What are your marketing goals in 2020? One of the biggest pain points for dealers is deciding where to spend their marketing dollars to get the results they want. Many dealers feel like their marketing strategies don’t perform as well as they used to, which, when combined with declining sales profitability, puts extra pressure on marketers to up their game.

However, doing the same thing over and over again and hoping for different results is the definition of insanity. You know what else is insane? 85% of leadership teams spend less than one hour per month discussing strategy, and 95% of employees don’t understand their organization’s strategy. If you want to improve marketing ROI, the first step is to block some time so you can research and develop new strategies, put them in writing and communicate them to your employees.

The auto industry is changing rapidly, so the next step is to consider current industry trends. What worked yesterday doesn’t work today, and this doesn’t only apply to marketing. It also applies to sales and service. Let’s review major market trends:

Trend 1: Digital Transformation

Gartner Market Insights reveals that 67% of leaders say their companies will no longer be competitive if they can’t be significantly more digital in 2020. Today, nearly all consumers begin the car-shopping process online and 86% of consumers use social media every day. Relying on inventory alone to attract car shoppers to your website is no longer a viable marketing strategy to attract new car shoppers, and neither is relying on email and/or snail mail to retain your current customers. Too many customers today delete emails or send them directly into spam folders, and disregard snail mail.

Your dealership needs a digital marketing strategy, and not just for sales. Your fixed ops department is responsible for half of your gross profits, so half of your digital marketing budget should be allocated to a strategy for service and parts. The old “sales feeds service” paradigm is outdated, as these days “service feeds sales” is equally true.

Trend 2: Importance of Data Curation

Intel CEO Brian Krzanich famously said “Data is the new oil.” In dealerships, on average, only 10% of data stored in the DMS is being used for any purpose, let alone developing business and marketing strategies.

These days the ability to leverage data is critical to gain the insights necessary that keep your business thriving. And if your marketing partners(s) aren’t leveraging your data to reach and engage with consumers, it’s no wonder that your marketing isn’t getting results.

When selecting a new marketing partner, ask them how they use your DMS and/or CRM data. In addition to the data in your DMS, an effective marketing strategy relies on selective acquisition of third-party data. This is used to augment the data in your DMS to develop targeted, relevant communications.

Today’s savvy marketing companies either perform their own data analysis, or partner with companies that specialize in this area, in order to maximize marketing ROI.

Trend 3: Rise of the Customer Experience

75% of consumers say the customer experience is an important factor in purchasing decisions. Millennials also dominate the consumer space, and they care less about price and more about ease of service, convenience and the overall experience.

With flat margins, the only way to differentiate your dealership from the competition is with customer experience. In the service department, where conversion and retention are paramount to growing profitability, the experience is everything. From how you communicate to the technology in your service lane, it’s important to implement a strategy that fits how you want the service experience to be. Do the research and ask what consumers want, and then provide that experience.

Avoid Common Pitfalls

Leverage these trends in your new marketing strategy. Take the time to develop a comprehensive strategy that focuses on these trends, while avoiding these common pitfalls.

1. Do-it-Yourself. When times get tough, many dealers reduce spending on outside marketing and bring it in-house. Unfortunately, digital marketing expertise doesn’t come easily, and you can spend a lot more making costly mistakes. Choose a partner with proven expertise and a track record in digital marketing, and ask for referrals so you can talk to other dealers about their results.

2. Investing in too many partners. Your marketing strategy should provide your customers with consistency in messaging. This can’t happen when you have too many partners. Look for a marketing partner that can integrate your marketing strategy with your sales and service marketing strategies. It’s also important that your direct mail and email strategies align with your digital marketing strategy.

3. Separate the marketing strategy from sales, service and customer experience strategies. The customer experience you provide is dependent upon your marketing programs and your sales and service processes. Therefore, your marketing strategy needs to seamlessly integrate with your service and sales strategies to accomplish your goals. Additionally, your employees need to know what role they play in your dealership’s strategies, so their behaviors and words can be aligned with your planned customer experience.

Today’s marketing strategies are no longer “set it and forget it.” With the rapid pace of change, you need to review, monitor and adjust your strategy so that your dealership can evolve to meet your customers’ needs and outperform your competition.

Most auto dealerships do some, if not all of their service marketing with their manufacturer owner retention programs (ORPs). The purpose of ORPs is stated in the name: to build customer loyalty. But how well do these programs deliver on that promise?

The results from ORPs are all over the board. Some dealerships effectively use ORPs to increase customer retention, while other dealers experience lackluster results.

The Pros

The premise behind ORPs is to stay in touch with sold customers, bring them back in for service and continue the relationship until they're ready to buy again. This is definitely the right idea. Sending consistent communications to customers keeps brand awareness high and generates ROs and revenue.

The Bad

Many dealerships' ORPs underperform due to a "one size fits all" marketing strategy. If you're simply sending out mailers and emails once a month with an offer based on what you think customers will respond to, you're not getting optimal results.

The Ugly

Dealers underinvest in service marketing as a whole. Fixed ops is responsible for roughly half of dealership gross profits, yet most dealers spend 10% or less of the overall marketing budget on service marketing.

