*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Tim Eckert

For all the negative disruption COVID-19 has created for automotive retailers, it’s also had one interesting side effect: speeding up the rate of technology adoption.

Out of necessity, dealers have had to fast track implementation of digital and remote solutions and services that make for a safer car-buying and servicing experience. It doesn’t hurt that those solutions also represent lasting improvements that boost customer satisfaction by emphasizing convenience and transparency.

Contactless payments are a perfect example. True, this technology was already available in many areas of our lives for years before the pandemic: airline tickets, parking meters, sports stadiums, subway systems, and even some grocery stores.

But automotive retailers, and even a significant chunk of consumers, have been slower to adopt.

Not anymore.

During the first half of 2020, 38 percent of all wearable devices (mainly prominent in watches and fitness trackers) had mobile-payment functionality via near-field communication (NFC) technology, with the number expected to approach 50 percent by the end of the year.

Meanwhile, one survey found that 26 percent of respondents expect to use less cash following the pandemic when compared to before, while 27 percent say they expect to use credit and debit cards more often.

And, among those who have adopted contactless payment as their new normal, 74 percent said they would continue to use the technology post-pandemic. In other words, once people become familiar with contactless payment, they like it.

Finally, we know from our own data that injecting convenience into the car-buying process makes a real difference.

Put it all together and a clear picture emerges: Consumers are gravitating to a more convenient and transparent digital future, and contactless payments in the dealership are a no-brainer. It’s a permanent process improvement you could implement right now to start making a difference in customer satisfaction and, ultimately, your bottom line.

The Benefits of Going Contactless

How, specifically, do contactless payments improve your business? There are four key benefits:

• It’s safe. We should assume, even in a post-COVID society, people are generally going to be more conscious of public health concerns. When it comes to one’s personal hygiene, contactless is inherently safer than any other payment option.

• It prioritizes the customer. Nothing communicates “We take you and your time seriously” to your customers like speeding up a step in the car-buying or servicing process. Contactless payments can take as little as 10 to 15 seconds, much faster than cash and even chip-enabled cards, which can take 30 to 45 seconds.

• It’s convenient. It’s worth stating again – the more convenient, flexible, and transparent your dealership processes are, the better. Contactless payments come in all forms – some of which the customer doesn’t even have to be present in your store to complete a payment, such as online or text. It’s all about catering to your customer’s lifestyle and giving them options on how to pay. Having a customer-centric reputation only does good things for your business.

• It’s secure. You might assume a digital payment is less secure than a payment made on a chip-enabled card, but contactless payments are encrypted wireless communications. They’re very safe, meaning you’re not losing any functionality or risking any security measures by switching to this faster and more convenient option.

Another feature of contactless payments is that it isn’t limited to a single method of delivery. Various forms of implementation include paying via your website, text message, mobile device, a tap-to-pay option, or even Bluetooth.

This flexibility once again emphasizes customer convenience above all. By presenting so many options, you meet them on their terms while still delivering great service.

With the end of the pandemic on the horizon, automotive retailers will soon be faced with a choice: to go back to the old way of doing things, or to take the lessons of COVID to heart and turn them into opportunities for permanent improvement.

With contactless payments, your dealership has one such improvement ready to go, just waiting to be implemented. Are you ready for the future?

About the Author

Tim is a Product Planning manager at Reynolds and Reynolds for the ERA-IGNITE platform, Business Office applications, Document Archiving solutions, Networking solutions, and ReyPAY®.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Jeff Adams

Video technology is rapidly growing in the automotive space, with one of the major surges coming from the service department. Why? Ninety percent of consumers claim a video will help them make a purchasing decision, so using persuasive selling materials such as video is critical to capturing additional upsells. Technicians are now using this technology to bring the report card to life to show customers needed service or repairs. However, with this new trend comes a few hurdles, including training and video execution.

Technicians are typically not customer-facing and likely not trained in videography. This means in order to successfully implement a video program, they need guidelines and training to help master this craft.

