Dealership best practices for engaging auto sales leads have evolved over the years to keep pace with changing automotive consumer preferences and marketplace conditions. With each advance in technology or shift in the market, the best practices in automobile dealerships have kept pace as dealers innovated to close sales and build customer relationships better, faster and more efficiently than their competitors.

That remains true today, as broad trends have unexpectedly accelerated, and consumer needs have suddenly shifted due to the COVID-19 pandemic and other factors in play. While the fundamentals of the automotive business remain the same, many dealership best practices for identifying and engaging prospective customers are changing – with dealers discovering the key to generating auto sales leads is to identify prospective buyers early in their car buying journey – or better, before it even begins.  

In this post, we look at four valuable auto dealership best practices for engaging auto leads in a rapidly changing marketplace to stay ahead of the competition, including:

• – Powering your outreach analytics with high-quality data

• – Analyzing your local market for opportunities

• – Maximizing your dealership’s virtual retailing process 

• – Proactively engaging loyalty and service conquest customers

Start With Quality Data

The past year has been marked by incredible volatility, impacting the finances of everyone from OEMs to buyers and driving major change in consumer buying habits. In fact, a recent automotive industry survey found one-third of customers intend on spending less on their next vehicle as a result of COVID-19. 

If your audience’s finances and buying preferences are changing, does your auto dealership’s data reflect that? When it comes to the quality of the data your analytics are using to generate auto sales leads, remember the old computer industry saying: “Garbage in, garbage out.” 

Low-quality data generates low-quality analytics insights, low-quality analytics insights create low-quality auto sales leads and low-quality leads cost you time, money and profits. There’s real money at stake: Gartner estimates that bad data costs the average organization it surveyed $15 million a year, in everything from wasted time to increased risk to decreased consumer confidence.

With increased competition and thinning margins, access to reliable data offers auto dealers an invaluable competitive advantage – especially when their competitors don’t have access to that same data. For example, Market EyeQ incorporates high-quality proprietary data from partners such as IHS Markit, TransUnion and CARFAX, with information from our dealer partners’ own DMS and CRM data, giving them a comprehensive look at the local market – something their competitors simply don’t have. As a result, our auto dealer partners report gaining up to 15 incremental deals per month, on average.

Pay Close Attention to Your Local Market

It’s always been important for a dealer to pay attention to what’s going on in the world outside their walls, but that’s arguably never been truer than right now. While this is certainly the time to search out the latest information about big picture automotive industry trends, consumer sentiment and other relevant information on a monthly or even weekly basis, it’s equally as critical that dealers monitor their local market for changing buying behaviors – and potential opportunities to attract auto sales leads. 

According to IHS Markit’s review of U.S. registration data, the automotive shopper mix is different in 2020 than it was a year ago. Compared to 2019, characteristics of 2020 car shoppers who are back in the market so far this year are:

• – More likely than they were to own a light truck, with pickups being the most popular body style overall

• – More likely to buy domestic

– More concentrated in small towns and rural areas

• – Older

•  

•  

– More likely to purchase than lease

Do you know which makes and models are popular right now in your unique, local market? By analyzing their local market and ensuring their available inventory mix reflects changing consumer behaviors, dealers can create a more welcoming environment for auto sales leads, paving the way for an exceptional customer experience from that very first touchpoint. 

This approach to engaging auto leads is especially impactful in today’s market where an increasing number of consumers are now considering both new and pre-owned options. Edmunds reports 29% of current new vehicle buyers are also considering used – a 5% increase in just a few months. By taking a comprehensive look at their local market, dealers can both create an attractive inventory and engage prospective buyers more effectively by matching them to the vehicle they’re most likely to purchase – whether that’s new or used.

Deliver the Sales Experience Customers Want

Consumers haven’t just changed which vehicles they’re shopping for – they’re also changing how they’re shopping. According to a recent study, more than 75% of Americans have tried new shopping methods, brands or places during the pandemic, and at least 60% have the intention of sticking with them in the long term. 

Online,  auto dealers aren’t just competing with local competitors or even other dealers – they’re competing with the estimated 4,000 to 10,000 advertisements the average American sees each day.

To both stand out among the noise and deliver the new experience buyers have come to expect, it’s critical dealers take a data-driven approach to their conquest marketing strategy. This goes beyond utilizing the right marketing channels. Rather, by leveraging predictive dealership marketing tools dealers can ensure they’re both targeting the right prospects and delivering the right message at the right time and in the format predicted to convert those prospects into buyers.  

Another notable trend is the rise of mobile online shopping: Comscore reports that in the first half of 2020, almost twice as many online automotive shoppers were on mobile devices than on desktop computers. 

Is your automotive dealership’s virtual retailing process optimized for mobile shoppers as opposed to desktop users? Is your BDC taking advantage of text and other forms of mobile communication? Now is the time to ensure you’re maximizing your dealership’s virtual retailing process to take advantage of every sales opportunity. 

Drive Auto Leads With Dealership Loyalty & Fixed Ops

Dealers have long understood the best auto sales leads are the ones you create, rather than discover. Loyalty sales are the most profitable thanks to the low cost of customer acquisition and pose a valuable opportunity for dealers to be proactive in identifying and engaging auto sales leads. 

Like conquest auto sales, predictive analytics combined with personalized marketing solutions are one powerful answer for how to generate and engage loyalty leads in an efficient and profitable manner. 

