Forecasted flattening markets, buyer preferences, the rise of AI, and more are hitting the automotive industry hard, and it’s important for dealers to alter their perspective about the types of customers to focus their efforts on and how best to engage with those customers. There are three clear themes that will help dealers keep their heads above water and be successful in 2019: the power of data-driven insights; the need for adaptability in the dealership; and the evolution to understanding and addressing their entire buyer market versus the traditional model of segmenting buyers.

Why Data is Powerful

Data from both NADA and IHS Markit forecast flattening, and even declining, sales trends in North America for the coming years. With that, dealers can no longer rely on their tried-and-true approaches to achieve sales growth this year. It is critical for dealers to get into the business of predicting buyer behavior patterns with technology, and proactively meeting customers’ needs before the competition does.

With the use of predictive solutions, which use a multitude of data inputs to predict consumer behavior by analyzing prior purchase patterns, household buying behaviors, registration records, social media activity, etc., dealers can target customers who are about to, or should be thinking about, replacing their vehicle, but might need compelling incentives to do so. Traditionally, dealers have simply reacted to internet leads or customers who have called or just walked into the store. Without any warning or background information about the prospective customer, dealers are put on the defensive and might be coerced into cutting pricing or offering free services to get the customer to buy then and there. Chances are, the potential customer is shopping multiple brands and stores.

Predictive analytics helps get in front of that – identifying and understanding dealer prospects before they even reach out, giving dealers the chance to proactively market to the customer in a highly personalized manner. With this approach, dealers can sell more efficiently because they have the data and knowledge about those customers to allow their sales teams to develop personalized talking points. Dealers can be informed about their customers before the first point of interaction, helping improve the overall customer experience and ultimately building customer loyalty. Dealers must prioritize continued technological innovations to keep on top of their growth and ahead of their competition.

Not only will data-driven customer insights allow dealers to understand their existing customer base, but with the right tools, similar behavior prediction algorithms can be applied to conquest customers as well – which is a game changer from the current “spray and pray” methodology used in present day conquest marketing tactics.

Understanding and Addressing Your Entire Market

With a better understanding of their customer base, dealers can start analyzing buying patterns of an entire demographic area. Historically, dealers segment customers into three categories: retention, service-not-sold and conquest. With the right technology and partners, dealers can look at their full probable buyer market as one holistic group. Why would a dealership limit its focus to 10,000 loyalty customers when they can see 100,000 non-segmented customers in their local market?

Understanding each household’s vehicle buying patterns, registration history and demographic data will help a dealer be successful in targeted marketing, versus the aforementioned “spray and pray” approach. Customers expect and respond to offers that are customized to their needs, so the closer dealers can get with their automated marketing – with personalization being key – the better their chances are of seeing that customer in their dealership ready to buy – whether they have bought from them previously or not. Insight into the customer, of course, helps level the playing field for the dealer – things like knowing why the customer is looking to buy and what factors influence their decision are great datapoints to have when prioritizing and personalizing your outreach.

By shifting to this holistic perspective, dealers can easily understand the needs of current and prospective customers in their market and can ensure every potential customer is targeted with personalized offers.

In short, sales are expected to flatten for many years to come, so dealers should focus on adaptability and the power of the right datasets to gain a competitive edge within their markets. The industry needs to embrace the evolution of the dealership’s role as providing more opportunities than ever before to become proactive in customer relationships – whether that relationship stems from a loyalty customer or a new conquest customer.

About the Author

Johannes Gnauck is Founder and Co-CEO of automotiveMastermind (Mastermind), a leading provider of predictive analytics and marketing automation solutions for dealerships. Mastermind is a part of IHS Markit. Learn more about Mastermind at

Author: Contributing Writer

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