Whether the tight supply of quality pre-owns loosens up soon or not, dealers who learn to source their used inventory internally are always at an advantage.

This approach to inventory management is smart:

  1. Sourcing used inventory from existing customers presents opportunity to strengthen their retention. You gain a valuable trade and likely sell a new or newer unit to them in return.
  2. Because this technique for sourcing quality trades can work so well, its effectiveness can reduce your reliance on the auctions. This reduced reliance also reduces your costs – fewer fees paid to auctions and to transports.
  3. The vehicles you take in trade are the ones you and your market wants – a combination of factors you make happen through data mining.
  4. Because you originally sold and serviced these trades, you have records to prove their quality. Recon costs should be less for these units.

Data mining 2012

Sourcing inventory through trades is not a new idea for dealers, of course. It is an old technique and one that can work well.

The only reason to revisit this strategy in 2012 is that new data mining technologies coupled with new strategies on how to present trade-in/move up solicitations make this technique much more powerful than before.

When data-driven opportunity discovery puts you first to present the right deal to the right customer at the right time, your customers will make their trades, buy their next vehicles and have them serviced with your dealership. This should be your top data-marketing goal.

Today’s data mining enables you to analyze customer data at unparalleled depths and, if I may, textures. Not only can the database be segmented by name, ZIP, make and model, mileage and other parameters, but we can better zero in today on those existing customers whose situation makes them more likely to respond to the right kinds of marketing appeals.

In fact, the emergence of this level of data mining has attracted a number of companies who are adding to their product mix a type of data mining analysis. Popular data mining analysis events to pursue include opportunities based on the existing customer’s vehicle specifics and the owner’s position Vis-a-Vis equity, lease- and finance-end, warranty expiration and more.

In our experience, as important as data mining is – many patents protect the leading data mining technologies – the data itself is not the only advantage a dealer needs to be successful and profitable using this marketing solution.

This other factor is very human, the point where you structure the right proposal presentation so it appeals to the specific buy buttons of the prospective existing customer. How to package and present these proposals is a subject to tackle in another article. However, let me state here that that this connection between your dealership and the customer does require some finesse to be successful.

Five profitable data mining ideas

Depending on the dealership and its historical units in operation, most any dealership using the proper data mining strategy can add from five to several hundred additional new and used units to the sales board every month. Many of these units will be sold as part of a trade deal in which you take in the kinds of cars, trucks and SUVs your market wants.

Consider these data mining tips:

  1. Establish an aggressive rate of contact: Connect daily with 20 or more customers identified by data mining. For every 10 to 15 appointments set, expect to capture five additional sales.
  2. Be Purposeful: Best results come from working this kind of marketing consistently. Many dealers eventually put a specialist in charge of this function, an individual or individuals comfortable speaking to customers by phone and having a basic knowledge of the business. Chasing these opportunities is worth establishing the right processes for success.
  3. Dig hard: The right data mining methodologies should be able to analyze existing customer data broadly and deeply. It should be able to identify the convergence of various matrices that provide you with special insight allowing your data mining marketing team to make very appealing offers that customer will find difficult to ignore. These convergences of data should identify existing customers owning in-demand vehicles in which they have equity, making them powerful trade in candidates. Other points include lease- and finance-end owners, warranty-end owners, high-mileage owners and more, including conquesting owners who did not purchase from you originally but now have their vehicle served by you.
  4. Work service: Contact your customers whose vehicles haven’t been in for their scheduled maintenance intervals. Visit them when they arrive for service. Knowing beforehand their likely buy buttons based on your data convergence analysis, introduce them to your offer. Alternatively, reach these customers by phone or email marketing and offer those whose vehicles are nearing OEM warranty end an opportunity to purchase vehicle service contracts. Some dealers are able to boost F&I department VSC penetration by nearly 60% using this approach.
  5. Be a great deal: Structure the trade or other offer to give the customer a good deal; after all, one important objective of data mining marketing like this is to boost customer retention. Build your offer using current market incentives and flexible terms that enable you to put them into a similar new or newer unit at or near their former monthly payment and with little or no money down.

Mining your data for nuggets of gold like this can help dealers – depending on their units in operations — add to from five to a hundred or more additional sales to the board every month, from existing customers!

Data mining also can help you reduce reliance on auctions and save auction-related expenses. Furthermore, when you acquire more new unit sales and service business from existing customers, new-customer recruitment and service advertising and marketing can be reduced.


Digital Dealer