For example, according to IHS Markit, more than 3 million leases will expire before the end of 2020. Predictive analytics allow dealers to not only identify prospects coming up on lease-end, but also those whose vehicles will likely qualify for factory certified pre-owned status, offering dealers additional revenue opportunities, including F&I reserves, upsells and initiation fees.

Another long-time dealership best practice, service conquest can also be taken to another level with predictive analytics and personalized marketing solutions. The combination of high-quality third-party data with a dealership’s own internal DMS and CRM information and insight into a service customer’s existing vehicle turns service conquest into an increasingly powerful generator of auto sales leads – as well as a source of trade-ins to profitably fill used vehicle inventory. Using this data-driven approach, Mastermind’s dealer partners convert service customers into new car buyers at 4x the rate of competitors. 

While customers may shop around for fuel efficiency, they have nothing on dealers who are seemingly on a constant search for operational efficiency. With razor-thin margins and cutthroat competition, dealers know they can’t afford to allow inefficiencies to build up in their operations if they want to protect and grow their bottom line. 

A recent study by Automotive News found 88% of dealers are likely to increase their use of digital tools to increase customers as a result of COVID-19. 

The digital revolution in the automotive industry has given dealers a whole new set of tools and capabilities to drive deep and meaningful gains in efficiency throughout their dealership operations. But for all the ways in which digital tools have improved auto dealer efficiency, possibly none has been as powerful as the revolution in auto dealer marketing. 

The combination of high-quality digital marketing for car dealers, along with new capabilities in conquest marketing and the implications for the entire sales and service process, are driving powerful bottom-line changes for dealers who have embraced it.

In this post, we examine three key ways to improve auto dealer efficiency with the right digital tools by:

• – Improving dealership marketing ROI with predictive analytics

• – Reducing the time wasted on low-quality auto prospects

• – Activating more service customers as conquest leads

Digital Automotive Tools – Not Just Digital Automotive Marketing 

Dealership efficiencies from applying digital tools to auto dealer marketing aren’t found solely in cutting ad buys to print or TV in exchange for digital ads. Of course, automotive digital marketing is a powerful strategy that plays an important role in any dealer’s marketing portfolio, but the truly game-changing capabilities of digital tools when it comes to improving dealership efficiency is realized in the application of predictive analytics tools to create personalized predictive marketing campaigns.

Using high quality data sources and AI-powered analytics tools, predictive marketing personalizes and targets auto dealer marketing messages in a way that isn’t possible with a non-digital strategy. Each consumer touchpoint is targeted to its individual recipient based on channel, timing, messaging, offer and more to maximize the person’s potential engagement with the dealer and conversion into an active high-quality auto lead. 

This one-on-one personalized outreach would be immensely expensive if your dealership had to do it manually but becomes less expensive than legacy auto dealer marketing campaign models – while also generating significantly more actionable auto leads – by automating the entire car sales process through the power of modern digital tools.

Virtually anything that would make a previous dealership process 15 times more efficient than before is worth embracing wholeheartedly, and that’s the kind of results Market EyeQ’s predictive auto dealer marketing solutions are generating for our dealer partners: 15x marketing ROI over industry averages.

Improve Dealership Employee Time Management

When it comes to improving dealership efficiency, the importance of dealership marketing isn’t just in how much it costs, but also in what kind of leads it generates. 

Simply put, low-quality leads cost your dealership time and money. That might be time your dealership’s Business Development Center spends chasing down a weak online lead, or it might be wasted marketing spend reaching out to someone who seems like a good opportunity but already bought elsewhere because you are using a reactive dealership marketing approach versus a proactive dealership marketing approach.

Another important reason to improve your auto lead quality and reduce the time your salespeople spend on low-value prospects is to avoid the efficiency trap of constantly losing good people to greener pastures. 

Great salespeople won’t stick around long in an environment where they aren’t being supported with the right tools. Research found that 61% of all dealership employees don’t think their dealership is using the latest technology, and 25% were considering leaving as a result to find a job somewhere with a brighter future. High performers don’t want to be left behind, especially in an industry as competitive as auto sales, and they want the tools they use to be effective and efficient in getting the job done.

This drive for efficiency is one factor of Market EyeQ’s Behavior Prediction Score® that ranks every prospect on a 0-100 scoring system. The simplicity of a single numeric score according to the likelihood of a sale allows salespeople to quickly and efficiently prioritize their leads and give each one a realistic share of their time and effort.

Activate Dealership Conquest Opportunities Through the Service Drive

Service drives have long been epicenters of key customer experience touchpoints at the dealership. Attracting new service customers through effective automotive digital marketing is not only key to running a profitable service department, it also serves as an increasingly valuable conquest marketing opportunity.  

Conquesting service-not-sold leads has become a critical practice in the current automotive sales environment when the service drive is often the de-facto front door of the dealership, and digital tools like Market EyeQ’s Service Conquest functionality supercharge the process. 

Market EyeQ automatically mines the service drive for sales opportunities by assessing each upcoming service appointment and every drive-up customer as a potential sales lead, combining information from your DMS and CMS with data from other sources – and factoring in what repairs their vehicle will need – to generate a ranked list of prospects for your team to engage with personalized offers. 

This model is so efficient that Mastermind dealer partners who use Market EyeQ to convert service customers into new car buyers at a 4x higher activation rate compared to industry averages.