Here are a few quick tips you can provide technicians to help them send a professional video to customers:

Prepare for the video before recording. 
Make sure the work area is presentable. Technicians should clean up as much as they can and put on a clean pair of gloves. Customers don’t want to see dirty gloves handling one of their largest investments. Also, have the parts or items needed for the video easily accessible.

Credential, credential, credential.
When a technician begins their video, they should state who they are, what they are doing, and confirm it’s the customer’s vehicle. This can be done by having the full vehicle in the shot or by showing the license plate number.

Provide clear shots and context behind recommendations.
When technicians are recording the video, they need to hold the camera still on the item they are speaking about to provide a clear shot for the customer. While speaking about the item, they need to provide some context behind why the item is being recommended. This could be done by providing the minimum standards, showing what the part should look like by having a new part ready to show, or by highlighting the potential outcomes of declining the recommendation.

Wrap it up with next steps.
You don’t want technicians telling the customer what needs done and then providing no avenue to make sure it’s accomplished. When the technician has completed the recommendations, they should always conclude the video by letting the customer know the next steps to complete the repair process. Always let the customer know how to buy.

With these pointers and practice, your technicians can help customers make their purchase decision and drive more revenue toward your store, and into their pockets. For even more tips, check out this training video from Reynolds and Reynolds.

About the Author

Jeff Adams is a Product Planning manager for Service applications at Reynolds and Reynolds.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Jeff Adams

It’s no secret some consumers have a sense of distrust when it comes to dealerships and dealership service departments. The major pain point: the fear of being overcharged and underappreciated before they hand over the keys. This distrust is often perpetuated by article after article that portrays dealerships in an untrustworthy light. So, how can you gain community trust and still be profitable?

One of the best ways to get new and repeat customers in your service department is through transparency. Although this is a familiar term, it’s important we translate this into your service department by making the process as predictable as possible. You create this atmosphere when you:

Display honest pricing.

Nobody likes it when restaurant menus don’t show pricing for meals or drinks. Customers feel the same when they can’t see the cost of your services. Having to guess the cost of their visit automatically makes their guard go up. Be as upfront with them as possible from the first interaction – whether online or at the advisor’s station.

Provide a fool-proof greeting process.

Part of transparency is knowing what to expect. This means a regular customer or a new customer can easily walk through the greeting process and receive the same treatment repeatedly. If a new customer pulled into your lot today, could they easily find your service drive? Once they get there, do they know the next steps for getting checked in? Your dealership should either have enough signage and online information to get a customer to the correct place, or your greeting staff should be ready at the door so the customer isn’t lost or confused. The next time the customer visits, they should be able to go through the same steps they did previously and know exactly what to expect – a menu presentation, a rundown of the multi-point inspection process, and next steps for their appointment.

Make sure customers see what they are signing.

When customers sign a paper document, allowing them to read the fine print is easy. However, with paper comes a lack of integration and the potential for the document to get lost or destroyed, and impossible to reference. With a digital RO comes the easy integration into your system and electronic file storage, but having a customer sign a signature line with no context instead of the actual RO is not transparent. It’s important your dealership has the best of both worlds with a greeting tool that allows the customer to see and sign a digital RO, creating transparency and trust.

Keep customers fully informed about their vehicle state.

Customers need to know about the state of their vehicle, which means sharing more than just the red items on the multipoint. If a technician marks something as yellow, the customer should know:

• How long it can make it without another check-up. 
• What the repair entails. 
• The cost of the repair.

Many times for yellow items, you can advise the customer this is something to keep an eye on for their next appointment. This lets the customer know something will need to be fixed in the future and your dealership is one they can trust their vehicle with.

Don’t forget to also mention or praise the green items. Let them know these items will likely need repaired at some point, but currently look great and are not a concern.

Let customers easily refer to their previous service history at your dealership.

Make previous items easily viewable for the customer. This can be through a printed report they keep for their files, or in their online account for service scheduling. They can walk into your dealership without worrying about being blindsided by repeat recommendations, and they can easily refer to this information to schedule their next appointment.

