If there’s one word that looks like it will define 2019, it’s “demand.” Consumer demand for new or used vehicles is expected to be down, potentially delivering a second year of lower sales in North America. At the same time, growing demand for trucks and SUVs, decreasing interest in cars and growing prevalence of alternative powertrains came to a head in 2018, driving fundamental automaker changes to production plans and product lines that will be felt in 2019 and for decades to come.

These trends, in turn, demand a strategic response from dealers that want to ensure sustainability and profitability in 2019 and beyond. With sales down, margins squeezed, products changing and consumers evolving, “business as usual” risks no longer delivering the usual results in 2019.

For the “Year of Demand” in 2019, consider responding with efficiency, adaptation and experience:

Efficiency

While efficiency is a dealer’s friend in the best of times, it’s during tightening markets where it truly becomes a critical competency. Too many dealers mistake cutting costs for efficiency, especially when they’re trying to do the same thing the same way while spending less.

Take customer acquisition, which is the lifeblood of any dealership. Marketing costs are a constant source of irritation and pain for dealers, especially in the traditional “spray and pray” model that often defies trustworthy ROI calculations. It’s tempting for dealers to shave their marketing spend, reducing frequency or thinning out channels to save a few dollars month-to-month and improve their bottom line in the short term.

With the same number of competitors chasing fewer customers, this is exactly the wrong way to go about finding efficiencies in marketing and reducing acquisition costs. You’re not changing the fundamental number that drives profitability, which is your advertising cost-per-sale. Dealers are used to hearing all sorts of sales pitches about the value various marketing campaigns will bring their business. But predictive marketing like the kind Mastermind offers is an entirely different model, with the results to show for it.

For instance, the industry average advertising cost-per-sale is $632. For Mastermind users, it’s $128. That’s efficiency through reinvention, enabling a much higher return on your marketing dollar and not just by spending less money to do the same thing.

Creating this kind of efficiency in a highly-competitive and mature market requires true reinvention of the marketing process, using the kinds of digital analytics tools that are reinventing so many other industries. These are the kinds of technologies that drove the e-commerce boom, that are reinventing everything from insurance to tourism, from Wall Street to law enforcement.

This reinvention means a paradigm shift from marketing to demographics or channels, to a one-to-one, personalized and predictive model that gets the consumer thinking about buying a new car before they even realize they are in the market.

Adaptation

2019 isn’t going to be a business-as-usual year, and dealers will have to adapt to both customers and manufacturers going through deep transformations.

It’s a cliché that it’s hard to see the forest for the trees, and dealers who are focused on their day-to-day business – especially during a tightening sales market – risk looking up to discover that they missed both threats and opportunities along the path they were on. Are your customers still interested in what you have to sell them? Are you sure? How do you know? Are there new customers who might be more interested in what’s on your showroom floor now than had been in the past?

This kind of environment is where predictive analytics shines, as the technologies behind it aren’t static or locked into a snapshot of the past. They’re constantly learning, by their very nature. With their ability to juggle thousands of data points at a time, they factor in the behavior not only of the customers who show up, but just as critically, they learn from those who don’t and automatically identify what didn’t work and what could be done better for the next similar customer.

This automated adaptation, which constantly refines your dealership’s understanding of both its existing and potential customers, can form the solid foundation for dealership success in 2019 and beyond. If your environment is evolving, so must you.

Customer Experience

It’s long been a fundamental truth of the auto dealer business that it’s much cheaper to sell another car to an existing customer than it is to conquest a new one. With fewer consumers on the horizon for 2019, it’s time to invest in your customer experience (CX) to ensure you’re building and maintaining the relationships upon which your success will depend in this brave new automotive world.

With sales down, it might seem counterintuitive to talk about investing in CX. But with its importance to your bottom line, it’s an undeniable fact that being good at keeping customers happy and feeling valued is far less expensive than being bad at it. Given the difference in acquisition costs between existing and conquest sales, every customer who walks out your door never to be seen again is hundreds or thousands of dollars in profit erased from your future balance sheets.

As we’ve discussed before, there are simple things that a dealership can do to improve CX and increase loyalty; this can be a starting point in 2019 for a more comprehensive approach such as Amazon’s “obsession with the customer” that leads to meeting customers’ needs before the customer even realizes they have them.

Whatever your specific strategy for improving the total experience your customers have with your dealership might be, its foundation needs to be a great CRM system that gives empowered employees the right data to do the right thing at the right time.