How many sales teams does your dealership have? If your answer is more than one, you may be missing valuable opportunities related to uniting your used and new car sales teams into a cohesive dealership team.

Auto industry sales trends illustrate shocks to customer finances and reduced new vehicle inventory has many would-be new car shoppers opting for pre-owned car options. As a result, a recent used car sales study found used vehicle sales grew by 105.5% from April to May 2020.

By uniting your dealership’s new and pre-owned sales teams, you empower them to take advantage of every opportunity by matching prospects to the vehicle they’re most likely to purchase (whether pre-owned or new) and delivering a consistently excellent dealership customer experience. 

In this blog post, we’ll share how dealership leaders can bring together their new and used car sales teams by:

• – Setting clear expectations

• – Rewarding the right behaviors

– Working from the same information

Set Expectations and Inspire Action

The road to a united car sales team starts with clear expectations and direction from dealer leadership. Your people need to understand that working together as a united sales team will benefit the dealership and one another by improving the customer experience and ultimately the bottom line.

This needs to be part of your efforts to create a dealership culture built on delivering great customer experience, as your sales team is a critical component of that effort. Research finds salespeople are the largest driver of car buyer satisfaction, ranking more than twice as important to customers than the time a purchase takes or even the vehicle sales price.

Find opportunities, such as during your daily Save-a-Deal meetings, to inspire your team while setting collective expectations and promoting collaboration by giving your teams a collective goal to work toward.  

Recognize and Reward Teamwork

When your team meets these car sales goals – reward them. Make sure your compensation and employee recognition tools can identify and track both individual and group efforts. Reward teamwork that closes a sale and gives the customer a great experience.

For example, one key dealer solution Market EyeQ includes in the performance insights reporting is a user-by-user view of how each of your salespeople is using the dealership platform tools, including total activity, activity by deal type (lease, cash or finance) and activity by Behavior Prediction Score®. 

This practice is valuable beyond just your sales teams, of course. BDC, F&I, fixed ops – if there were ever a time to identify and recognize employees who are making an extra effort to help deliver a great customer experience and contribute to the dealership’s bottom line, it’s now.

Work From the Same Information and Insights

It’s difficult to overstate the importance of having your entire car sales team working from the same set of customer and inventory insights. Collecting and analyzing data from your dealership’s CMS, DMS and inventory from a single sales platform allows your sales team to create a consistent sales experience while maximizing customer engagement by efficiently matching customers with the right offer and vehicle.

For example, Market EyeQ provides sales teams with unified customer insights to allow them to identify which prospects in your marketplace are most likely to purchase, whether that’s new or used. It also interfaces with personalized marketing campaigns to engage your best prospects with high-ROI marketing touchpoints selected by predictive analytics tools that deliver actionable offers at the right time, in the right form and through the right channel to maximize customer engagement.

Beyond solely improving your used and certified pre-owned (CPO) lead generation, marketing ROI and closure rates, putting everyone on a single platform also sends the message that your dealership places equal importance on both new and used car sales teams. It makes it easier for employees in different roles to work together to meet customer needs and expectations and reduces the potential for friction between teammates.

There’s no denying that automotive leads are the lifeblood of any dealership. But seldom, if ever, has there been a dealership that is completely satisfied with its car sales lead quality and quantity. 

Some of the most common questions we hear from dealers revolve around automotive leads and prospecting: Where do qualified leads come from today, how do you get more leads and how do you convert them into sales?

According to research from Foureyes, 39% of the average auto dealership’s leads are organic leads generated by searches or research, 28% are prospects who have come directly to the dealership, 23% are from paid advertising, 9% are from referrals and 2% are from social media channels.

But in today’s marketplace, the best automotive leads are generated by high-quality data analysis that develops actionable insights into each individual prospect, giving dealers the knowledge and tools they need to power their marketing, sales and customer experience management.

In this post, we take a data-driven look at:

• – Who are your dealership leads?

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• – What do you know about them?

– How do you connect with them?

Who are Your Leads?

Some auto industry veterans may think of automotive leads as people who have somehow indicated to your dealership that they’re in the market for a new or used vehicle. In reality, that’s only one kind of lead.

According IHS Markit research, there are approximately 9 million in-market consumers who are ready to buy without strong loyalty to a specific brand in 2020. These nomad buyers offer dealerships a massive opportunity when it comes to identifying and engaging auto sales leads.  

To take advantage of this opportunity, dealers need to effectively view every single person of car-buying age in their marketplace as a potential dealership lead of greater or lesser quality. That obviously isn’t a prospect list you can plop down on a salesperson’s desk and tell them to start calling, but it is a starting point for modern data analytics tools like Mastermind’s MarketEyeQ. 

By analyzing a combination of public and private information about the consumers in your marketplace – including from sources such as your own DMS and CMS in addition to OEM and third-party providers – MarketEyeQ identifies the consumers who are most likely to be in the market for a vehicle purchase, presented in a 0-100 Behavior Prediction Score® that lets your sales team easily prioritize the highest quality dealership leads.

What Do You Know About Your Auto Leads?

The challenge isn’t that there isn’t enough data. If anything, it’s that the connection of so many parts of our lives to the digital world means all of us – including the people behind your dealership leads – are generating almost inconceivable amounts of data. 

The total amount of data stored worldwide is predicted to grow 16.6% in 2020 alone, reaching 16.6 zettabytes – 16.6 trillion gigabytes – of data. That’s four times the amount of combined data all humans generated in just 2013, which demonstrates how big “big data” has gotten and how it’s getting even bigger.

