Automotive Equity Mining vs. Data Mining: Why Your Dealership Needs a Sales Platform
Dealerships using data and equity mining tools for sales and profits may miss out on other opportunities if they don't use these tools in other parts of their business. Some dealers may even overlook using these tools, as ways to increase service revenue, or equity mining tools to identify customers who may benefit from a lease or finance offer. By leveraging them in other areas, dealerships can unlock new opportunities for growth and maximize their overall profitability.
In this blog post, we will:
- Define automotive data mining and equity mining for dealers
- Review the limitations of data mining and equity mining
- Identify impactful ways data and equity mining can be utilized
What is data mining?
Data mining is the process of fully analyzing information related to potential customers, in order to understand the different factors that influence each person’s decision-making process when it comes to purchasing a car. The practice’s ultimate goal is to identify those customers who are most likely going to be highly motivated to make a purchase, before they re-enter the market.
Some of the factors that go into data mining include:
- Lifestyle information
- Social media posts
- Driving patterns
- Credit reports
Predictive analytics tools, powered by artificial intelligence, are used to score potential customers based on their likelihood to purchase a vehicle in the near future. These tools analyze patterns and similarities in customer data to identify the highest-quality prospects for sales teams to engage with.
Automotive dealers are well aware of the significance of understanding their customers' needs and preferences, as it can be the deciding factor between closing a sale and losing a potential customer. Automating data analytics is an effective approach to streamline this process and gain insights into potential prospects and customers. By leveraging these tools, dealerships can efficiently mine vast amounts of useful data that would be difficult for humans to analyze manually.
What is equity mining?
Equity mining is a specialized form of data mining that is aimed at identifying existing customers who are in a position to trade their current vehicle for a new one. This practice specifically involves analyzing customer data to identify those who have positive equity in their vehicles, and who could potentially be interested in purchasing a new vehicle with attractive OEM financing terms. However, equity mining is not just a simple calculation based on the money built over time or calculating payments remaining. It takes into account other factors like:
- Factory incentives
- Trade-in value
- Interest rate differences
Equity mining is a highly effective tool, as it allows dealerships to not only identify valuable prospects, but also uncover opportunities to generate revenue across different departments, such as:
- New and used vehicle sales
- Fixed ops
By combining these processes, equity mining provides dealerships with a comprehensive understanding of their customers and enables them to optimize their sales and revenue generation strategies.
When equity mining tools identify a prospect whose leased vehicle will likely qualify for factory certified pre-owned status, most dealers can drive service and parts revenues by certifying and preparing that car for resale. That subsequent sale (or lease, if the OEM offers CPO leases) then offers other revenue opportunities, including:
- F&I reserves
- Initiation fees
Limitations of data mining and equity mining
Data mining and equity mining are powerful tools to drive sales, but they can only accomplish so much when they’re used as standalone tools, instead of alongside a comprehensive dealer sales and marketing platform like Mastermind.
A sales and marketing platform that is powered by predictive analytics works in tandem with a dealership's current DMS by leveraging and enhancing the data they already possess, while integrating information from other public and private sources. This approach deepens the dealership's understanding of their customers and enhances the equity mining process, as well as other forms of automotive data mining.
Mastermind significantly enhances the dealership's ability to identify the most promising trade-in prospects by incorporating:
- Household demographic data from S&P Global Mobility
- Consumer financial information from TransUnion
- Vehicle-specific insights from Carfax
How can this mined data be used with Mastermind?
The process of turning prospects into closed sales requires effective communication, which is where Mastermind can be incredibly useful. By taking insights gained from data mining or equity mining, Mastermind can create consumer-centered, targeted marketing campaigns that deliver the right message to the right person, at the right time, and in the most effective manner possible.
Once the marketing has attracted the customer to the dealership, Mastermind can further assist sales and F&I teams by providing them with:
- Actionable insights
- Targeted offers
- Personalized talking points
- Other information that can help them close deals
After the sale, a sales and marketing platform can continue to be beneficial by being integrated into the service and customer relationship management processes. This enables the dealership to continue nurturing the relationship with the customer and maximize service revenues. Eventually, the sales and marketing platform can also identify when a consumer is ready to re-enter the sales process, enabling the dealership to begin the cycle all over again.
Data mining, equity mining and other big data analytics tools are already making a difference in dealerships across the country. Interested in how your dealership can improve its data mining processes and grow revenue with a comprehensive sales and marketing platform? Contact us for a free demo.