It is possible for service departments to overcome the stigma of distrust, but it’s not as simple as having personable advisors. Create processes that make the customer feel informed and comfortable to build trust and gain repeat business.

About the Author

Jeff Adams is a Product Planning manager for Service applications at Reynolds and Reynolds.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Corey Walls

At this point, every automotive retailer has heard that “electric vehicles are the future.”

That’s actually inaccurate – the age of electric vehicles has already begun, and there are no signs that it’s slowing down: plug-in and hybrid vehicle sales have quadrupled globally since 2015.  And when you look at the lucrative used vehicle market, both supply and demand for electric vehicles are rising quickly.  There are now well over 1.3 million EVs on the road.  It is still a niche market, but similar to lifted and accessorized trucks, it’s a highly profitable pre-owned segment if you can effectively buy, and more importantly, sell these vehicles.

Before you enter this market, you need to make sure your sales team is ready.

Train Your Staff on the Technology

Across the board, your associates need to become knowledgeable about the features of electric vehicles, but this is especially crucial for your sales staff. One way you can train your associates is through role-playing conversations about electric vehicles.

Vehicle lifespan, battery specs, and charging options should be foundational, base-level information for each EV on your lot. Just as you’d mention engine performance in a sales pitch for a truck, you should learn exactly how battery-electric cars perform and transmit that information to potential buyers.

It’s also critical to avoid grouping all EVs together in one category. EVs can vary significantly in size, range, and performance. A Tesla Model S and a Nissan Leaf will have vastly different features and buyers, despite the fact they are both powered by electric batteries. Research-driven customers will want to know which EV best fits their needs, so your staff needs to know what sets each one apart. For prospective buyers, seeing their options in person is a key step of their buying journey, and your readiness to engage with them will determine the outcome.

For example, there could be confusion in the buyer’s mind about how charging works. One way to clear up any misconceptions could be to offer a hands-on demonstration to see firsthand how they would charge their vehicle. It’s also vital to teach them about the options of an in-home charging device or point them to apps that can locate publicly available charging stations.

Selling EVs will require a higher degree of technical knowledge, but through coordinated training efforts, your sales staff can embrace opportunities to talk about electric vehicles with prospects.

Build Strategic Relationships

As EV technology continues to evolve, you may find prospective EV buyers have more questions and a longer buying process than traditional car customers. This means it could be necessary to heighten the management of your interactions with specific customers, which can be achieved with effective customer relationship management (CRM) software.

Ideally, you want your salespeople to lead customers to a purchasing decision, but it can be difficult to focus your efforts in the right place without an effective CRM. To boost both efficiency and effectiveness, this solution would help your team prioritize tasks and follow-up actions based on the likelihood to buy.

A key part of this is understanding different EV buyer profiles. For example, Teslas and Audi EVs are high-performance vehicles with very advanced tech features, meaning the type of buyer you should target for these vehicles is different from, say, an environmentally-conscious Millennial looking at a Hyundai Kona.

That same base of technical knowledge in your sales associates will also help them differentiate between prospective buyers for the various EVs in your store, and your CRM is vital support in this area.

Implementing an effective CRM solution also ties back to properly training your staff to sell EVs. You can use real data to coach your employees on both their strengths and weaknesses throughout every customer interaction.

Conclusion

EVs are here to stay. While America is still adapting to EVs being more readily available, you can prepare your dealership to sell EVs with straightforward, intentional steps. By training your employees on the technologies behind EVs, prioritizing relationships with prospective buyers, and driving home beneficial incentives in F&I, your dealership can take charge of electric vehicle sales.