When it comes to auto dealerships, some of that data is relevant to automotive lead generation, but most of it is not. The increasingly important challenge is to ensure you’re using the right data to maximize sales lead quality. That’s why Mastermind’s predictive analytics tools rely on high-quality data from IHS Markit, TransUnion, CARFAX and other unrivaled sources to give our dealer partners access to insights from 200 million households, 3.2 billion ownership records and 650 million vehicle records.

How Do You Connect With Your Auto Sales Leads?

When it comes to auto dealership leads, sales and marketing are deeply intertwined. The average dealership spent $554,292 on marketing in 2019, averaging $640 in advertising spend per new vehicle sold. With the added pressure of the COVID-19 pandemic challenging dealers to “do more with less,” it’s critical dealerships be more efficient and effective in their marketing without wasting high-quality sales leads. 

But in the advertising marketplace, you’re not just competing against other dealers. Whether it’s conquest marketing, dealership loyalty retention or other forms of automotive lead generation, your messages are competing with the estimated 4,000 to 10,000 advertisements the average American sees each day. 

This isn’t merely ensuring your marketing spend is aimed at the right marketing channels. Rather, the power of predictive marketing in the automotive industry is seen in its ability to determine which channels are most likely to connect with each individual prospect at the right time – and with the right message to influence their decision process. 

The most successful predictive marketing campaigns maximize the effectiveness of your message by building off each previous campaign. In fact, by creating a personalized experience that nurtures leads through the sales funnel, Mastermind’s predictive marketing solutions help our dealer partners gain up to an incremental 15 conquest sales per month.

How do you motivate dealership employees to work as a team? And is it worth the effort, especially when there are so many other challenges competing for your attention as a dealership leader?

Evidence from the most successful dealerships demonstrates how focusing on building a motivational team culture can pay off in measurable bottom-line ROI. A recent study found engaged employees lead to 21% more profitability, 41% less absences and a 59% reduction in employee turnover.

But how do you go about building a team culture in a dealership, especially in a legacy dealership that may have deep cultural roots going back decades? 

In this blog post, we share 4 best practices for how to improve car dealership team culture and how to motivate employees to work as a team:

• – Be clear with your team

•  

•  

– Communicate well and often 

– Coach – but don't micromanage

• – Give them what they need to succeed 

Focus on Clarity

One of the most damaging things you can do as a leader is set your team up to fail by giving them incomplete or inconsistent guidance. It’s hard to succeed if you’re not certain what you’re trying to accomplish. In a study of professional project managers, 30% identified “undefined project goals” as a cause of project failure.

One of a dealership leader’s most important responsibilities is to make sure each staff member understands their personal role and responsibilities and has a clear view of how they fit both into their team and into the dealership. Evaluate the goals you set for your team by asking yourself if they are SMART: Specific, Measurable, Actionable, Realistic and Timely. 

Clarity also extends to transparency. Share as many updates as possible about what’s going on in the dealership, especially when times are tough or news is bad. A car dealership team culture that is based on an honest and transparent communication regarding dealership operations will ultimately help minimize discontent and car dealership employee turnover driven by fear of the unknown.

The Power of (Great) Communication

Creating a team culture that values effective communication is critical to both individual and dealership success. A study by the Project Management Institute found that on average, two out of every five corporate projects fail to meet their original goals – and half of the failures are due to ineffective communication.

Never forget that communication goes both ways. As a leader, you should be listening to your team as much as they’re listening to you – preferably more. Great leaders ask great questions, and they’re constantly curious. Ask questions that require more than “yes” or “no” answers, and make sure you’re not just talking to and hearing from your direct reports. 

Remember that you communicate with much more than words. Body language, energy, eye contact – all these things create context that can speak louder than the words you use.

Coach – Don’t Control

In 2016, Google set out to identify what made its own managers effective at building and leading strong teams. They determined the number one behavior of an effective Google manager was “is a good coach.” 

Never forget, as a car dealership leader, your primary role is to support and empower your team. However, it’s critical to not mistake micromanagement for coaching. (In fact, “empowers team and does not micromanage” was the second key behavior identified by Google.)

There’s always the risk that when you focus more of your time and attention on an employee, they take that as a sign of lack of confidence in them. This can cause employees to lose motivation and confidence in their abilities and perform even more poorly than before. 

A manager who sees this decline in performance will likely intensify their involvement in the employee’s work, making the problem even worse than before. Researchers have called this the “Set-Up-to-Fail Syndrome,” and it’s a very real risk for even the most well-intentioned managers.

To avoid this self-fulfilling spiral, make sure you’re using the tools of clarity and communication discussed above. Most importantly, don’t get so caught up in the mechanics of managing a team member that you forget to show you care about them as a person.

Set Your Dealership Employees Up for Success

Equipping your dealership team with the tools and training they need to succeed allows dealership leaders to create an exceptional dealership culture that’s built on delivering a great customer experience. 

Audit your car dealership’s marketing tools. Is your employee-facing technology easily accessible to every member of your sales team? What about your service department or F&I staff?  Do your databases (CRM, DRM and sales platform) easily integrate? 

