AUCTION LANES: CRM. Business Builders. Leading dealers ensure they have solid core inventory. Data Mining as Internal Auction Lane
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1 AUCTION LANES: CRM CONTENTS Business Builders Leading dealers ensure they have solid core inventory. Data Mining as Internal Auction Lane One of the most efficient, effective ways for a dealership to avoid auctions and still acquire vehicles is to use data mining. DMS for Inventory Acquisition? According to DealerSocket s Dealership Action Report (DAR), data mining is in a class of its own in generating actionable information. Lucrative Remarketing Opportunities Using data mining to identify acquisition opportunities through internal auction lanes is undeniably profitable. CUSTOMERS AS STRATEGIC PARTNERS Many dealers think of customers as just that: customers. Top-performing dealers take it a step further. They think of their customers as strategic partners. A dealership requires a wide network of partners to conduct business effectively. Parts suppliers, media outlets, and payroll service providers are all strategic necessities. Why not think of customers in the same way? In addition to vehicle, fixed ops, and aftermarket purchases, as well as leases, the customer also provides value as a strategic partner for inventory acquisition.
2 The average dealer brings in $250,000 in incremental revenue by using its CRM to conduct campaigns, including equity mining, buy list matches, and exchange-and-replace payment programs. BUSINESS BUILDERS Leading dealers ensure they have solid core inventory. Core vehicles sell fastest, most consistently, and most profitably at a dealership. For the acquisition of desirable inventory for remarketing, dealerships frequently overlook their current customer base as an alternative to traditional auctions. The vast majority of dealerships acquire their used car inventory through auctions despite the lengthy process, administrative costs, and fees. Consider that the average dealership sells nearly 1,000 vehicles every year. With an ever-lengthening lifespan and increased quality, each one of these cars represents an opportunity to acquire quality vehicles, at a much lower cost, that match the unique demographics of a store s customer base. A dealership has all of the information it needs sales and service history, contact information, DMS data, and more to initiate a conversation proactively with a customer regarding a trade-in for an upgrade. Thinking of customer trade-ins as a replacement for traditional auctions just makes sense. In fact, the average dealer brings in $250,000 in incremental revenue by using its CRM to conduct campaigns, including equity mining, buy list matches, and exchange-and-replace payment programs. Let s explore some of the tools that leverage readily available information to identify inventory acquisition opportunities. For the acquisition of desirable inventory, dealerships frequently overlook their current customer base as an alternative to traditional auctions.
3 DATA MINING AS INTERNAL AUCTION LANE One of the most efficient, effective ways for a dealership to avoid auctions and still acquire vehicles is to use data mining to tap the wealth of customer information stored in its DMS. An effective data-mining platform constantly scans its store s customer data and identifies people with vehicles that match current core inventory needs. It then feeds warm leads into the CRM for follow-up. Above all, mining for these opportunities engages customers before competitors, keeping its dealership top of mind. One of the most efficient, effective ways for a dealership to avoid auctions and still acquire vehicles is to use data mining to tap the wealth of customer information stored in its DMS.
4 DATA MINING BY THE NUMBERS $424,000+ The gross profit generated through data mining per dealership, per year 90% The closed sale rate for leads identified through data mining 21 The average number of additional vehicle sales per month through data mining 84% The rate of calls resulting in appointments made from leads generated through data mining (compared to 25 percent for other lead sources) DMS FOR INVENTORY ACQUISITION? According to DealerSocket s Dealership Action Report (DAR), which comprises data from more than 6,500 dealerships and 189,000 users, data mining is in a class of its own in generating actionable information. While a DMS is traditionally considered a sales tool, it is also an unparalleled source for identifying vehicles (and the customers who own them) that a dealership wants on its lot for remarketing. Clearly, this is a win-win. Any vehicle acquired from a customer through proactive outreach is not only a remarketing opportunity, but a new sales or lease opportunity. Our analysis of dealerships that use Revenue Radar, DealerSocket s flagship data-mining solution, found that leads generated through it are more likely to be driven to action and are converted more often and more effectively than any other source. Despite its performance, costeffectiveness, and widespread adoption, data-mining technology is still a relative secret and largely underused weapon in the remarketing space. The availability of the technology combined with innovative adoption as an inventoryacquisition tool makes it a mustuse resource. According to the DAR, only half of dealerships use data-mining technology. In those that do, only 17 percent of data-mining leads are actually contacted. Considering the wealth of information available as well as the likelihood that such leads will result not only in acquisition of core inventory, but also sales these numbers reveal a significant gap that must be bridged to help dealerships reach their full potential. Taking the time to familiarize a sales team with data-mining technology and provide training on its use to acquire vehicle inventory as an alternative to traditional auctions is invaluable.
5 LUCRATIVE REMARKETING OPPORTUNITIES Using data mining to identify acquisition opportunities through internal auction lanes rather than traditional auctions is undeniably profitable. Dealers ready to take advantage of anticipated used-car inventory will enjoy faster selling cycles, lower acquisition costs, and better margins. The DAR shows that the average total gross profit for used cars ($3,091) is 14 percent greater than for new cars ($2,717) across all lead sources. Additionally, data shows that used-car leads take fewer days to close than new cars (44 days compared to 56) and generally deliver a significantly higher average ROI. Dealerships that consider their customers as long-term partners can quickly identify opportunities to acquire inventory for remarketing, match those prospects with their next vehicles, and establish a virtuous loop that will create a significant competitive advantage and a fruitful revenue stream for the foreseeable future.
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