Demand Excellence

If 2019 is going to be the “Year of Demand” for dealerships, let it be the year that you demand excellence in marketing efficiency, in your adaptation to a changing marketplace and in your relationship with your customers. If you’re successful in these initiatives, then 2019 will truly be a happy new year.

Interested in learning how you can capitalize on demand this year? Sign up for a VIP demo today: https://automotivemastermind.com/#/demo

A strong automotive industry started to cool off in North America in 2018, while slow moving product trends suddenly showed up on dealership floors with a vengeance. Meanwhile, fears of a subprime auto loan bubble began largely to recede. Automakers began to go public with specific plans for the future.

Sales Sag

Headlines like Bloomberg’s “The Global Auto Industry Is Likely in First Recession Since 2009” don’t make auto dealers optimistic for 2019, but for those who remember the dark days of the Great Recession there are few predictions things will get anywhere near that bad. Industry analysts predict automaker production will end up down 0.6 percent in 2018 from the previous year, with another 0.4 percent drop in store for 2019 before growth resumes slowly in 2020.

Dealers who have invested in sales and marketing efficiency while building customer relationships will be the ones to prosper in a tightening marketplace. It’s in slower markets, more than anywhere else, that the efficiency of customer retention and predictive marketing truly shine over “spray and pray” marketing techniques. When margins tighten, the dealerships that built loyalty through excellent customer experience have a measurable advantage over those waiting for the phone to ring or door to open.

The Subprime Bubble that Wasn’t

In 2017 and even early into 2018, many pundits and analysts were predicting a traumatic 2018 in auto lending, as a subprime auto loan “bubble” was set to burst. While there were some changes in the marketplace and some smaller lenders went out of business or got out of the market, the biggest news in the subprime market in 2018 was that lenders shortened loan terms, managed interest rates, limited credit lines and otherwise managed down subprime risk to the point where delinquency was down even as subprime lending was up in the third quarter of 2018.

Subprime lending is expected to increase again in 2019 to 16.5 percent of overall origination volume, according to TransUnion’s consumer credit forecast. However, it’s worth noting that in 2007, at the start of the last recession, that figure was as high as 20 percent.

Dealers benefit from having a diversity of finance options available to them. While tighter risk management may create challenges in the short term for getting customers approved, the changes by lenders will be healthy in the long term, as a defaulted buyer loses almost all of the value invested in their relationship. The solidifying subprime lending market is an opportunity for dealers to take a fresh look at their customer relationship management and build rules to identify potential candidates for financing who had been left out during the lending market corrections of 2016 and 2017.

Product Mix Keeps Trucking Along

In a way, 2018 was the retirement year for the sedan as sales tumbled, while trucks and crossovers took center stage and manufacturers announced plans to thin out already-lean sedan product portfolios.

This year, the trends included some of the most dependable performers on showroom floors. The 2018 Honda Accord, recognized by many as “the best car Honda’s ever made,” sold so poorly at one point the manufacturer had more than a hundred days of inventory on hand, forcing production cuts at its Marysville, Ohio plant. Overall, Accord sales in the United States were down more than 12 percent on the year as of November, while Honda’s truck sales were up more than four percent.

At Toyota, the mainstay Camry was supplanted by the RAV4 as the company’s best-selling vehicle in the U.S. market and Corolla sales were down almost 11 percent, while the company posted some of its best sales months ever for light trucks. The Camry remained the top-selling car in the North American market, it’s now the seventh best-selling vehicle behind the F-series, Silverado, Ram, RAV4, Rogue and CR-V.

Sedan sales market share dropping to its lowest-ever level in November of 2018, and the industry is responding to the shift in consumer preferences. General Motors announced the end of at least six nameplates from its portfolio. Ford also gained widespread consumer attention when it announced that by the end of next year, it expects almost 90 percent of its product portfolio to be trucks, SUVs and commercial vehicles. The only sedans that will remain are the Mustang and the new Focus Active.

For dealers, changing product mix means new demands on sales teams as well as new challenges for customer experience. While product mix is driven by aggregate consumer demand, customer relationship management means treating customers as individuals, not aggregates. This means individual customers who’ve been happy and loyal buyers of discontinued vehicles such as the Ford Focus or Cadillac XTS should receive proactive and thoughtful management by their dealers to maintain the relationship, identify their wants and needs and move them into the most appropriate new vehicle on the showroom floor.

