Predictive Analytics in Automotive Industry
As the market continues to evolve, automotive dealers continuously face new challenges and opportunities from changing product mixes, customer buying behaviors and the competition.
The dealers best equipped to succeed are the ones who leverage data analytics to predict effectively and efficiently what’s likely going to happen next.
In the modern automotive retail industry, proactive dealers are using predictive analytics to analyze consumer purchase trends and make predictions about future events using techniques like data mining, data modeling, machine learning and artificial intelligence (AI).
In the ever-changing auto industry, this new advanced approach to data analysis allows dealers to forecast future trends, tailor their strategies accordingly, and ultimately drive success in a competitive market. Keep reading to explore the power of predictive analytics, including:
● The definition of predictive analytics and why it matters to dealers
● The increasing importance of predictive analytics in the auto industry
● How predictive marketing is shaping the future of auto
What are Predictive Analytics and Why Dealerships Should Care
Predictive analytics is the use of historical data to forecast future outcomes. This is done through a variety of statistical techniques involving data mining, machine learning and predictive modeling.
Dealership marketing tools powered by predictive analytics analyze data from a dealer’s equity and data mining processes, DMS and CRM, as well as third-party data from public and proprietary sources to predict what consumers are most likely to do next. This enables teams to engage prospective customers before they even return to market with a personalized approach.
Not only will data-driven customer insights allow dealers to understand their existing customer base, but with the right dealership predictive analytics tools, similar behavior prediction algorithms can be applied to conquest customers, as well – which is a game changer from the “spray and pray” methodology used in present-day conquest marketing tactics.
New Ways Dealers are Using Predictive Analytics
Beyond just identifying prospective sales opportunities, there are numerous ways dealers can leverage predictive analytics. Dealership technology powered by predictive analytics enables dealers to identify their most profitable opportunities and prioritize their efforts across the dealership.
From identifying and engaging the owners of highly in-demand pre-owned models to improving the efficiency of marketing campaigns, predictive analytics empower dealers to maximize their portfolios and take control of their future success by:
Attracting New Customers
As traditional broad advertising methods lose impact, predictive analytics enables dealers to cut through the noise to attract new customers. By tapping into the power of big data, predictive analytics applications can accurately identify new prospective customers that are most likely to purchase a vehicle in the near future and provide the right customer experience.
Complex algorithms consider factors such as time since last purchase, number of repairs on the current vehicle, current mileage and information pulled from social media to identify likely buyers. From here, predictive marketing technology can leverage these details to create personalized deals customers are most likely to accept – at the lowest cost to the dealership.
Building Customer Loyalty
Just like with conquest customers, predictive analytics help identify which of their loyalty customers are preparing to re-enter the sales cycle.
By engaging customers at optimal times after their purchase, dealers can build trust with buyers using personalized messaging like service offerings and extended lease terms designed to encourage loyalty and repeat business. This proactive approach enables dealers to proactively retain loyalty customers before they’ve had a chance to defect.
Acquiring Profitable Pre-Owned Vehicles
As wholesale pre-owned prices continue to fluctuate, dealers are increasingly looking for new opportunities to acquire in-demand pre-owned vehicles. Utilizing predictive analytics, dealers can tap into a wealth of data to discover lucrative trade-in and buy-back opportunities.
This strategy involves analyzing important factors beyond just vehicle equity, allowing dealers to proactively identify potential acquisitions before customers decide to re-enter the market, thereby optimizing their pre-owned vehicle inventory in a challenging landscape.
The Changing Role of Predictive Analytics in Dealerships
As technology evolves and transforms the future of the automotive industry, tools powered by predictive analytics are becoming key to dealership success.
While some dealers are inherently skeptical about any new technology that promises to change their business, predictive modeling is different. Rather than metaphorically tearing out the showroom floor and starting from scratch, predictive modeling is the next evolutionary stage of sales and marketing best practices that dealers have been developing for more than a century.
Sales strategy has always been based on an instinctive form of predictive modeling that salespeople engage through personal experience: Knowing what you do about the prospect, how do you think they’ll respond to this tactic or that offer? What’s the most likely thing you can do to get them to decide?
To navigate challenges in today’s continuously evolving automotive industry, proactive dealers are looking to data to plot their next steps with the help of predictive analytics.
Leverage Automotive Analytics
The evolution of predictive analytics in the automotive industry is helping dealerships proactively address the needs of today’s – and tomorrow’s – car buyers.
By leveraging these advanced tools, dealers can gain a competitive edge, eliminate outdated practices, maximize operations, supplement marketing strategies, and enhance the role of sales teams by equipping the detailed insights and actionable data they need to succeed.
Want to learn how Mastermind can help fuel your dealership’s sales and marketing efforts with predictive analytics? Book a demo.