About the Author

Corey Walls is Senior Director of Product Management at Reynolds and Reynolds. He leads Product Management for Naked Lime Marketing, Digital Retail, and FOCUS. He was formerly the director of software design for ERA-IGNITE, POWER, The docuPAD® System, AddOnAuto, and ReverseRisk®.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Hayley Holmes

COVID-19 continues to put pressure on the automotive industry. Sales teams have been forced into the new territory of online selling, manufacturers are playing catch up after halting production, and sanitation has become the new convenience factor in stores. But what really stands out to me is used inventory levels. As the pandemic has played out, it has gotten harder and harder to find quality used vehicles. Auctions aren’t what they used to be – both in terms of how they operate and vehicles available. And with the two month lull in sales during the spring, consumer trades took a hit as well. This issue is intensifying every day as consumers are fully back to shopping and are ready to buy. The challenge is, how do you serve them without the right inventory mix?

Mining your customer database is one way to fight back against an undesirable (or empty) used inventory lot. You can scour each profile to find those who are driving just the right vehicles you need, but that’s only half the battle. Of those, you have to find the ones likely to sell or make the trade today. So what goes into it?

Equity Mining 

Equity mining consists of analyzing your customer database to determine how much equity a customer has in their current vehicle. Most people would think targeting only customers who have positive equity, even just a small amount, would give them the best opportunity to close a deal. This isn’t always the case. Positive equity certainly helps when putting together a deal, but negative equity customers can be just as ready to buy – sometimes more so – than positive equity customers. Disregarding negative equity customers right away is a huge miss.

Data Mining

Data mining helps you identify customers in the market and ready to buy or even sell based on life circumstances. It uses three types of data – demographic, transactional, and behavioral – to analyze each customer’s unique position. This includes traits from age and income, to warranty information and deal details, to selling a vehicle and going through a change of address. All these factors, and thousands more, have a generous effect on whether or not a customer is willing to play ball.

Extreme Mining 

Smarter predictive analytics engines will combine every factor when deciding who’s an appropriate target. This includes both equity position – regardless if it’s positive or negative – and life circumstances. The reality is, the more data and information you have on a customer, the easier it is for the engine to determine their exact next move. Maybe it’s to simply sell their vehicle so it’s off their hands. Maybe it’s to trade in their vehicle for the newer model. Or maybe it’s to trade in their vehicle for a completely different model. You wouldn’t know without a robust predictive analytics engine.

Inventory levels aren’t just a challenge to navigate during the pandemic. It’s always important to make sure you’re allocating the right inventory mix for the right customer base. Take a look at your mining efforts and determine what category they fall under. If you’re only using one over the other, you could be missing the mark.

About the Author

Hayley Holmes is the product planning manager at Reynolds and Reynolds for XtreamService. She formerly served as a marketing specialist and team lead, providing XtreamService to dealerships, and assisting to build and develop the marketing services team.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Hayley Holmes

You hear a lot about predictive data and how it can help businesses turn higher profits and capture more customers. But what isn’t talked about as much is the customer’s perspective – how predictive data affects their experience.

Have you ever been blown away by someone’s hospitality? The Ritz-Carlton is a great example as they pride themselves on providing an over-the-top experience for every customer. A story recently circulated about some guests who had a son with food allergies. The family had traveled with specialized eggs and milk, but upon arrival, they realized the eggs broke during the trip, and the milk had spoilt. The Ritz-Carlton staff set out to find the specialized foods for the family, but given they were in Bali, finding just the right eggs and milk proved to be a challenge. After searching all over town, the chef had no choice but to call a family member 1,000 miles away to ask if she would fly down to Bali with the ingredients. Sure enough, they made it happen and accommodated specifically to the guests’ needs. This is a defining moment. This is a wow factor. Experiences like this are what turn occasional customers into lifelong buyers.

In your dealership, think of this as everyday customers coming into your service drive for a typical oil change. They are expecting a routine visit, but after a thorough inspection, their vehicle is in need of $1,000 in repairs. Instead of spending the money to repair their vehicle, they could trade it in for something newer and nicer – something they didn’t consider an option before. What a lasting impression that leaves with the customer! People are most satisfied when they least expect it and when it feels like you’re going above and beyond for them. This is definitely apparent when customers arrive in service but leave F&I instead.