In 2019, new consumers, new product mixes and a new competitive landscape mean dealers have to take a new look at how they efficiently identify, sell to, service and retain the customers upon whom their success depends. The industry’s not standing still, and neither can you.

How Can automotiveMastermind Help?

Do you have any questions or comments about the new competitive automotive and how it’s changing the customer experience process? Contact us today.

Auto show season is officially upon us!

The 2018 LA Auto Show kicked off the season earlier this month featuring nearly 1,000 cars, trucks and SUVs, with more 60 vehicle debuts from major brands including Toyota, BMW and Volkswagen. As one of the world’s largest auto shows, the 10-day event was met with plenty of hype, including the usual pre-show rumors and speculation focusing on which vehicles would be unveiled. 

While much of the speculation was true, leaving few surprises when it came to debuts, the 2018 show ultimately gave a glimpse into where the industry is now and where we will be heading next. Here are just a few takeaways.

Big is Back

As expected, multiple automakers unveiled large models such as trucks and SUVs during the show. This came only weeks after GM and Ford announced they would be discontinuing production on many sedan models in favor of SUVs, CUVs and trucks, reacting to shifting consumer demand.

Garnering the most attention in the class was the 2020 Jeep Gladiator, unveiled on day one of the show. It is the first mid-size pickup from the automaker in more than 25 years, a testament to the current industry trend. Met with fog machines and strobe lights, the workhorse literally climbed the steps to take center stage during its unveil, met by fanfare on the show floor and on social media. 

Dealer partner BMW made a splash and joined the full-size market with its 2019 X7. With room for seven, the three-row luxury SUV is the largest BMW X model, with a spacious interior and plenty of leg room. The move was well-calculated. Only days later, the BMW released its November 2018 sales report, showing its lineup of sports activity vehicles accounted for 56 percent of sales during the month, led by the X5 and X3.

On the slightly smaller end, dealer partner Honda debuted its brand new 2019 Passport. The five-seat, mid-size SUV is big, but not too big– well-positioned in the market as consumer continue to move away from sedans into larger models.

"With customer demand for SUVs continuing to grow, the new adventure-ready Passport is going to further solidify our lineup, attracting new buyers and keeping existing customers in the Honda family," said Henio Arcangeli, Jr., senior vice president of American Honda Motor Co., Inc., in a release after the debut. 

EVs Take Center Stage

Representing another shift in the industry were the number of electric vehicles and hybrids debuted during the show. As consumers warm up to EVs (a consumer report from AAA earlier this year found 20 percent of U.S. drivers would likely buy an electric vehicle), dozens of models were introduced from both well-established brands like Volkswagen and Audi and newcomers like Rivian.

Dealer partner Audi’s E-Tron GT Concept vehicle stole much of the spotlight after its global reveal in a non-descript parking lot attended by actor Robert Downey Jr. The four-door coupé touts an estimated range of 248 miles and an impression 590-hp. While the model is expected to enter production in 2020, the automaker aims to have 12 all-electric automobiles by 2025.

Also ushering in an electric concept was dealer partner Volkswagen. With a playful exterior reminiscent of the classic VW Bus, the I.D. Buzz Cargo Concept is the newest addition to the automaker’s line of fully-connected electric vehicles. The Cargo has a range between 200 and 340 miles and can be charged to 80 percent capacity in only 30 minutes. The zero-emissions van could begin production as early as 2022.

While not fully electric, dealer partner Subaru debuted its first-ever hybrid model during the show, the 2019 Crosstrek Hybrid. The hybrid is the “most efficient version” of the brand’s third best-selling model in America, with a combined electric and gas range of 480 miles. The model is expected to hit dealerships this month.

Adapting to Today and Preparing for Tomorrow

As two distinct narratives unfold, the LA Auto Show serves as a glimpse into where the industry is right now. Of course, as more and more consumers opt to purchase larger vehicles, automakers will continue to introduce new trucks and SUVs. But as the industry looks forward, EVs continue to stay relevant. That’s not to mention the number of autonomous vehicle concepts revealed during the show.

This is ultimately reflective of 2018 as a whole: Dealers and automakers are being forced to adapt to changing consumer behaviors while also considering and developing future mobility to appeal to tomorrow’s customers.

Where do you think the industry is headed next?