Even worse, as sales start to slow, service marketing budgets often get cut. This makes no sense. If sales are slowing, don’t you want to get more service business? How else do you expect to maintain profits during challenging times?

If your service marketing strategy is not working, change it, don’t cut it.  

The key to maximizing ORP dollars is to measure results. However, most dealers go about this the wrong way.

For example, many dealers view service marketing campaigns as a way to generate immediate ROI. For every email campaign sent, success is measured with metrics like open rates, click-through rates (CTRs), number of ROs or dollars generated.

While it's important to keep your marketing partner accountable, the ultimate goal of an ORP is to increase customer retention. Therefore, the correct way to measure results of your ORP is with customer loyalty or retention metrics.

Some popular metrics include Net Promoter Score (NPS), active customer status, customer lifetime value (CLV) or revenue per units-in-operation ($/UIO). Pick one or several to measure progress by.

Tips for Improving ORP Results

Once you have customer retention benchmarks for your ORP effectiveness, it’s time to implement strategies to improve results.  Here are a few tips to get you started.

Most dealers choose a budget-first approach, but this caps the potential audience that your campaigns can reach. Instead, use a goal-oriented budget approach and strategically select communications based on your dealership’s needs and business goals. This might mean doing fewer campaigns but maximizing the reach x frequency of each campaign.

Diversify your channel strategy beyond email and direct mail. Implement an omnichannel strategy and add social media, digital advertising and other channels depending on the goal of the campaign. If you’re doing conquest service campaigns, it takes up to seven touches to drive customer action. Adding more channels enhances the effectiveness of the channels you already have in place.

Not every campaign has to drive ROI. Be sure to include campaigns such as service thank-you’s and educational pieces that help build customer relationships.

Take a holistic approach and consider how your ORP messaging complements your overall dealership’s marketing strategy. What dealership events and marketing messages can be incorporated into your ORP?

Additionally, many dealers fail to leverage their customer data to create targeted and relevant ORP campaigns. Using predictive analytics can help identify which customers are most likely to buy into your dealership’s service value proposition and therefore are most likely to become loyal customers.

You can read more about these strategies as well as others in Affinitiv’s ebook, “Turbocharge Your Owner Retention Program (ORP) Marketing.”

Once you’ve modernized your ORP and you’re getting better results, it’s time to connect the dots between your ORP marketing and the rest of your dealership’s marketing. Your owner retention program should not be run in a separate silo. To really maximize results, it’s important to integrate your service marketing strategy with your sales marketing strategy.

Integrating the ORP into the rest of your marketing creates a more consistent and better customer experience throughout the vehicle ownership lifecycle, which in turn increases customer loyalty and generates more revenue.

Owner retention programs (ORPs) are one of the most used marketing tools and have been used by dealerships for many years. However, most ORPs are run in a silo, separate from the rest of the dealership’s marketing strategy.

This practice results in an inconsistent, less than optimal experience for dealership customers. The way it currently works is dealers sign up with several marketing vendors for different purposes; e.g. one vendor for their ORP, another for email marketing and another for video marketing. As a result, customers are subjected to messages with different voices, different ways of connecting and different tones.

To increase customer retention, you need to deliver a strong and consistent brand message. Your marketing strategy is an important part of how customers perceive your brand. To improve brand perception and thereby improve the customer experience, it’s critically important to connect the dots between your ORP program and other marketing products. Here are a few examples of how this connectedness works and how it improves your marketing efforts.

Customer Data

Data is the backbone of every marketing program. To be successful requires using first-party data in your DMS, as well as third-party data. Why? The more data you have on your customers, the better insights you have into what drives their behavior and actions.

It’s critical to integrate all customer data with your ORP in order to communicate accurate and timely information. Data helps with messaging and also knowing when to start and stop communications. Data also allows you to see who is redeeming your offers, viewing your marketing and what drives higher CSI scores.

Conquest Solutions

Historically, conquest marketing has been viewed as a separate strategy from ORPs. However, the best conquest customers are the ones who are currently in your DMS. Isn’t a return customer even more valuable than a new customer?

Using data such as buyer habits, life events and Internet history, you can accurately guess when an existing customer is ready to exit their existing cycle and start a new one—regardless if that cycle is in sales or service.

Then you can take those customer profiles and data and create lookalike audiences, so you can accurately identify new prospects in your primary market area (PMA) who are most likely to buy. This conquest strategy is much more cost effective than blanketing an entire PMA with television commercials and direct mail.

Online Scheduler

You may not think of an online scheduling product as a marketing product, but it’s essential to have this connected to your marketing program. When you send out service reminders and customers respond, you want them to be able to schedule without delay.

When a customer logs into your scheduler, do they see the same service offers that they received in the mail or on social media? This allows them to simply click on their offer(s) of choice. Seeing exactly what they received helps to build trust and create a consistent customer experience.

Service Lane Software

Integrating your service lane technology with your retention program helps with the customer experience, as well as how to communicate. Anything that happens during a service appointment can be communicated to everyone who’s involved with touching the customer and ensuring that message gets delivered.