These tools impact more than just the efficiency of your dealership – they impact your employees’ satisfaction. One industry study found 61% of employees don’t believe their car dealership is using the latest technology – with 12% thinking their dealership is way behind the times. As a result, 25% are considering leaving because they don’t believe their dealership is headed in the right direction. 

Your success as a dealership leader depends on equipping your team with both the right tools and the skills they need to use those tools to their fullest potential. The same previously mentioned industry study found 1 in 3 dealership leaders aren’t investing in employee training opportunities beyond what the OEM provides. 

Investing in dealership training like technical job-specific courses and broader automotive leadership training is a great way to keep your dealership’s staff motivated and inspired – while simultaneously empowering them to deliver exceptional customer service that sells more cars.

How many sales teams does your dealership have? If your answer is more than one, you may be missing valuable opportunities related to uniting your used and new car sales teams into a cohesive dealership team.

Auto industry sales trends illustrate shocks to customer finances and reduced new vehicle inventory has many would-be new car shoppers opting for pre-owned car options. As a result, a recent used car sales study found used vehicle sales grew by 105.5% from April to May 2020.

By uniting your dealership’s new and pre-owned sales teams, you empower them to take advantage of every opportunity by matching prospects to the vehicle they’re most likely to purchase (whether pre-owned or new) and delivering a consistently excellent dealership customer experience. 

In this blog post, we’ll share how dealership leaders can bring together their new and used car sales teams by:

• – Setting clear expectations

•  

•  

•  

– Rewarding the right behaviors

– Working from the same information

Set Expectations and Inspire Action

The road to a united car sales team starts with clear expectations and direction from dealer leadership. Your people need to understand that working together as a united sales team will benefit the dealership and one another by improving the customer experience and ultimately the bottom line.

This needs to be part of your efforts to create a dealership culture built on delivering great customer experience, as your sales team is a critical component of that effort. Research finds salespeople are the largest driver of car buyer satisfaction, ranking more than twice as important to customers than the time a purchase takes or even the vehicle sales price.

Find opportunities, such as during your daily Save-a-Deal meetings, to inspire your team while setting collective expectations and promoting collaboration by giving your teams a collective goal to work toward.  

Recognize and Reward Teamwork

When your team meets these car sales goals – reward them. Make sure your compensation and employee recognition tools can identify and track both individual and group efforts. Reward teamwork that closes a sale and gives the customer a great experience.

For example, one key dealer solution Market EyeQ includes in the performance insights reporting is a user-by-user view of how each of your salespeople is using the dealership platform tools, including total activity, activity by deal type (lease, cash or finance) and activity by Behavior Prediction Score®. 

This practice is valuable beyond just your sales teams, of course. BDC, F&I, fixed ops – if there were ever a time to identify and recognize employees who are making an extra effort to help deliver a great customer experience and contribute to the dealership’s bottom line, it’s now.

Work From the Same Information and Insights

It’s difficult to overstate the importance of having your entire car sales team working from the same set of customer and inventory insights. Collecting and analyzing data from your dealership’s CMS, DMS and inventory from a single sales platform allows your sales team to create a consistent sales experience while maximizing customer engagement by efficiently matching customers with the right offer and vehicle.

For example, Market EyeQ provides sales teams with unified customer insights to allow them to identify which prospects in your marketplace are most likely to purchase, whether that’s new or used. It also interfaces with personalized marketing campaigns to engage your best prospects with high-ROI marketing touchpoints selected by predictive analytics tools that deliver actionable offers at the right time, in the right form and through the right channel to maximize customer engagement.

Beyond solely improving your used and certified pre-owned (CPO) lead generation, marketing ROI and closure rates, putting everyone on a single platform also sends the message that your dealership places equal importance on both new and used car sales teams. It makes it easier for employees in different roles to work together to meet customer needs and expectations and reduces the potential for friction between teammates.

Like every other department, pre-pandemic life likely looked vastly different for auto dealerships’ F&I teams than it does now. Even with vehicle affordability concerns on the rise, record-high credit scores made financing relatively simple in most cases. 

As automotive dealerships continue ramping back up, a question many auto dealerships are asking is: what’s stayed the same and what’s changed in dealership F&I as a result of the pandemic?

In this blog post, we share four best practices to improve your car dealership’s post-pandemic F&I results by:

• – Staying connected to your lending sources

• – Connecting with customers on finances before the transaction begins 

• – Reinforcing your dealership’s customer experience culture

• Taking the time to train your team 

Stay Connected to Your Lenders

It’s always been important for your F&I team to be closely connected to the banks and finance companies your auto dealership uses the most. But with current economic factors in play and the variety of special programs lenders have in place to deal with them, this has become more critical than ever. 

Dealership leaders should make sure their F&I teams are watching every move lenders make and that they’re communicating the highlights to your sales teams so they’re prepared to answer shoppers’ questions and start financing discussions with the most current information, which is changing rapidly.

Challenge your F&I team to know each lender’s stipulations, their maximum advance guidelines, what book value they use, their relative affordability for subprime shoppers and many other lending guidelines and other factors that help you put together packages and get applications approved quickly and cleanly.

Connect on COVID-19 Auto Finances at the Start

Previously mentioned economic challenges emphasize the importance of F&I professionals having a clear, up-to-date view of their customers’ financial history, especially what may have happened to them in the first half of 2020.

