The automotive industry continues to face dynamic challenges such as shifting marketing conditions, increased competition, cost pressure and volatility. For dealers with the right technology, tools, and ambition, it represents an exciting time with a lot of opportunities to differentiate themselves in a very crowded automotive market space.
Technology is rapidly transforming the automotive industry, and predictive analytics, while now a common industry buzzword, is a core differentiator for dealers who use it well. Predictive analytics is being used to analyze consumer purchase trends and make predictions about future events using techniques like data mining, data modeling, machine learning and artificial intelligence (AI).
In this blog, Mastermind dives deeper into predictive analytics in the auto industry and what that means for dealers, including:
- The definition of predictive analytics and why it matters to dealers
- The increasing importance of predictive analytics in the auto industry
- How predictive marketing is shaping the future of auto
What is Predictive Analytics and What Can it Do For a Dealership
Predictive analytics uses historical data to forecast future outcomes. This is done through a variety of statistical techniques like data mining, machine learning, and predictive modeling. Predictive analytics helps identify and understand dealer prospects before they even reach out, giving dealers the chance to proactively market to the customer in a highly personalized manner. With this proactive marketing approach, dealers can sell more efficiently because they have the data and knowledge about those customers to allow their sales teams to develop personalized talking points. Dealers can be informed about their customers before the first point of interaction, helping improve the overall dealership customer experience and ultimately building customer loyalty.
Not only will data-driven customer insights allow dealers to understand their existing customer base, but with the right tools, similar behavior prediction algorithms can be applied to conquest customers as well – which is a game changer from the current “spray and pray” methodology used in present day conquest marketing tactics.
This data is actionable because predictive modeling involves combining what we know about an individual and what we know about the behavior of people who are in similar circumstances. The more we know about the general wants, needs and behavior of the aggregate group, the better we’re able to predict what the individual is likely to do next in their buyer journey and what messaging they’re likely to respond to.
How Dealerships Can Use Predictive Data
Predictive modeling takes the guesswork out of car sales prospecting and marketing by identifying the information that matters about potential customers and analyzing it to determine what’s most likely to change consumer behavior at that particular point in the sales cycle. Those customer insights can then be put into useful context that empowers a dealer’s marketing efforts and sales team to confidently reach out to targeted potential buyers.
For car dealerships, predictive analytics will help the sales team close deals and promote proactive maintenance in the service department. Data analytics can help in optimizing deals against the competition and even provide insights into ways that will help speed up the sales process. Sophisticated data analytics algorithms will find the most profitable opportunities based on critical customer details, analyze it, and then provide deals that prospects are most likely to accept, at the least cost to the dealer. Sales teams can even engineer deals based on the unique needs of an individual customer.
The Future of Predictive Analytics for Car Dealers
Among other strengths, the auto industry has done a great job in attracting new customers with traditional marketing strategies such as television, radio, and print media. However, these advertising mediums are quickly losing their effectiveness as audience sizes steadily decline. Predictive analytics is perfectly suited to help the auto industry overcome these marketing challenges. By tapping into the power of big data, predictive analytics applications can accurately identify persons most likely to purchase a vehicle in the near future. Complex algorithms consider factors such as time since last purchase, number of repairs on current vehicle, current mileage, and information pulled from social media to identify likely buyers.
While some dealers are inherently skeptical about any new technology that promises to change their business, predictive modeling is different – and even more important is the datasets that go into them. Sales has always been based on an instinctive form of predictive modeling that salespeople engage in through personal experience: Knowing what you do about the prospect, how do you think they’ll respond to this tactic or that offer? What’s the most likely thing you can do to get them to make a decision?
There’s a key reason why a predictive modeling sales platform is such a powerful tool for auto dealers: Rather than metaphorically tearing out the showroom floor and starting from scratch, predictive modeling is the next evolutionary stage of sales best practices that dealers have been developing for more than a century. It removes inefficiencies and automates costly and wasteful processes. Rather than replacing salespeople, it empowers them, giving them not just more information, but better information, along with suggestions on how to use it most effectively as part of their sales process to sell more cars every month.
Auto dealerships should have a predictive analytics platform in place that is focused on harnessing data and gaining insights for your sales team to help your dealership sell more cars. Market EyeQ by Mastermind is the first sales platform that gives your dealership the power to target and communicate with every potential buyer in your market from one tool. With the right technology and resources, your dealership can thrive this holiday season and beyond. If you need help, contact us to set up a Market EyeQ demo.