When the Internet first began to play a role in car buying, many dealers were concerned they would lose influence over their customers and become simply a pick-up location for new vehicle purchases – or worse. But while the dealership’s role has evolved thanks to modern technologies, those same changes are giving dealers more opportunities than ever before to become proactive rather than reactive in their relationship with their customers.

Many of the same core technologies that allow almost 90 percent of American consumers to research cars online before visiting a dealership also power predictive marketing solutions that can put dealers in the position to reach consumers with personalized and targeted communications at the time when they’re in the market for a new vehicle. Critically, this can happen even if the customer doesn’t realize that yet.

These predictive marketing solutions are an entry point to a comprehensive customer experience (often referred to as “CX”) model that draws customers in, learns as much as they can about them and then uses those insights to build a lasting, long-term relationship with them.

Forrester defines CX as how customers perceive their interactions with your company. For a customer to have a positive experience, Forrester says, you need to make it useful, usable and enjoyable.

Here, it’s worth considering the difference between “useful” and “usable” and how that applies to the dealership experience.

A useful experience is one that provides value to the customer. Almost 90 percent of consumers use the Internet to shop for cars, but less than a third of them show up at a dealership knowing which vehicle they’re going to buy. A useful experience is one where they’re given the information and insight they need and the hands-on product interactions they want, so they have everything they need to make a decision. For today’s shoppers, this means moving away from the sales pitch where you’re telling them what they already know from their research, and more toward a consultative “product expert” model where you’re determining where you can contribute to their understanding.

This changes from customer to customer. Baby boomers and Gen Xers may be more likely to arrive with questions to ask, but younger customers tend to want a quick path to a test drive. Either rushing or slowing down a customer’s preferred speed can harm their perception of their experience with you.

Where usefulness is about the value you provide your customers, usability is about how easy it is to do business with your dealership. This starts with your website. Most web traffic is mobile, and your site should be designed with this in mind – and continues throughout the entire CX process. Does your sales team know who your customers are and what they want before they show up? Is their car ready for a test drive when they get there? Is there a place for the kids to play while the adults talk? Are your employees trained, prepared and able to give your customers a personalized experience?

Everybody wants to feel special, and customers want to feel valued. This shows up in research on how they interact with companies: According to Marketo, more than 78% of consumers will only engage with offers if they have been personalized based on their prior engagements with you. More than half of customers are more likely to buy from you when they’re recognized by name.

Your customers will enjoy the car buying process more when you use predictive marketing to treat them as individuals with specific needs you can meet and expectations you can match. This commitment to CX then forms the basis of an ongoing relationship marketing function that crosses sales, service and finance to build lasting positive relationships with customers.

Done right, predictive marketing gets customers in the door, empowers you to personalize their experience and forms the basis for a profitable, long-term relationship. The alternative is a model of low-closing percentage digital sales teams, price-shopping walk-ins and “spray and pray” marketing campaigns. When you plan for the future of your dealership, you can either decide that you’re going to know what your customer wants and needs – maybe even before they do – or you can continue hoping for the best when someone walks in the door.

How Can automotiveMastermind Help?

Do you have any questions or comments about predictive solutions and how it’s changing the customer experience process? Contact us today.

While it might feel like we’re at the end of 2018 with a month and a half left in the year, another way to look at it is that we’ve still got a tenth of the calendar left in front of us. Just as you can get a lot done in the last 45 minutes to an hour of your work day, there’s still a lot that can be done to improve your dealership customer experience before closing the books on 2018. Here’s five suggestions on how to spend the remaining weeks:

1. Ask Your Customers for Anything but Time

French Emperor Napoleon Bonaparte famously told his generals, “You can ask me for anything you like, except time.” It’s a sign of progress that your customers today feel the same way an emperor did in the 19th century, which is why one of the quickest ways to lose their business is to make them think you’re wasting their time.

Take time yourself to follow customers through both the sales and service customer experiences and identify where you could shave time, even a few seconds here or there. How long is the customer waiting while information is entered or retrieved from a system? How long do they wait to interact with a cashier or service representative? How long are they waiting for information to get from one of your employees to the next, or for their vehicle to be pulled around?

Survey after survey finds convenience is king for today’s customer – especially the next generation you’re hoping to build a relationship with now for decades to come. Find ways to make the entire process as short and efficient as possible, and then make a point of telling your customers what you’re doing. Don’t wait for them to notice that you’re finding little ways to make things move faster, but rather train your staff to share that information: “We’re doing things this way now because it lets me get you out of here faster.”

