Dealers are data-curious and dubious. And that’s a problem.
Consider Cox Automotive’s recent eye-opening Power of Data Study. “While 83 percent of dealerships have access to data insights from a dashboard or reporting tool, less than one-third are satisfied with the insights they get from vendors,” Cox Automotive reported, adding, “54 percent of dealers have experienced conflicting data across multiple sources, making it difficult to determine which data is accurate.”
More alarmingly, it found that more than two in five “have held off adopting new data solutions or tools.”
Dealer’s skepticism is understood.
After all, dealers are people people, not data people. Being told to focus on data more is burdensome, discouraging, or overwhelming, when they’d rather be out there gripping and grinning in showrooms and on lots.
The Case for Data
But they’re making a mistake if that skepticism leads them to underinvesting in it, underutilizing it or just ignoring it all together.
Using data, at least when it’s right, offers dealers major competitive advantages. And to be clear, Cox’s research does show the vast majority of dealers do value data. They do want to use it. They do want to believe in its power. But a persistent minority appears skeptical that its benefits outweigh the costs.
Analytics tools give auto retailers the power to see more clearly into nearly every aspect of their businesses—who their customers are, what condition their trade-ins are in, how regional and national trends will affect their inventories and why they should change their prices, etc.
What Dealers Forego When They Forego Data
Optimizing trade-ins and prices: Big data and OBD2 diagnostics are a powerful combination. Dealers don’t need to send a trade-in to their service department to get a detailed understanding of its problems. Existing services allow dealers to evaluate each trade-in and immediately detect the car’s current issues, the cost of repairing them specific to the year, make, mileage, model, trim and even zip code of the dealership as well as predict what likely repairs the trade-in will have in the near future.
Converting more leads: Data-based insights on consumer behavior help dealers track potential buyers’ online activities and purchasing habits. Dealers who effectively use data-driven insights see a boost in their ability to convert leads into sales. With actionable data, dealers can tailor their approach to customers, enhancing engagement and improving conversion rates.
Lower Inventory Costs: Inventory management platforms provide dealers ways to manage their supplies more efficiently. By analyzing sales patterns, dealers can stock the right vehicles at the right time, reportedly, limiting carrying costs. Predictive analytics helps reduce excess inventory by up to 20 percent, giving them an advantage in managing cash flow and increasing overall operational efficiency.
These are just a few examples of what dealers spurning data leave on the table.
To borrow a Russian proverb, popularized by Ronald Reagan, American auto dealers need to trust, but verify, their data.
How Dealers Can Validate their Data
Cross-Check Multiple Sources: Don’t rely on one source alone. For example, dealers can visually inspect cars, pull a CarFax report, and use OBD2 diagnostics to analyze the vehicle’s current and past issues. By cross-referencing these sources, dealers can create a comprehensive and accurate picture of the vehicle’s health.
Integrate Other Tools: Use tools like vAuto to integrate mechanical data into pricing and decision-making workflows. This automates the process of verifying data, ensuring consistency in remote or auction-buy decisions.
Study Historical Performance: Look at the track record of the data vendor. Have they provided reliable data in the past? Use customer reviews, case studies, and independent sources to verify whether the vendor’s data has been consistent and accurate over time.
I realize it sounds onerous for the data-averse or the dealers out there who are overwhelmed by the flood of analytics inundating their industry.
I get it.
But American dealers need to know that good data is like a good friend—hard to find but even harder to live without.