Forecasts from IHS Markit estimate 1.3 million fewer light vehicles were produced in the first quarter of 2021 due to chip shortages and other external influences. This combination of constrained supply coupled with increased consumer demand as the economy recovers has driven both new and used vehicle prices to new highs.
According to IHS Markit, increased demand drove the consumer price index for used cars and trucks to increase by 10% in April 2021 – the largest monthly increase in series history.
This unique situation means dealerships are on the hunt for in-demand, high-quality inventory, no matter which manufacturer they represent. But with auction prices steadily rising alongside the consumer index, buy-backs and trade-ins have become critical to maintaining a profitable and sustainable pre-owned inventory in 2021.
With detailed customer and vehicle insights, the service drive provides the perfect opportunity for dealers to acquire in-demand, high-quality trades – as well as the ability to double down by selling a customer a replacement vehicle.
In this blog post, we’ll share best practices for acquiring pre-owned vehicles through the service drive, including:
- Proactively identifying vehicle acquisition opportunities
- Engaging prospects before they start shopping
- Generating sales and service opportunities for the future
Proactively identify vehicle acquisition opportunities in your service drive
While aligning your sales and service teams can be challenging, ensuring your entire dealership is on the same page regarding your acquisition strategy is critical to developing an efficient plan. Ensure your service team is in-the-know regarding in-demand makes and models, including setting internal standards for your dealership’s buyback expectations to maintain consistency.
These details will be key when identifying prospective trade opportunities among service customers. However, identifying which customers represent the best opportunities for your dealership’s inventory sourcing is a bit more complex. Unlike other prospects, service customers are typically not in the market yet and are simply trying to keep their vehicles maintained. Pinpointing which customers are preparing to return to market is key.
Leveraging advanced data mining tools like Market EyeQ, some dealers are proactively mining their upcoming service-to-sales appointments to engage customers who represent their best prospective trade opportunities, such as customers who are out of warranty or over their lease mileage, or those who could benefit from a lower monthly payment.
Some dealers have taken this approach one step further, reconfiguring their BDC to dedicate one (or a small number) of their most tech-savvy team members to act as a service-to-sales liaison. This strategy enables service teams to efficiently identify proactive trade opportunities and engage prospects before they enter the service drive, setting the stage for an excellent buyback experience.
Engage prospects before they start shopping
With increased demand for pre-owned vehicles, competition to acquire the best used models is fierce. To acquire profitable buy backs, dealers need to get ahead of the competition by getting ahead of prospective leads.
Using the same previously mentioned data mining tools with predictive marketing capabilities to automatically identify prospective leads, dealers can identify the key factors driving a prospect’s purchasing decisions, as well as uncover critical insights such as a customer’s CARFAX history report or their vehicle maintenance history.
By automatically assessing factors like a vehicle’s estimated trade-in values or current programs and incentives that may be available to the customer, dealers can engage prospects proactively with personalized messaging and specific offers that factor in demographic information like household composition, previous purchase history and more. By taking a tailored approach with each prospective customer, dealers are empowered to stand out from the crowd and engage prospective leads before they start shopping around.
Generate sales and service opportunities for the future
According to a recent IHS Markit report, loyalty has recently emerged as one of the most-watched metrics in the U.S. new vehicle industry, alongside market share and profitability in terms of importance. Today, amid inventory shortages and historically high vehicle prices pushing the market to new heights, nurturing customer loyalty is crucial to ongoing dealership success.
Another IHS Markit report found “super loyalists,” or those who acquired their three most recent acquisitions from the same OEM, were brand-loyal in 90% of their purchases, while young nomad buyers generated just a 73% rate. Meaning, loyal households become more loyal over time, and the growth continues after that with each purchase.
Loyal customers and their households are additionally an invaluable source of high ROI sales, less likely to haggle and significantly more likely to generate service and other fixed-ops revenues, as well as contribute to referral business. These dealership inventory sourcing opportunities provide not only the highest margin sales on the new car going out but also on the trade coming in.
By using dealership marketing technology that integrates with their CRM and DMS, some dealers are proactively promoting customer loyalty by automatically engaging customers at key relationship-building touchpoints, such as using conveniently timed and personalized service notifications, developing a positive connection with each household until they are ready to re-enter the market. Our dealer partners who have taken a similar approach using Market EyeQ report increased retention sales up to 15%.
Interested in exploring how Market EyeQ can help your dealership overcome inventory challenges and embrace new opportunities in 2021? Contact us for a free demo.