Some customers go so far as to share online how satisfied they were with the service they received. Take a look at this example:

Not only was he happy with the outcome of his visit, but he praised the dealership staff’s service along the way – pleasurable, polite, friendly, no pressure. What dealership wouldn’t want to add these qualities to their resume? Customer reviews like this are what online brands are built on. And despite all the technology in the world, word of mouth referrals are still gold.

At the end of the day, do customers notice you’re using data to fine-tune and personalize their experience? Not necessarily, but they do take note of how they’re feeling and their overall satisfaction. Ultimately, providing this Ritz-Carlton level of service means new lifelong customers, a better reputation, and turning that missing wow factor into an integral part of your store.

About the Author

Hayley Holmes is the product planning manager at Reynolds and Reynolds for XtreamService. She formerly served as a marketing specialist and team lead, providing XtreamService to dealerships, and assisting to build and develop the marketing services team.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Raymond Desadier

As scholars ponder the future of the automotive industry, those within its ranks are concerned with the impact it will have on all facets of the business. One profit center the COVID-19 pandemic may not have an adverse effect on is accessory sales.

The market for accessory sales has actually improved when you consider the following variables:

0% financing – Several OEMs are offering zero percent financing for anywhere between 60 to 84 months. Why take on the cost of accessories elsewhere when you can add it to your monthly car installment and pay it out over several years for no additional cost?

Inventory Issues – As inventory shrinks due to production slowdowns, accessories are a way for customers to make sure they get all the features they want in their new vehicle.  Upgraded wheels, chrome inserts, infotainment systems, and hitches are common trim upgrades that can now be accessory opportunities for you.

Trucks Are Still Big – Pickup sales have held strong amongst the pandemic, dropping only 18.7% compared to SUVs falling 36.6%. Trucks are by far the biggest accessory opportunity with so many modifications and add-ons available. Make sure you have a full catalog of accessories to offer your truck customers.

Increased Accessory Budget – Many consumers in the market for a car are likely to be in a stronger financial position now than pre-pandemic. Between stimulus checks, lower expenses, and no opportunities to spend money on entertainment, many have disposable income that wasn’t there previously. In fact, we are at the highest personal savings rates since the 1980s. Now is the time to present accessory options to every customer.

Increased Value of “One-Stop Shopping” – Convenience has become more important than ever as consumers have become accustomed to home deliveries or easy street-side pick-up. The demand for safety and convenience carries over to other purchases as well. Your customers will stick with you if they can get all their vehicle needs from one visit.

Increased Value of Accessories – Some accessories are now even more valuable. Keeping your vehicle clean is top of mind for consumers; all-weather mats are easily hosed down and seat covers can be washed regularly. Storage compartments are perfect for containing extra masks or sanitation supplies. But also, accessories that inspire fun – like spoilers, suspension, and roof racks, have also increased in value. Now that people have to make their own fun, they may turn to their personal vehicle.

There is no better time to rethink your accessory strategy and adapt to the current environment. Make sure you’re ready to take advantage of this lucrative market with a vetted digital solution.

About the Author

Raymond began his career in the automotive industry in 2001. He joined the Reynolds Consulting Services team 15 years later as an accessories business consultant. He has established accessory departments in many dealerships and has helped them thrive with training and recommendations.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Robert "Skip" Scott

Working with dealerships across the U.S., one thing is abundantly clear: every dealership wants to make more money, no matter what the economy is like. Unfortunately, most dealerships don’t have a plan in place; or worse, they have one but it’s not obtainable. “If we increase sales by 20%, PVR by 15%, and repair orders by…” – you get the picture. Quite often, they are far off their goals and forecasts by the end of the first quarter. Then, they give up trying to reach them.

It’s time to think differently. Consider all the individual transactions that make up your month – every retail car deal, accessory, and aftermarket product. Think about every bank contract, parts ticket, service repair order, wholesale car deal, and dealer trade. Even the smallest volume dealerships have thousands, if not tens of thousands, of unique transactions by the end of the month.

Improved profitability is more easily obtained by increasing tracking and accountability among team members. By using technology available to dealers today, you can identify and correct inhibitors to profitability. Below are six areas that can lead to increased profitability without directly selling or servicing any additional vehicles.