It’s well known that customers are wary of being taken advantage of. Service lane software ensures consistency of messaging at every level. What the service advisor tells a customer in the shop is the same message they hear two weeks later when they receive their next email.

Digital Channels

More than 80% of people consume media over digital channels, so marketing via digital channels is no longer an option. This applies to your ORP as well.

Social media is a very cost-effective way to deliver personalized service reminders, lease-end expiration alerts and other timely and relevant messages. These communications can be dropped right into your customers’ Facebook and Instagram feeds.

In marketing there is a “Rule of 7,” meaning it can take up to seven marketing touches before a customer takes action. Adding digital channels such as social media and online ads to your ORP is an effective way to increase customer touches without seeming overly invasive.

Other digital channel strategies to consider include integration between your website leads and your ORP, as well as videos into email marketing. 

Instead of running your ORP in a silo, try integrating it with the rest of your marketing products. When you consolidate and integrate multiple products into a single, cohesive marketing strategy, your dealership will convert and retain more customers, as well as deliver a better customer experience.

Your dealership has probably been using an owner retention program (ORPs) for years, but when was the last time you evaluated the effectiveness of each communication?

One thing is certain. Sending out the same communications with the same messages via the same channels, again and again, isn’t a winning strategy. The goal of an ORP is to increase customer loyalty and improve marketing ROI. To accomplish this goal, you may have to modernize your ORP touchpoints to reach and engage more customers.

Start with the five most essential ORP communications.

New Car Thank You, Sales to Service Handoff

This communication is the first one that your customers receive after purchasing a vehicle. This should be an elevated piece that hits the customer when they are most excited about their new purchase. The primary goal is to set the tone for your relationship going forward.

Everyone loves driving their new car, and sending a message that warrants the amount of time and money they spent on their vehicle is a great way to keep customers’ excitement levels high. This communication also presents an opportunity to sell accessories.

Many dealers send either an email or a letter. Some do both. Using only one channel for this communication limits your reach to just a small percentage of your new customers. How can you establish a relationship if the customer never hears from you again?

A direct mail piece is a good strategy here since the customer just purchased a vehicle, so they might think the letter is something important related to that purchase. Better yet, use social media to reach that customer with the same message. The more channels you use to send this message, the greater your reach and the more relationships you will build.

Declined Service

Multiple channels may be required to ensure that the customer sees and hears this message. A highly effective strategy is to have a Service BDC conduct outbound declined service call campaigns. These will be most effective if scheduled shortly after the customer receives an email and/or sees the reminder in their Facebook or Instagram feed.

The most important strategy with this communication is to make the message relevant and personalized. Let’s say your customer declined a wheel alignment and tire rotation. When your customer clicks on the email or social media link, they should be taken to a specific landing page that plays a video on the importance of doing a wheel alignment and rotation.

Interim or Education Pieces, Newsletter

Many dealers believe that if a communication isn’t designed to immediately generate a repair order (RO), then it’s a waste of money. Nothing could be further from the truth.

Remember the goal of marketing is to build customer loyalty and retention, which increases long-term revenue. Not every campaign needs to have immediate ROI. The purpose of these communications is NOT to sell, but to inform, educate and entertain.

One dealership I know of invites their customers to bring gifts to the showroom every holiday season. The customers place the gifts in a new vehicle. When the vehicle is full of gifts, the dealer drives it to the nearest children’s hospital and distributes the gifts. Stories like these generate a lot of goodwill and help to cement your dealership brand in your customers’ minds.

A quarterly newsletter is a great way to share educational information about your customers’ specific models, such as how to use the infotainment center, how to operate the sunroof or how to check tire pressure. You can also invite them to upcoming events and share the latest news about the manufacturer or your dealership.

Inactive/Reactivation/Lost Customers

How do you reach customers who haven’t been into your dealership in the last 18 months? Generic marketing messages and offers won’t cut it. If they haven’t worked in 18 months, what makes you think they’ll work now?

The key to re-activating lost customers is personalization. First, get to know these customers by analyzing your customer data. Then, create campaigns designed to drive action. Many dealers make the mistake of creating campaigns targeted towards the vehicle, and not towards the vehicle owner.

The more data you have on a customer, the more likely you can find the reason why they defected in the first place. Was it a bad experience? Did they move? Did their warranty expire? Purchasing third-party data about these customers can give you insights into how to win them back.

Did a customer just have a new baby? Buy a new house? Recently married? Life-changing events are powerful indicators that a customer may be in the market for a new vehicle soon, if they aren’t already. Focus messaging on your customers’ needs, not on the vehicle needs.

Service Thank You

Again, many dealers might believe this communication isn’t important since it doesn’t generate ROI. That’s short-term thinking.

The primary goal of this thank you message is to solicit feedback from customers. The Customer Service Index (CSI) score is essential to track what went well and what didn’t go well with your service experience.

The most valuable information is collected within a week of your customers’ visit, when the experience is still fresh in their mind. During this short window customers want to share feedback whether their experience was good or bad.

Of course, feedback is only useful if you actually use it to improve your service processes.