The pandemic and its associated public health measures created sharp economic shocks for many American households, with 870,000 jobs lost in March and 20.5 million in April (according to the Bureau of Labor Statistics). But while people weren’t working, they also weren’t spending as much money. This was good news for credit scores: American consumers have paid down their credit cards during the pandemic. After hitting a record high in February, consumer credit card debt is now down to its lowest level in three years.

F&I professionals should make sure they take the time to learn up front to connect with customers and have a transparent conversation about their current financial situation, both to determine whether specific lender programs may apply, as well as to identify potential trouble spots and ensure every risk is transparently laid out on the table.

Establish a strong digital retailing process that includes F&I, such as offering options like e-signing or video chats for customer interviews. This may require investing in new dealership tools and solutions – a definitively worthwhile venture. A recent NADA study found dealerships with an established digital retailing process saw F&I profits rise 58% on new vehicles in April compared to February, versus 35% at dealerships that didn’t offer digital retailing.

Reinforce a Dealership Culture Driven by Customer Experience

One benefit from an auto dealership customer experience (CX) culture from an F&I perspective is it helps reduce chargebacks. When F&I pros ensure the customer is satisfied with the products and services they receive in the F&I room, those customers are less likely to cancel their products in a few months. 

Instill a CX-driven culture by training your F&I team to design deals and offer add-on products based on a customer’s best interests. It’s not that F&I shouldn’t be maximizing gross profit PRU through profitable markups or selling add-ons, but they should be making sure the customer understands and is comfortable with their interest rate and they’re identifying and selling add-ons that the customer needs.

The result will be a customer who is less likely to default on a poorly structured deal, less likely to cancel useless add-ons and more likely to remain loyal to your dealership for service and their next purchase.

Make Time for Dealership F&I Training 

High-quality F&I requires more training than arguably any other role in an auto dealership, except for service technicians. With sales volume down, this is a great time to both get your F&I team training that will help them grow in their roles, as well as update F&I-related dealership training for your new and pre-owned sales teams.

This could mean participating in lender updates, third-party sales training, product-specific training, internal role-playing training to help prepare for specific circumstances or more; whatever makes the most sense for your car dealership. 

One simple and low-cost dealership F&I  training method is simply to videotape an F&I transaction – either live or mock – and walk through it with the staff involved to identify areas of potential improvement. Have them explain why they made the choices they did at key points in the presentation.

Contact your dealership’s service and technology providers to inquire about any included in-person dealership training programs or remote opportunities. Mastermind, for example, provides ongoing, personalized car sales training to all our dealer partners to ensure every member of their team gets the most value from our product suit.

Growing auto sales requires a meaningful improvement in a dealership’s ability to conquest new customers. 

That’s because out of the three kinds of car buyers -- first-time shoppers, loyalty customers and conquest customers – only conquest has the potential for meaningful growth. Loyalty sales only protect the market share you already have, and first-time shoppers are becoming rarer in almost every market as the car-buying population ages.

This keeps conquest in its long-time role as the primary driver of car dealership sales growth. But what’s new today is conquest is no longer just a function of bigger advertising spends or word-of-mouth. Today’s most effective dealership conquest campaigns are driven by big data, not big dollars, and the results are undeniable.

In this post, we dive into how predictive analytics can revolutionize automotive conquest sales, including:

• – Identifying and targeting the best auto sales prospects before they start shopping

• – Improving dealership marketing effectiveness and ROI

• – Powering conquest opportunities through the service drive 

Improving Both Quality & Quantity of Car Sales Leads

Predictive analytics redefine the historic “quality versus quantity” question for car sales leads by automating parts of the lead qualification process that had previously been the limiting factors for dealers. 

Rather than manually qualifying incoming leads on a one-by-one basis, dealers using predictive analytics marketing tools can effectively consider every prospect within their geographical market a lead. By utilizing automated predictive marketing tools powered by data sources that range from public, to proprietary, to the dealer’s own DMS and CMS, dealers can efficiently rank prospects based on their likelihood to convert. 

Instead of a monthly stack of leads of uncertain value, our dealer partners work from a list of prospects ranked according to a 0-100 Behavior Prediction Score®.  This empowers their team to focus on the highest-quality, most-actionable car sales leads first – increasing the time salespeople spend actually closing sales.

Of course, this sort of approach is only possible with high-quality, accurate automotive consumer data. For instance, any analysis of a household’s readiness and ability to purchase a new vehicle needs to include social demographic information like household composition, existing vehicle makes and models in the family garage and household financial information. 

That’s why Market EyeQ’s predictive analytics insights incorporate high-quality data sources from IHS Markit, CARFAX, TransUnion and OEMs, and integrates with dealer DMS and CMS systems to offer our dealer partners a 360-degree view of their entire market.

The Predictive Marketing Revolution

Even with the growth in online advertising, the total marketing cost-per-sale and ROI have barely budged over the past decade: In 2010, dealers had spent $635 per sale, at 7.9% of total gross costs. In 2019, the average dealer spent $640 per new vehicle sale, accounting for 7.9% of total gross costs.

However, personalized automotive marketing campaigns powered by predictive analytics are proving their worth when it comes to improving dealership marketing ROI. Rather than giant and expensive monthly blasts with broad standardized messaging, analytics-driven marketing creates customized marketing campaigns for each conquest prospect that walk them through an individual journey of the right offer at the right time through the right channel to maximize their likelihood of turning into an activated, high-quality prospect.

