Automotive Industry, meet Analytics. 

Analytics, meet Automotive. 

Nice to make your acquaintance. This union–at last–results in Discipline, and it couldn’t come at a better time.

Well it’s “almost” been here for a while, kind of…  For a long time, large Automotive “data” firms and others have been generating “lists” that provide some insight into “who might buy a car”.  But that’s old school (no offense).  I mean it still works OK.  But the problem is that EVERYONE is buying the exact same data, and the exact same lists. 

So what is a game-changer for Automotive? 

Some companies have now found a way to infuse Analytics across all marketing efforts.  Not just via some decent lists, but by truly changing the way they view data, and they way they use it; and yes… they’re finally using it.  Some in Automotive are finding a way to tap into the most strategic, untapped resource out there – Analytic insights driven by their own internal data.

This might come as a shock to those who have spent a lot of time in Financial Services, or Telecom, where advanced Marketing Analytics have been the norm for years.  But not all industries are equally receptive to such concepts.  Some industries have historically relied on gut- on intuition – much of which has been pretty solid I might add.  Inertia is a powerful thing but times have changed, and analytically driven marketing is the most profitable, most replicable, most trustworthy way to drive ROI.

So what are Automotive companies doing, and who’s doing it?

• A Shift to Direct – Via analytically driven direct marketing, we’re driving ROI – much higher than that of more traditional Mass media.  As a result, we have some clients who, with up to a 4 to 1 ROI, are shifting marketing spend from mass media to direct marketing for 2009, and upping the “Direct” spend by 50%.  It’s not just with us.  Other colleagues are seeing the same shifts.  So while firms may still be cutting overall spend, they’re allocating more spend in the right buckets.  
• Household Level Marketing - Via serious data integration efforts – and a lot of healthy sessions about the state of the car buying world, we’ve seen many have shifted from “selling cars” to “selling households”.  The focus is on relationship building across time – not just selling one car – but selling cars across a lifecycle.  70-80% of dealerships have only one of the vehicles in a given (two or three car) household.  That’s a problem and an opportunity, indeed.

Note: I saw an RFP from an OEM recently – their first ever around CRM.  Why? Because they finally realized maybe they needed to get someone to buy a car from them twice, instead of once.  That takes focus, discipline, and relationship building.

• Incremental Value.  Direct Marketing is the most measurable marketing tactic, and we suggest measuring it as it should be – in incremental dollars to the business.  How much extra did a company get, that they would not have gotten, if they didn’t spend marketing dollars. This is a simple concept, but one that requires discipline.
• Service, Not just Sales, Is Key.  It’s not about selling cars in a vacuum, it’s about service too.  A servicing relationship can mean big bucks for a dealer. Service drives retention.  Service sells more cars.  On average, a person who is servicing their car with you is 30-50% more likely to buy another vehicle from you, depending on the brand.  Furthermore, Advanced Analytics tells us who is likely to service, how much they might spend, etc. This drives profitability.

Who’s Doing It?

Some of the largest dealer groups, and some of the largest OEM’s.  Not all of them though.  Stay tuned for results over the next few years – Analytically driven Direct Marketing will reveal itself in the success of those that choose to adopt it.

The Tasks for Auto Marketers:

1. Learn everything you can about the household. People who buy the same brand or the same car do so for very different reasons. Know those reasons and differentiate your efforts.
2. Get customers to service their vehicles with the dealer.  Over 40% of those buying a car NEVER return for service.  That’s devastating.
3. Know when customers are in-market for another vehicle.  This is not just an off the shelf list… leverage your own data to out-think the competition.
4. Integrate your customer contact strategy to include Sales and Service messaging across time.  This will drive repeat purchases. 
5. Trying to reel in prospects, aka “conquesting”, is challenging.  But you MUST do it.  Your competition is doing it to you.  Analytically driven marketing is the only way to do it.

The time is now.  Some companies are already there.  If you are not one of them, it will almost certainly come back to bite you.