Before sending out these communications, make sure that the purpose of each communication is clearly defined. To drive customer action, keep your messaging clear, complete and concise. Most of all, make sure each communication is relevant for every customer. Follow these steps to improve both your customer retention metrics and ORP ROI.

Most dealers have been using an owner retention program (ORP) for years. Sometimes referred to as a service connection program or trigger-based communications, the goal is to stay in touch with sold customers, bring them back for service and continue servicing them until they’re ready to buy again.

These messages are a great way to communicate with customers in a timely and relevant manner without having to lift a finger, which is why these programs are well known and widely used.

However, many ORPs still use a dated, generic approach to marketing. If you’re sending the same ol’ messages using the same ol’ channels—typically coupons and service specials sent via email and direct mail—it’s time to modernize the way you communicate to your customers.

Ways to modernize your ORP include:

1. Use “Big Data” to add relevance

Many dealers ORP underperform due to “one size fits all” marketing strategy.

It's not uncommon for dealers to create offers based on what they think the customer wants, instead of what the customer actually needs. The only way to accurately predict a customer's need is to be able to leverage customer data and predictive analytics.

Customer and vehicle data is used to create personalized, relevant offers. If a customer recently had an oil change they don't need a coupon for an oil change one month later. If a customer is approaching their 30,000-mile maintenance, they should receive an offer designed just for them.

Predictive analytics predicts the best offer for a customer based on that individual's previous actions and behavior. If a customer clicked or didn't click on your previous offer, or if a coupon was redeemed or ignored—all this data should be used to craft the next offer that's relevant for that customer.

2. Add channels to increase reach x frequency

Many dealerships spend a disproportionate amount of their ORP budget on email and direct mail; but not all customers respond to these channels. This approach limits reach x frequency of your communications. In marketing, it’s well known that the greater your reach x frequency, the greater the response rates and ROI are.

The fact is most emails today are deleted, but millions of people spend hours a day on social media and/or YouTube. Being able to drop service reminders into a Facebook or Instagram feed, or include a video pre-roll on YouTube will increase the percentage of your customers that see your message.

BDC campaigns are also highly effective and worth the investment for higher ticket repairs. And believe it or not, direct mail campaigns are still highly effective for certain types of communications, and tend to reach a higher percentage of your customers than email campaigns alone.

To increase the effectiveness of your ORP, add an omnichannel strategy that leverages customer data and predictive analytics to deliver the right message to the right customer via the right channel at the right time.

3. Measure ROI of the program, not campaigns

Many dealers continue to measure the ROI of individual service campaigns based on dollars spent vs. dollars generated. This approach fails to consider how the overall ORP is working towards its stated goals. Customer loyalty can't be measured by the number of coupons redeemed.

The purpose of an ORP is to build long-term relationships with your customers. Therefore, your ORP should be used to deliver frequent communications so that you stay top of mind between service visits.

To keep customers engaged, you have to focus on “What’s in it for the customer?” instead of “What’s in it for your dealership?” Educational information and “thank you for servicing with us” messages are great for building customer relationships and trust.

These campaigns may not generate much ROI, but they go a long way to increasing loyalty and retention metrics.

Since the purpose of an ORP is to increase customer retention, it makes sense to measure ORP effectiveness by measuring and tracking customer retention. There are several ways to do this; or you can use your own method.

• * Assign a loyalty score to each customer in your database, and track the cumulative average of that score over time.
• * Assign a status to every customer, such as active, inactive or lost, based on how long it's been since the customer has visited your dealership. The more active customers you have, the more effective your ORP is.

* Measure and track revenue per units-in-operation ($/UIO).

4. Be flexible with budgeting

Many dealers set ORP marketing budgets based on a random amount they think is appropriate; such as $1,000 for this email campaign and $2,000 for that direct mail campaign.

But when you put a monetary cap on each campaign, you’re essentially telling some customers they’re less important than others and that it’s not worth communicating to them. Rather than limit the spend, limit the number of communications you send out.

For every campaign, review your strategy and select the best communications and channels to achieve your dealership’s goals. For example, if retention is down, prioritize service reminders and inactive customers instead of a ‘New Car Thank You’ piece or other type of interim communication. If you’re having problems with the customer experience or negative reviews, emphasize CSI and ‘Thank You for Service’ pieces.

If you are on a budget, consider what you are hoping to accomplish with your overall marketing strategy. Piecemeal, inconsistent campaigns do not work and send a fractured message to customers. Choose the best pieces that will make your strategy work for you.

And remember, when it comes to retention, you have already achieved one of the most difficult marketing challenges: converting a contact into a customer! Doesn’t it make sense that you would allocate a large share of your budget to strengthening those relationships so they will visit again and again?

5. Consolidate providers

Many dealers use several vendors to execute their ORP marketing campaigns; e.g. one vendor for email, another for mail and another for digital communications.

This strategy results in a fragmented and inconsistent customer experience. Customers respond well to a logical and progressive sequence of messages that are relevant to where they are in their ownership lifecycle. The best way to ensure this happens is to allow a single vendor to coordinate and deliver all of your dealership's ORP campaigns.