Mastermind dealer partner Lexus of Towson is experiencing the power of predictive marketing first hand. In its first month, a direct mail campaign based on our platform’s analysis of thousands of data points empowered the dealer to close 20 deals. At a 63% close rate, it was up from the store’s typical 35-40%.

Their success using our behavior prediction technology isn’t unique. Dealers using Mastermind’s data-driven predictive marketing campaigns gain up to 15 additional conquest sales per month. Further, dealers using Mastermind’s personalized dealership marketing solutions report an average $115 per-sale advertising cost – an 82% ROI improvement from the industry average that goes straight to the dealership’s bottom line.

Powering Service Conquest

While the most cost-effective dealership sale is to an existing loyalty customer, the next-best option is conquesting a customer with whom you have a pre-existing service-not-sold relationship. 

Predictive analytics are especially powerful for improving your dealership’s service-to-sales process as your dealership has unique access to critical data about the customer’s existing vehicle that informs how likely they are to start shopping for a replacement vehicle. 

Dealers that have embraced predictive analytics as a tool for driving service conquest auto sales regularly have a dedicated salesperson or even team devoted to reviewing the analytics-driven insights on each and every scheduled service appointment and proactively engaging with service drive visitors who have been identified as high-quality car sales leads by their sales platform’s predictive analytics tools. 

Mastermind’s dealer partners who have embraced this model report converting service customers into new car auto sales at 4x the activation rate than the competition. On average, Market EyeQ helps dealers activate 55% of their service drive into in-market customers. That kind of increased sales volume from high-ROI customers is a powerful addition to any auto dealership’s profitability.

Customer retention can make or break a dealership’s bottom line. That’s why customer relationship management has become such a hot topic – and why in recent years automotive dealership customer retention statistics have moved from the footnotes to the executive dashboards of dealers and OEMs alike.

In this blog post, we share 3 ways auto dealers can improve their dealership customer loyalty and retention, including:

• – Defining what dealer loyalty is worth to your bottom line

• – Helping your employees understand the value of loyal customers

• – Making sure you’re focused on where the customer relationship lives

Know What Dealer Loyalty is Worth

Dealer loyalty is profitable. Loyal customers are cheaper to sell to, less likely to bargain aggressively on pricing, more likely to generate service and other fixed-ops revenues and are a source of high-ROI referral business.

But how profitable is it to invest in a long-term customer relationship, if that requires short-term investments or foregone revenues? A landmark Harvard Business Review paper found that improving customer retention by just 5% increased profits by 25% to 85%, depending on the industry. 

That can translate into big numbers in the auto industry. In 2012 General Motors reported that a single percentage point of improved customer retention loyalty was worth 25,000 vehicle sales, or $700 million in annual revenues to the automaker. 

At the dealership level, data from IHS Markit finds every 1% decrease in loyalty rate equals an average of 90 sales units lost. Further research from MaritzCX found for the average dealer, improving dealership customer satisfaction by one level on a standard five-point scale would result in $2.5 million in loyalty-related revenue, while a one-level drop in customer satisfaction would cost the dealer $4.2 million in lost loyalty revenues.

All this to say, improving customer loyalty for auto dealers means knowing its worth. Use what you know about your existing automotive dealership customer retention statistics, gross and net revenues and other key performance indicators to project what even small improvements or declines in loyalty would mean to your top-line and bottom-line figures, and then project that out over time. 

By utilizing behavior prediction technology, you can take those predictions and KPIs a step further by determining when high-value customers will be in-market and immediately engage them before they’ve had the chance to defect. From there, measure your responses and ROI to further optimize your approach. 

Have Your Employees Think Long Term

From a day-to-day perspective, dealerships revolve around hitting the weekly and monthly sales numbers, and that’s not going to change. This can create conflict with the way auto dealers improve customer loyalty, as it means making decisions that incur short-term costs as investments in long-term loyalty, such as absorbing repair costs in an OEM warranty dispute or offering a free loaner.

However, what’s good for customer happiness is good for loyalty and good for sales, even when happiness comes at a cost. The reality is automotive dealership customer retention statistics, customer satisfaction statistics and sales figures all march in lockstep together. 

The important question is whether your dealership is being managed accordingly. Are your loyalty and satisfaction numbers posted as prominently and discussed as regularly as your sales figures? Are loyalty and satisfaction improvements celebrated and declines taken as seriously as the month’s sales figures? Does your dealership culture truly rank the customer’s experience over that month’s numbers?

Critically thinking, what’s making a dollars-and-cents difference for your people? When GM saw that a one percent improvement in loyalty retention was worth $700 million, the automaker made customer retention statistics part of the annual bonus calculation for its leaders. How are you rewarding your employees for dedicating themselves to excellent customer relationships and building long-term dealer loyalty to drive dealership customer retention? 

Ensure you’re utilizing your reporting tools and dashboards to help you understand why salespeople are or are not hitting their sales targets and where there are opportunities for improvement and growth. By actively setting, monitoring and measuring these metrics, you’ll ultimately improve on your dealership’s sales strategy.

Focus on Where the Relationship Lives

Many dealers view the customer experience through the lens of the sales floor, but in reality, once the sale is over the service drive becomes the focal point of your customer relationship. By the time the next sales opportunity rolls around, the quality of the service customer experience will far outweigh the quality of the sales experience years prior in your customer’s mind and heart.

