What are your dealership’s greatest challenges in 2021? Are they the same today as they were five years ago? Chances are, they’ve likely evolved over time.
Most dramatically, in a matter of weeks, the COVID-19 pandemic reset many dealerships’ priorities and processes. This ushered in a new era of challenges that dealerships are continuing to experience in 2021. Some of these challenges were entirely new, such as navigating new safety protocols. Other trends, like rapid industry adoption of digital retailing, were just accelerated.
While some dealerships struggle to adapt, proactive dealers are turning to data to navigate today’s constantly changing marketplace and uncover new opportunities.
In this blog post, we share how to leverage data to tackle 3 current dealership challenges in 2021, including:
- Adapting to inventory shortages
- Preventing customer defection
- Conquesting customers from the competition
Adapting to Inventory Shortages
While the automotive industry recovered from early production delays caused by the pandemic, semiconductor shortages ushered in new challenges in early 2021. According to IHS Markit in February, nearly 1 million fewer light vehicles are anticipated to be produced in the first quarter of 2021 due to supply interruptions.
Dealership leaders are split in their outlook. In a recent survey by Automotive News, 59% of surveyed dealership executives said they expect inventory to meet demand by mid-2021, while 25% didn’t expect that to happen until at least 2022.
Instead of waiting around to find out, forward-thinking dealers are leveraging the data in their CRM and DMS to maximize their existing customer portfolio. Using dealership marketing tools, dealers are using this data to identify and engage drivers of in-demand makes and models with proactive marketing messages.
This same data empowers dealers to make decisions quickly and efficiently regarding trade-ins by analyzing key insights like a vehicle’s maintenance and accident history to predict reconditioning costs and trade profitability. This strategy is especially valuable to dealerships acquiring in-demand pre-owned vehicles through trade, as retail typically generates less overhead than auction.
Preventing Customer Defection
The rapid digitalization of the vehicle buying process means today’s consumers have more options than ever when it comes to where and how they buy their next vehicle. With increased competition, it’s critical dealers focus on preventing customer defection.
To get ahead of the competition, dealers need to take a proactive approach to promote long-term loyalty. With unique access to insights on their customers’ existing vehicles that informs how likely they are to start shopping for a replacement vehicle, dealers can leverage the same previously mentioned marketing tools to identify and engage their loyalty customers before they start shopping around.
For example, some of our dealer partners use Market EyeQ’s predictive and automated marketing
capabilities to track customers on 72-month terms and structure personalized offers to well-
qualified auto prospects with 36 months or less left on their current vehicle. By leveraging data and intelligent behavior prediction technology, our dealer partners report increased retention sales up to 15%.
Conquesting the Competition
As dealers work to defend their existing base, they’re also presented the opportunity to conquest customers from the competition – if they’re able to identify customers and reach them where they are in their buying journey. Here, predictive marketing technology that leverages household and vehicle ownership data is key.
When communicating with new customers, it’s critical dealers focus on building trust, starting with an earnest personal connection with each consumer. This means personalizing your approach to clearly demonstrate your dealership understands a prospective buyer’s unique wants and needs. With advanced digital marketing tools, proactive dealerships can do exactly that, targeting prospective buyers with personalized marketing messages that speak to their unique situation and reach them in the format they prefer.
Of course, the importance of personalization doesn’t end at your initial outreach. According to industry research, consumers are more willing to buy from dealerships that offer a modern, customized buying process, with over half of respondents noting they would purchase new vehicles more often if buying processes were improved.
To modernize their approach, successful dealerships need to leverage data to think beyond the sale and improve the entire customer experience. By integrating data from their CRM, DMS and sales platform, dealerships can both improve the hand-off between marketing and sales and unite their teams including sales, service and the BDC. This empowers dealers to create a buying experience tailored to each buyer’s unique wants and needs, building trust from that very first touch point.
While the challenges dealerships are facing in 2021 will continue to evolve, dealers can stay a step ahead of the competition – and their audience – by leveraging data. By doing so, dealers will build more profitable pre-owned inventories, promote long-term loyalty and conquest customers from the competition – regardless of what lies ahead.
Interested in exploring how Market EyeQ can help your dealership overcome challenges and embrace new opportunities? Contact us for a free demo.