When signing with a new vendor, commit to six months to a year to gauge results. If you haven't seen any improvement in your customer retention metrics after one year, it's time to try another vendor.

Today’s ORPs are not the same product that your dealership subscribed to years ago. If your goal is to increase customer loyalty and retention, modernizing your ORP and the way you communicate with your customers is key.

For such a small word, the word ‘data’ packs a pretty big punch. Some marketers get overwhelmed when they hear it because they believe it’s complicated. Others give it a bad rap without really understanding the benefits.

Yet it’s difficult to deny the advantages of data-driven marketing:

* 2 out of 3 leading marketers admit that data-based decisions beat gut instinct
* 78% of organizations say that data-driven marketing leads to increased conversion and customer acquisition
* Personalized marketing increases ROI 5X to 8X

Keep in mind that marketing statistics like these are simply a gauge for how strong your customer relationships are—and ultimately, that’s the goal of any marketing strategy.

The face-to-face communications that your employees have with customers during the sales and service process lay the foundation for a relationship. While first impressions and good customer service are important, it’s when the customer is out of sight that your dealership either becomes out of mind, or builds on that foundation.

To build that relationship requires the ability to send personalized, relevant communications to every individual. Sending a monthly email blast or postcards with a single service offer to your entire database is neither personalized nor relevant.

This is where data becomes valuable. Chances are you already have all the data you need to create targeted marketing campaigns. The only question is, are you leveraging that data?

Every customer in your database has a unique profile. Data-driven marketing allows you to analyze each profile and quickly determine what the best message is, the best time to send that message and the best channel(s) to send it through. Of course, these analyses are not done by you as an individual—that would take forever. The entire process can be automated or semi-automated, depending on your preferences.

Let’s review how the right data can help your dealership improve relationships with three sample customers.

Customer Profile “A”

* Male, aged 3
* Purchased a vehicle from you 4 years ago
* Purchased a warranty
* Owns 2 other vehicles, both the same OEM/brand
* Actively searching online for 2020 models of the same brand
* Recently got married
* Loyal customer to your dealership for service; he has not visited any independent repair facilities (IRFs)
* Lives 7 miles away from your dealership
* Consumer spending habits include luxury restaurants, organic supermarkets

Based on this data, we can surmise this customer is a brand enthusiast who always wants the latest, greatest thing out there. He understands the value of OEM parts and service and is already loyal to your dealership for service.

This customer is what we call a “Super Responder” because he is looking for a new vehicle and recently had a life event change (marriage).

Based on his browsing history and previous communications from your dealership, we know he has clicked on Facebook ads and banner ads on his favorite websites.

Now, imagine if this individual received an oil change coupon in the mail from your dealership. Is that relevant? Is it going to put your dealership in consideration for his next purchase?

This customer should immediately be targeted with Facebook and digital ads promoting the 2020 models he has searched for online. This customer is also an ideal target for exclusive car clinics and other VIP events at your dealership. If he is due for service, he’s more likely to respond to an offer with a free loaner vehicle; especially one of those newer models he is checking out online.

Customer Profile “B”

* Female, aged 27
* Drives a vehicle that she leased from you 2.5 years ago
* Did not purchase a warranty
* Actively searching online for independent repair facilities (IRFs), as well as new models
* Recently got married and had a baby
* Last service was with an IRF 4 months ago
* Recently moved 12 miles away
* Consumer spending habits include budget restaurants and wholesale supermarkets

This customer understands the value of OEM parts and service and has visited your dealership for some repairs. However, she is also budget-conscious and uses IRFs for oil changes and other routine maintenance.

She is also a “Super Responder” because she is actively searching for a vehicle. She’s also had a baby, so her vehicle needs have changed and safety is likely a priority. However, she has recently moved so you’ll need to make it worth her while to purchase or lease from you again.

This customer is active online and has responded to previous communications sent through email and Instagram. She frequents YouTube and has also clicked on video ads.

This customer needs education as to why it’s best to get her leased vehicle serviced at your dealership. She should also be targeted with an early lease trade-in promotion. Make the 12-mile drive worth her time by offering a free loaner car or shuttle service. Use an omnichannel marketing approach, targeting her with digital and video ads delivered via email, on Facebook and Google properties.

Customer Profile “C"

* Male; age 63
* Purchased a vehicle from you one year ago
* Owns one other vehicle of a different brand
* Did not purchase a warranty
* No online presence
* Unmarried
* Has visited an IRF for an oil change
* Lives 4 miles away from the dealership
* Consumer spending habits show he shops locally and is a convenience shopper

This customer purchased a new car from you a year ago but has not returned for service. The fact he took his vehicle to an IRF for an oil change means that cost and/or proximity are most important to him.

Since he doesn’t have an online presence, it’s best to target this customer with a direct mail piece. From his profile, we know he’s a convenience shopper so create offers that promote convenience, speed and competitive pricing for routine maintenance. Invite him to a car clinic to increase his enthusiasm for your brand.

These examples clearly show how the right offer delivered to the right customer through the right channel at the right time will increase response rates and engagement with your brand.

The ability to leverage data allows you to get to know your customers and connect with them on a personal level, which in turn creates a better customer experience and stronger relationship.