This is especially important in challenging sales environments where the service drive becomes the de facto front door to your dealership. As the customer lifecycle circles around, the service drive is where your dealership has its best opportunity to collect the payoff on your CX investments by being the launching point for trade-in discussions with sales advisors during service visits. It’s also your best venue to profit from your competition’s failure to build dealer loyalty when you leverage your service-not-sold customer relationships to turn a service customer into a conquest sale. 

This is again where a dedication to the customer relationship results in real-world profits: When deployed as part of a comprehensive customer experience culture, Market EyeQ helps our partner dealers activate up to 55% of their service drive customers into in-market leads, a 4x activation rate over industry standards that helps drive up to 15 incremental conquest sales per month.

It’s clear that used vehicle sales are going to make or break 2020 for many auto dealerships. Even before COVID-19 disruptions, auto industry sales trends reflected a growing opportunity for dealers in pre-owned vehicles. In a recent study, 64% of car buyers said they would consider pre-owned options while shopping for a vehicle. 

In late 2019, Kerrigan Advisors research found that dealers of all kinds were already approaching an average 1:1 new to used vehicle sales ratio; an increase of almost 10% since just 2018. For new car dealerships specifically, NADA reported a total of 14.9 pre-owned vehicles sold by new-vehicle dealerships in 2019, compared to 17.1 new light-duty vehicles. 

Now, considering new vehicle production disruptions, household financial shocks to car shoppers and a glut of pre-owned vehicles hitting the market, 2020 will likely see pre-owned vehicles handily outsell new cars. Dealers that embrace the reality of auto industry sales trends and adjust to take advantage of the pre-owned sales opportunities in this marketplace will be far ahead of competitors who revert to business as usual.

In this post, we suggest three ways your dealership can sell more used cars in 2020, including:

• – Identifying pre-owned buyers early in their car buying journey

• – Improving your profitability through smarter acquisition

• – Boosting net profit by improving cost-of-acquisition ROI

Identify & Engage Pre-Owned Prospects Early 

With fewer trips to the physical dealership comes less opportunities to engage would-be buyers early in their purchase journey. Even before the COVID-19 pandemic, the window of opportunity for dealers to engage potential buyers was narrowing. According to one study, from 2017 to 2019, the average time consumers spent shopping and researching for used vehicles fell from 15:07 to 14:12 – a decrease of almost an entire hour in just two years.

In today’s fiercely competitive market, dealers need to identify prospects early in their purchasing journey and earn their business by delivering an exceptional dealership customer experience from the start. 

This means understanding and addressing each prospect’s individual wants and needs. Knowing used conquest auto sales are heavily product driven, leverage your dealership’s DMS, CRM and dealership sales platform to identify prospects likely to be in the market for vehicles in your available inventory. 

With pre-owned buyers typically more nomadic, price sensitive and credit challenged, understanding the various factors influencing their purchasing decisions can be difficult. Comprehensive predictive analytics and sophisticated outreach programs are critical to simplifying these complicated buyer journeys, empowering dealers to match pre-owned customers with relevant offers and simplifying complex sales cycles with automated, data-driven marketing.

Keep Pre-Owned Car Inventory Working For You

NADA’s annual dealership survey found that of the 14.9 million pre-owned cars sold at new-car dealerships last year, 40% were acquired by trade-in on a new car purchase, 27% were from auctions and 23% were from trade-ins on used vehicle sales.

That mix will likely change dramatically in 2020 thanks to the year’s unique market forces, including shrinking new car inventories thanks to OEM production disruptions, defleeted vehicles clogging auction lots and an increase in used trade-ins. 

This presents challenges and opportunities for dealers looking to build a profitable used car inventory mix. Make sure your dealership’s used car buying isn’t just operating on a “business as usual” model, but is instead ready to identify opportunities in a glutted market for high-value acquisitions on one end while ensuring you have the capacity to take more trade-ins on used vehicle sales than in the past.

This is a great time to look at what pre-owned cars are in demand in your market. Once you know what’s hot and hard to find, use predictive marketing tools to identify owners of those vehicles in your marketplace and engage them with personalized messaging and actionable trade-in offers that factor the potential resale value of their current cars into the equation.

Increase Dealership Profit Through Efficiency

In 2019, the average new-car dealership in America made a $2,374 gross profit on every used car sale, but only $14 in net profit. Those figures are even worse for import dealers, which averaged a $50 net loss per used vehicle sale, and for luxury dealers, which posted $1,708 net losses on each pre-owned transaction despite comparable gross profits.

Improving those figures requires cutting the costs that go into the difference between gross and net profit, which largely means cost of acquisition. While NADA doesn’t track used vehicle marketing costs specifically, its dealer surveys did find that the average dealer in 2019 spent $640 in advertising per new vehicle sale. That was almost 32% of the gross per-sale profit and more than the $631 net loss dealers averaged on new car sales last year, highlighting what dealers have always known: Improving marketing ROI is critical to net profitability. 

With predictive marketing campaigns, dealers can convert qualified auto leads into buyers more efficiently by using the channels and messaging most likely to engage each individual prospect. 

This is why we’ve built pre-owned functionality into Market EyeQ, using strategic information from IHS Markit. Just as with new vehicle sales, dealers can use Market EyeQ’s Behavior Prediction DriversTM to identify the best used vehicle sales prospects, communicate with Mastermind’s predictive marketing campaigns and close more deals with actionable customer insights. The results speak for themselves, with dealers who market with Mastermind generating up to 15x ROI.