1. Benchmark your current performance.

Know your strengths and weaknesses. Identify how you’re doing versus other dealers like you. Identify and quantify what areas in your store can realistically be improved, and what you will gain. For example: “My store’s service absorption rate is at 65%. The dealers of my brand that are performing the best are at 85%. By obtaining 85%, I’d have another $57,000 in gross profit.” 

Pick any two or three items you can easily fix and fix them (or have your management team justify why they can’t be fixed). Then move on to other areas of opportunity. Do this two or three times a year, with two or three key areas each time.

2. Track expenses relentlessly.

So many dealerships literally spend themselves out of business. Have a system in place that allows you to quickly see your expenses each month as they are being posted. Make sure you can see what the month over month trends are and investigate immediately when expenses seem to be getting out of control. Department managers need to pay attention to important expenses that affect vehicle, parts, and sales profitability. If tracking expenses isn’t easy, find a solution that will handle it for you.

3. Accountability and communication are key.

Who is in charge of your dealership’s collection department? Unfunded contracts, unpaid warranty claims, unpaid incentives, slow paying wholesale deals, and trade title issues can all put a grind on your finances and profitability. Who keeps your money flowing? Is it easy for you to track their performance? Get a system that allows you to create a dealership-wide “bulletin board” of who is keeping money owed to the dealership, including what is known about an issue and what is being done to correct it. This can increase profitability by cutting down the time it takes to get paid.

4. Know your wholesale business.

Most dealers simply look at one number – wholesale profit or wholesale loss – for the month. We need to look deeper at the “why” behind the number. Do you have a manager(s) or salesperson(s) that needs help with the appraisal process because it’s their cars you constantly lose money on? Do you have wholesale outlets that perform better than others, and therefore should get a shot at more vehicles? Are there particular brands/types of cars you are consistently having to wholesale and take a loss? Having a tool to track your wholesale performance on a monthly, quarterly, and annual basis can be an easy way to improve overall profitability.

5. Track your salesperson goals every day.

Every dealer claims to do this. The reality is, tracking it and doing something about it don’t always happen together. There are far too many five and ten year veteran salespeople selling the same amount of vehicles as the person hired three months ago. Your managers need to see salesperson performance month over month, year over year. They need to set, communicate, and track goals (and even automatically email performance to staff on a daily basis). Managers need to identify salespeople who haven’t closed a deal in the last couple of days, so they can train them to get back on track. Having a single system that does this for you can hold sales staff accountable and can ensure you don’t miss obtaining realistic goals.

6. Track your service advisor goals every day.

Similar to the sales department, you need to track your service department more closely. Can service managers easily identify coaching opportunities? Do you know op code utilization per advisor? Do you know the most profitable op codes being utilized? Do you track each advisor’s repair orders monthly to track gross profit percentage per RO?

We all track work in progress, but do you know which advisors are responsible for having the greatest percentage of aged open ROs? Do you know on a daily basis the status of these ROs and what’s being done to get them closed? Having a tool that tracks key performance areas of the service department can improve profitability without servicing any additional vehicles.

Conclusion

Keeping track of your dealership’s performance and managing your business has immense payoff. If you’re in need of a solution that can help, contact your Reynolds and Reynolds account manager.

If you need custom consulting to help fix issues or walk you through key tactics, contact Reynolds Consulting Services at 888.204.6092 or email consulting@reyrey.com.

About the Author

Skip has been a part of the Reynolds Consulting Services team since 2013. He consults on CRM for sales and service, used vehicle profitability, and ReverseRisk®, a comprehensive dealership reporting tool. With over 35 years of industry experience working as a general manager, sales manager, finance manager, and sales and leasing consultant, Skip is well equipped to help dealerships manage their stores.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Jeff Adams

In times like these, making sure customers feel comfortable in your store is paramount to retaining business and driving revenue. But when making customers feel safe includes limiting interactions with employees, how can your dealership provide quality service to customers?