Most marketers think of third-party data as something to be used in conquest marketing. While it's true that we must rely on 3rd-party data to acquire new customers, it's important not to overlook the value of this data in marketing to your current customers.

Most companies use only 12 percent of the data they have on hand, which means 88 percent of their data is not being used effectively. In dealerships, that 12 percent is typically contact information. Most customer records are limited to names, phone numbers and emails, if that.

This limited data gives us very little insight to our customers, which makes it difficult to market to them effectively.

For example, the July Fourth holiday is coming up. Did your dealership send out postcards or email blasts to everyone in your database? If so, you've just wasted a lot of your marketing budget on customers who have purchased cars within the last few years and/or who have recently been in for service.

Not only did you waste money, but you also delivered a customer experience that was less than optimal. Remember that customer experience doesn't just happen in your store; most of your customers' experience with your store happens online, with every impression or email they see.

Infrequent, mass marketing campaigns are largely ineffective with low response rates and ROI. Frequent, targeted marketing campaigns to smaller groups of individuals based on their needs will always deliver higher response rates and ROI—with no change to your current marketing budget.

When third-party data is added to your customer records, it allows you to create complete customer profiles, which gives you a better understanding of what types of messages and offers your customers will respond to.

Three Types of Data

There are three types of data that will be most useful in your current marketing campaigns:

1) Vehicle Data

Vehicle type, age and mileage can be used to predict what type of service the owner might need. Additionally, what other vehicles are sitting in your customer's garage that belong to other household members?

2) Customer Data

This data can include demographics, life events and credit scores. For example, we know that newlyweds, new parents and parents of high school and college-aged children all make great potential prospects for new or used vehicles.

Additionally, you might want to target prospects by zip code or within a certain income range. There are literally hundreds of demographic data points to filter through and you can get as specific as you like.

3) Shopper Data

Vehicle and customer data become even more useful when they are layered with specific shopper data. Is a former customer getting vehicle service done at an independent repair facility (IRF) or at a competing dealership?

You can also determine whether someone fits your ideal customer profile by filtering through shopper data from restaurants, department stores, sporting events, or even the kind of wine they like to drink!

Create a Customer Profile

Once you populate your customer records with this data, you have more complete customer profiles. Now you can look at a customer record and gain a lot of insight by asking questions such as:

* Did they purchase a warranty for their vehicle?

* What other vehicles are sitting in their garage?

* Are they actively searching for a new car or service online?

* Did he/she just have a child?

* Do they visit an independent repair facility (IRF)?

* How far are they located from the dealer?

*Did they purchase a new or pre-owned vehicle?

How can this data help you? Let's say you're having a big July Fourth Sale. I already mentioned how it's not a good idea to target customers who have purchased a vehicle within the last three years—UNLESS they've had a major life event change. For example, if a customer recently had a baby, you'll definitely want to add that person to a list of prospects for a mini-van or SUV.

If you discover that a customer frequents an IRF for vehicle service, but has a luxury brand vehicle sitting in their garage and eats at upscale restaurants, that person is definitely worth spending some extra money on to try and win their service business.

However, this type of customer probably won't respond to a coupon; so, promoting your service expertise and offering incentives like a loaner car is a better strategy.

Third-party data can also tell you how the customer is more likely to respond. For example, as a marketing professional I deal with a ton of emails every day so I am pretty diligent about unsubscribing and deleting all unnecessary emails. But if I know I need an oil change and I get a postcard with a coupon in the mail, I'm likely to use it.

On the other hand, someone who travels a lot for business and/or pleasure probably throws most of their 'junk mail' away without looking at it. To reach them, social media would probably be the best option because social media travels with you.

Then comes the fun part of marketing. Frequent, targeted campaigns allow you to switch up channels, messaging and timing to see what's more effective. And because your messaging is so targeted, you're delivering a better customer experience.

Every individual is unique, and your marketing should be too. Using third-party data is a very cost-effective way to make your marketing campaigns more timely, relevant and customized—all of which returns a higher response rate and ROI.

Most people think about marketing as a way to generate immediate ROI. For every email campaign sent out, we measure its success with metrics like open rates, click-through rates (CTRs), number of sales or ROs, or even dollars generated.

While it's important to expect accountability from your marketing partner, sometimes it's easy to get lost in the weeds of campaign results data. I recommend taking a step back from scrutinizing campaign results and taking a more holistic approach to your marketing strategy.

What are your ultimate marketing goals? Do you want to get a lot of click-throughs, or do you want to acquire new customers? Do you want to generate a dozen ROs, or do you want to increase customer retention? More ROs does not necessarily translate to increased customer retention, and customer loyalty cannot be measured by the number of coupons redeemed.

The true purpose of marketing is to stay in touch with your customers and keep them engaged so that when something is wrong with their vehicle, your dealership's service department is the first place they think of. Or, when it's time to trade their vehicle in for a new car, your dealership is the one they trust the most.

In order for this to happen, your marketing strategy needs to include campaigns designed to build brand recognition and customer trust, without the expectation of immediate results.

