In every dealership sales meeting, the main topic on the agenda is how to raise the bar and sell more cars. Some dealerships are still waiting for the “up bus” to arrive, while others are becoming frustrated with unresponsive, and low converting internet leads. Millions of dollars are invested on the latest and greatest lead generation trends to drive showroom traffic; forgetting to address the sleeping elephant in the room, which are the previously sold customers in service and the overall database. The main strategy of any business is to retain customers and build loyalty avoiding customer acquisition costs. According to Marketing Metrics, the probability of selling to an existing customer is 60-70%, in contrast to a new prospect 5-20%. The question is why are we not fully embracing this in our industry?
Equity mining is the million-dollar secret that makes an immediate impact on your dealership’s growth in 2017. Let’s look at the opportunity at hand.
Every day, customers are visiting your service drive, even though only 50% purchased their vehicles from your dealership. What is your current strategy to engage these service customers to upgrade their vehicles today? Attempting to appraise every car or have a rotating staffing schedule for salespeople to greet clients in the service lane won’t cut it in today’s market. Consumers are becoming immune to the generic “we want your trade” campaigns. To create the best customer experience, we- as an industry- need to ensure that the right customers are communicated with at the right times, with individualized, value-added opportunities to upgrade their vehicles, at a similar monthly payment.
Technology is constantly evolving, and consumers today want the latest and greatest products. In automotive, many people are signing up for long term loans (up to 84 months), so the likelihood of them keeping that vehicle to maturity is very low. Equity mining is the vehicle (no pun intended) that escalates the trade cycle and gives the consumer viable options to consider.
This process isn’t restricted to the service lane; dealers have thousands of owners in their DMS. Which of them can trade keys today, and keep their payments the same or potentially even lower? We need to identify these customers before they enter the ultra-aggressive car shopping cycle. What is the talk track or communication method to engage them and create opportunities into the dealership? When an OEM rolls out new incentives on specific model lines can you cross reference that data in the database? Or are you still telling your salespeople to call all their customers and creating call reluctance and low employee morale. What would the impact be if sales managers could have this information to relay to their salespeople, and create targeted campaigns to the prospects that are in a conducive position to upgrade? The answer is better engagement, and more sales.
Many dealers have grown numb to equity mining because they may have had inadequate training, lack of use, or improper processes in place at the dealership to create success previously. Others have invested in poor software where the numbers didn’t add up, and lost confidence with their staff. Either way, having an easy to use software solution installed is essential. Partner up with a vendor that is committed to your success. Being able to serve up customer information that is accessibly at a moment’s notice is crucial. Your staff needs to have a seamless process that encourages them to use the software. Once they are bought in, it becomes part of their daily routine.
Still not convinced? How many customer pay repair orders sit in your service lane monthly? How many of those customers didn’t originally buy from your dealership? You already have the answers. After consulting with hundreds of stores, typically 4-6 customers per day are in a conducive positon to upgrade. How many days are you open for service? I guarantee you the numbers will get your attention.
Now this is just your service lane, so what about the customer database? At any time, 10-15% of those customers are eligible to upgrade. The roadblock today is that dealers don’t know who they are. If you do not have this baseline for your dealership, how can you measure your success rate? Without a strategy, the chance of success is minimal at best. The faster way to success is not reinventing the wheel, but mirroring what other successful people do. Having a consultant guide you in the right direction will save you a ton of time, frustration, and put your dealership on the fast track to developing a playbook to success and hit your sales numbers in 2017 and beyond.
Join me for my session on equity mining at the 22nd Digital Dealer Conference & Expo this April 11-13th in Tampa, FL. This session will give you an edge over your competitors, and open your eyes to the “million-dollar secret.”
Author: Jeff Bounds
Jeff Bounds is National Account Director at Dominion Dealer Solutions. He has over 23 years of experience in the automotive industry, including 15 years in dealership retail. He has extensive knowledge in data mining and the automotive sales process. He developed a BDC and data mining process for the Penske Automotive Group that increased sales volume 200 units in the first year. He works directly with OEM partners and strategic dealer groups to implement a turn-key data mining process that drives sales and customer satisfaction. Jeff has created and facilitated multiple workshops with numerous OEM’s to help their dealers reach their sales objectives. The dealers that Jeff has consulted have increased individual sales volume up to 30% and generated gross profit in upwards of $2,000,000 dollars.