The more your customers believe you’re making a sincere effort not to waste their time, the more they’re going to be willing to entrust you with it in the future. A reputation for respecting your customers’ time is a powerful relationship marketing tool to drive future sales.

2. Who’s Waiting, and What Could They Be Doing?

Rethink your service waiting area. You’ve probably already figured out chargers and easy-to-access Wi-Fi are the new “doughnuts and free coffee,” but what’s next? These rooms tend to try to be something for everyone, but in the process, they can fail to meet the specific needs of your working customers. For someone who’s had to take unexpected time away from the office to deal with a car repair issue, it can be frustrating to try to stay connected to work while young children chatter, and game shows play on the television. Consider creating an adults-only service waiting area targeted at businesspeople, with minimal noise distractions, seating conducive to laptop use and potentially even a printer or fax machine.

Take a look at the next hotel “business center” you pass and consider what value its amenities might provide to your service customers. This is also a great time to make customers feel like they’re valued: Have a dealership manager take the opportunity to ask them in person what they thought of their wait, and what would have made it better: “We’re thinking of making some changes and would value your opinion.”

3. Revisit the Rules

Are your CRM rules still reflecting the way you want your customers cared for? Too many dealerships “set and forget” their CRM rules, and too few get dealership leaders in sales, service and F&I together to go through the rules together and ensure they reflect reality and best practices.

Your CRM is a critical engine for dealership sales – and, given the low cost of retaining an existing customer compared to the cost of acquiring a new one – profitability. Take the time before the end of the year to revisit those CRM rules about who gets contact, how often, for what and by whom, and make sure that they’re leveraging your CRM investment to its maximum potential.

4. Spread the Social Love

Keep your team connected to the digital world. While social media platforms are great for sharing special offers, news and other information with customers, they’re also a source of potential friction if your customer-facing staff don’t know what’s being said.

Do you have a process for making sure your sales and service teams know what’s being said on your social media channels and website? Do they all know what digital coupons are out there, or what vehicles are being featured today?

You can’t trust your team to be constantly watching Twitter – and you probably wouldn’t want them to, anyway. But with today’s customers virtually always starting their shopping online, it’s critical for dealerships to connect the (often offsite) digital team with the people who will be the next point of contact for those customers, ensuring there’s no confusion about the featured deal or coupon of the day.

5. Use the Free Time

We’re entering the slower period for foot traffic in the dealership, so this is a great time to get things done. Use this time for sales and service staff training, getting them up to speed on new tools as well as refreshing the things you let slide during the busier times. You don’t need to send people off to all-day seminars – although if you’re going to this is the right time – but you’ve got more time now for the kind of 15-minute or half-hour sessions that make a real difference in the long term. Whether it’s sales techniques, product knowledge, upsell opportunities, market information, internal policies or other useful knowledge, take advantage of the opportunity to make your team more efficient and effective.

If you’ve got maintenance or renovations to do to customer-facing areas that could be disruptive, this is the best time to get that done with the least possible interruption or inconvenience. Carpet a little worn in the service waiting area? Time to repaint the walls in the service bay? Need to reconfigure the sales team’s desks to make more room? November and December are the right time to get that done.

How Can automotiveMastermind Help?

With a number of tools out there to help you maximize your customer experience, the automotiveMastermind technology will help give you a major advantage over the competition. Nearly 70 percent of our dealer partners said they were at least 50 percent more productive after implementation. More than 70 percent said conversations with customers have also improved.

Contact us today to learn how we can help you improve your overall customer experience.

IHS Markit (Nasdaq: INFO), a world leader in information, analytics and solutions, today announced the acquisition of automotiveMastermind Inc., the leading provider of predictive analytics and marketing automation software for the automotive industry.

http://mstrmind.us/IHSMarkitaMRelease

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aM is ranked seventh on the Inc. 5000 List, the most prestigious ranking of the nation's fastest-growing private companies. As one of the country's highly respected rankings of private companies, this award recognizes the innovations and contributions aM has made to become one of the most successful organizations in America.

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aM has been named a finalist in the 2017 SaaS Awards in the following categories: Best User Experience (UX), User Interface  (UI) or Design in a SaaS Product, Best Data-Driven SaaS Product and Best SaaS Product for Sales and Marketing.

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Each independently owned and operated Volkswagen dealership is now able to partner with automotiveMastermind, the leading predictive analytics technology company, to attract more drivers through the implementation of behavioral analytics and marketing automation. 

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