Too often I see dealership marketing strategies designed with a "What in it for me?" focus. Meaning, every single campaign the dealership is trying to sell the customer something; whether it's a car or service. What are you giving your customers other than a sales pitch?

While some of your marketing communications can and should include targeted offers, it's important to also deliver communications that aren't sales-oriented; such as educational information, 'feel good' campaigns that highlight your dealership's commitment to the community and/or newsletters.

With educational and "feel good" types of campaigns, you will probably get high open rates and CTRs, but very few dollars generated. Does this mean they are a failure? Absolutely not! Sending a holiday card is one example of a campaign that asks for nothing but generates a tremendous amount of goodwill. 

How to Measure Marketing Success

Campaign results data such as CTRs and number of ROs generated are important and can definitely be used to review the effectiveness of individual campaigns. This data can tell you what's working or not working so you can make improvements and adjustments to campaigns.

However, this type of data should not be used to measure the overall effectiveness of your marketing strategy. If the goal of your marketing strategy is to improve customer retention, then it makes sense to use customer retention metrics to gauge success.

Here are several customer retention metrics you can use, or you can come up your own method.

1) Assign a loyalty score to each customer in your database, and track the cumulative average of that score over time. Net Promoter Score (NPS) surveys are a relatively easy and low-cost method for generating a loyalty score.

2) Assign a status to every customer, such as active, inactive or lost, based on how long it's been since the customer has visited your dealership. The more active customers you have, the more effective your marketing strategy is.

3) Assign a customer lifetime value (CLV) to every customer in your database. CLV is the estimated net profit that a customer will provide over their lifetime, calculated using metrics such as average purchase value and frequency. Measure the average increase in the CLV of your database over time.

4) Measure and track revenue per units-in-operation ($/UIO). This metric is far more effective for measuring service potential than the outdated service absorption metric. To calculate your $/UIO, take the total number of vehicles your dealership has sold in the last six years. If you average 100 cars per month, that's about 72,000 vehicles. Now, calculate all the service revenue you have generated from these sold VINs (excluding new conquest customers). Divide that figure by 72,000 to arrive at your current $/UIO. Use this number as a benchmark to measure future growth by.

Service revenue from VINs sold in last 6 years/ # of cars sold in last 6 years = $/UIO

Your marketing strategy should be designed to build relationships, not one-and-done transactions. Taking a holistic approach to your marketing goals allows you more freedom to create campaigns designed to engage your customers, build trust and keep your dealership top of mind until their next visit.

One of the biggest challenges for dealers today is knowing which marketing channels deliver the best reach, frequency and ROI. For marketers everywhere, it can be difficult to reach an intended audience, and when they do, many times the audience isn't paying attention.

Take television, for example. Many dealerships still create and air commercials on TV and cable for brand awareness. But take a look at these stats:

*31% of people aged 18-49 are light TV viewers
*18% of US population have never signed up for cable
*Only 45% of TV ads are watched

As expensive as TV ads are, there's a large segment of your intended audience that either aren't watching at all, or are simply tuning out commercials. Consider that most people, especially the younger generations, watch TV with smartphones or tablets in their hands. When commercials come on, it's easy to hit the mute button and scroll through emails, check social media or watch a video on YouTube.

Increasingly, YouTube is a favorite alternative to television, with more than 5 billion video views daily. Additionally, the average length of visit to YouTube is 40 minutes. Not only do people love the entertainment value of YouTube, but they rely on it for educational and research purposes; including researching new and used vehicle options.

* YouTube clearly has an influence on auto shoppers:
* 75% of auto shoppers say that online video has influenced their shopping habits
* 60% of auto shoppers who used video during research visited a dealership website
* 40% of auto shoppers who use online video for research said it helped them discover a vehicle they weren't aware of or previously considering

But the best thing about YouTube for auto marketers is its targeting capabilities. On YouTube, there are four ways to target an audience:

1) Demographic/Geographic. YouTube provides a multitude of demographic information such as age, gender, income and location. It also factors in signals from Google's search and maps properties to locate auto intenders near your location.

2) Interests, behavior and life events. We all know that major life milestones often precede new vehicle purchases. YouTube makes it easy to target newlyweds, new parents, parents of high school and college aged kids, college graduates and people who have recently moved. You can also target by specific interests; e.g. automotive or brand names.

3) Consumer patterns and shopping behavior. How well do you know your most valuable customers? Many of them shop at certain department stores, frequent nice restaurants and attend local sporting events. Knowing the behavior of your most valuable customers allows you to create lookalike audiences and target similar prospects on YouTube and other Google properties.

Additionally, you can find consumers who have their vehicles serviced and purchase tires at independent repair facilities, and create ad campaigns designed to drive them into your service department.

4) Video content that your audience is watching. This one's a no brainer. If a consumer in your PMA is watching a manufacturer test drive or walkaround video, your dealership name should be the first thing they see. Again, YouTube can tap into Google's search properties so it's easy to target in-market auto shoppers, and also consumers who are looking for service.

In addition to its incredible targeting capabilities, as an advertising platform YouTube allows for greater budget and scheduling control. Perhaps its greatest advantage is that you only have to pay for video views and interactions. This means there's a huge opportunity to raise your brand awareness even when you don't have to pay for video views.