To help customers keep a distance, you can:

1. Set the standard for an environment where customers understand you are working to keep everyone safe. This can be done by creating a “stand behind” line at advisors’ desks, marking 6 feet waiting places on the floor with tape, having hand sanitizer readily available for customers to use, and displaying reminder signage around the dealership to be respectful of each other’s space.
2. Provide a self-led greeting option for customers to check in without interacting with an advisor. They can see your store’s service deals and walk through a normal service greeting at their own pace away from other people.
3. Communicate from a distance with phone or text frequently providing consistent updates as the customer’s vehicle makes its way through the repair process.  Make sure every communication is documented making future interactions much smoother.
4. Upsell with an online option similar to Amazon or other online retail experiences. By sending additional service recommendations via text or email, the customer feels like they are in control of their service visit and they can review their recommendations anywhere inside or outside of your store.

Overall, dealerships can and should be providing a good experience to the customer in a way that makes everyone feel comfortable. Don’t be afraid to help customers and present additional findings, even from at least six feet away.

About the Author

Jeff Adams is a Product Planning manager for Service applications at Reynolds and Reynolds.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Hayley Holmes

Have you played “two truths and a lie” before? The concept is simple. I give you three statements – two are true, one is false. It’s up to you to determine which are which. Our topic will be about consumer leads and their likelihood to buy. Think you have what it takes?

Let’s play

1. A customer currently driving a two-door coupe is likely to upgrade to a newer two-door coupe.

2. More leads do not equal more conversions.

3. Negative equity can be used to your advantage.

Do you know which are true and which is false?

Let’s dive in

1. 1. A customer currently driving a two-door coupe is likely to upgrade to a newer two-door coupe.

This statement is false. Just because a customer bought it before does not mean they will buy it again. There are a variety of factors that could have altered this customer’s position to buy.

Perhaps the customer purchased her two-door coupe when she was twenty-two and single. Now, seven years later, she’s married and expecting her first child. Do you think a two-door coupe still fits her lifestyle? Likely not.

Perhaps the customer has moved and changed jobs since she first purchased the two-door coupe. Her new neighborhood and income have changed her buying position. Now, she is more likely to purchase something accommodating to her long commute and luxurious to fit her new lifestyle.

1. 2. More leads do not equal more conversions.

This statement is true. You might be thinking that a constant stream of leads coming in is like Christmas morning, and the more leads you have, the more you close. Not true. It’s about the quality of leads, not the quantity. Carefully crafting your lead funnel to the leads that will actually buy hold much more value than a random assortment of leads thrown at your salespeople. It’s about analyzing your inventory, the market, and your database to identify not only possible leads, but those likely to close.

1. 3. Negative equity can be used to your advantage.

This statement is also true. At first glance, you’re probably thinking a customer with $6,000 in negative equity is a reason to run for the hills and wait a couple years to call. Not a chance would you consider approaching this type of customer. Not so fast. You might be surprised to find that factoring in incentives and personal buying habits brings this customer from a D rating to an A+.

Moral of the story: not all leads are created equal, so why treat them the same?

Let me explain

How am I coming to these conclusions? Predictive analytics.

Predictive analytics uses demographic, behavioral, and transactional data to determine customer buying likelihood. It considers life circumstances and compares it to historical data of similar customers to make an informed decision.

Just like leads are not created equal, predictive analytics engines are also not created equal. In each statement above, the predictive analytics engine is going against the odds and the norm. Consider implementing a predictive analytics engine that goes beyond traditional data mining. The right solution will leverage previous deal information, in-stock inventory, OEM incentives, and behavioral and demographic data to propose buying propensities and likelihoods. You’ll be able to identify customers you would not have considered targeting before, and you’ll walk away with a new approach to and outlook on selling vehicles.

See what your salespeople think about this round of “two truths and a lie”. Did they get them right?

About the Author

Hayley Holmes is the product planning manager at Reynolds and Reynolds for XtreamService. She formerly served as a marketing specialist and team lead, providing XtreamService to dealerships, and assisting to build and develop the marketing services team.