer pool as the perfect target audience for conquesting efforts,” added Fletcher.
Through this approach, dealers have created new audience models to identify high probability customers with the highest statistical probability of upgrading to a new car. Dealers can further enhance their “perfect-time” strategy by prioritizing consumers with a higher likelihood for loyalty and greater overall lifetime value to their dealership.
Equally important to the right audience is the right messaging as consumers look to brands for reliability during uncertain times and reward those who meet their needs. To achieve this, dealers and their partners are tapping into advanced expertise in expanded data assets from Equifax and Team Velocity to improve personalization and engagement in the right channels with their preferred audience. They are also matching offline data to target consumers online through prominent touchpoints like over-the-top (OTT), social and display, allowing for a more holistic marketing approach and reinforcing consumer loyalty.
“With these new strategies in place, dealers will be well positioned to thrive in today’s challenging environment, while being well prepared for the return of more normal inventories in the future,” said Jeffreys.