You've probably seen skippable pre-roll ads on YouTube videos. Whenever you want to watch a video, you have to sit through five seconds of a pre-roll commercial before you're allowed to click on "Skip Ad."

This five seconds is where the greatest opportunity lies. If you create a commercial that displays your dealership name and can grab the viewers' attention in the first five seconds, even if the consumer clicks on "Skip Ad" you are raising your brand awareness and increasing the reach and frequency of your message—for free!

Hopefully, your message and accompanying images are compelling enough to appeal to auto intenders, and they won't skip your ad. Either way, it's a win-win situation.

The ROI of skippable pre-roll ads varies, but a recent national Lexus campaign delivered the following results:

*13:1 ROI for every dollar spent
*12% YOY total RO increase
*19% YOY total revenue increase

Videos are a cost-effective way to increase your dealership's brand awareness and capture the attention of consumers, where their attention is focused most—increasingly, that attention is on YouTube.

As many dealership marketers know, search campaigns are a necessary part of a multi-channel marketing strategy. The danger with search campaigns is the potential for pay-per-clicks to become very expensive, which tends to happen when marketing vendors use a single strategy for all dealerships, and set up campaigns as "set-it-and-forget-it."

Your dealership is a unique business with a unique market and unique customers. Therefore, the keywords and strategies used in your PPC campaign should be different than the keywords and strategies used in PPC campaigns of other dealerships.

With the right keywords and strategy, benefits of a well-executed PPC campaign include:

* Real-time measurable results
* Budget & scheduling control
* Target traffic
* Reduced cost due to paying only for clicks,not impressions

PPC campaigns can greatly increase the ROI of your dealership's current Owner Retention Program (ORP) marketing strategy. Here's an example:

Dealership 1 and Dealership 2 were both using email and direct mail for their ORP marketing. Dealership 1 added a multi-channel marketing strategy that included social media, display advertising and phone calls. In one year, Dealership 1 saw a 3.9% RO increase and $168,300 average increase in RO revenue.

Dealership 2 added the same multi-channel marketing strategy with the addition of PPC. In one year, Dealership 2 saw a 7.5% RO increase and $299,200 average increase in RO revenue.

The difference is significant because Dealership 2's strategy targets both passive consumers and active consumers, while Dealership 1's strategy only targets passive consumers.

A passive consumer is one that we identify as ready to take action based on online behavior, lifestyle factors and vehicle history. We target them through multi-channel marketing to reach them with the right message at the right time.

An active consumer has an immediate need; for example, it's time for an oil change or the brakes start squeaking. The consumer turns to a search engine and enters a phrase such as "BMW oil change," or "Silverado brake pads."

If your dealership doesn't have an effective PPC strategy, you risk not showing up in the search engine results, and the consumer will click on another link.

More than 60% of Google's searches are performed on a mobile device, so it's also critical to have your PPC campaign optimized for mobile search.

Customize PPC for Consumer Micro-Moments

Google has identified five key micro-moments that occur during the consumer's road to the sale. These moments are when information is actively acquired, shaping a car shopper's preferences and purchase intent.

An effective strategy is to create a PPC campaign that targets consumers during these micro-moments:

1) Which car is best? These initial research moments focus on collecting general data to understand which cars are recommended by experts and are considered best in class. Information is increasingly collected from YouTube videos featuring trusted reviews and comparisons. The conversion rate for consumers at this stage is just 2%.

2) Is it right for me? This is a critical stage where searches become more personalized. Car buyers want to know whether specific vehicles will suit their lifestyle so it's common to see searches about appearance, safety features and luxury options.

Videos are instrumental in this phase as consumers turn to YouTube to watch vehicle test drives and highlight reels on attributes and configuration options. Static images still play a role in showing how a car looks, but the vast majority of these pictures are now being viewed on mobile devices. The conversion rate for consumers at this stage is 6%.

3) Can I afford it? Once choices have been narrowed down, consumers concentrate on the financials. Information around prices, owning and leasing options are critical at this stage and are increasingly being searched for on smartphones. Conversion rates for consumers at this stage is 13%.

4) Where should I buy it? Once consumers have determined which car to purchase, they seek out dealership locations, hours and inventory. More dealerships are getting the comparison treatment as consumers examine online reviews to obtain the best experience. Conversion rates for consumers in this category are the highest, averaging 40%.

5) Am I getting a deal? Even after consumers get to the dealership and start negotiating packages, their online research continues, with 50% of shoppers consulting mobile phones to ensure they are getting the best price. Conversion rates for consumers at this stage are around 10%.

Owning each of these micro-moments can help steer car shoppers to your dealership. When you create a PPC campaign, it's important to make sure you're in consideration at each stage, as the opportunities to raise brand awareness in the first few stages can help convert shoppers into customers later.

If you're not happy with the ROI of your PPC campaigns, don't be tempted to give up. Adjust your strategy and focus on common search phrases used during the micro-moments. When added to a multi-channel marketing strategy, PPC campaigns have the potential to double your ROI.