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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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Your Gut Ain't Enough Anymore

 

Fifteen years ago, the shopping radius of your customers was smaller. More of your sales came from people in your local area who used the same cable system, read the same paper, and listened to the same local radio stations. You thought you had a pretty good gut feel for the market, any you probably did. Besides, you didn't have much choice. Good marketing data was scarce.

Today, new customers are considering your inventory from further away and your local customers are looking at inventory from dealers they never considered before. Shoppers are bouncing from site to site like they were in a pinball machine. You have no idea who sees and hears your ads and who strips your commercials from your content. In short, the changes in consumer behavior have given your gut feel a gastric bypass.

I keep asking myself why thousands of dealers subscribing to J.D. Power's PIN product don't use the free PowerDealer tool, or why more dealers haven't signed up for Dataium's free VisiCogn Insite product. Why don't more dealers subscribing to vAuto and FirstLook take full advantage of the tools they subscribe to? These products, and others, provide good useful data that can facilitate sound decision making. I'm beginning to think it's not these analytical tools that are being dismissed as much as it is the process of using them.

Decision makers of my generation need to face up to the fact that marketing is more complicated than it used to be, and our gut feel is less equipped for the job. In fact, some of our experience from 30 years ago is working against us when we make decisions in a vastly different landscape. Networking with other dealers isn't enough either, because media penetration is much different in one community than it is another. You've got to make sense of the numbers in your DMA and base your decision making on the clearer picture they can provide.

We used to say that the homecoming king would make more money than the class nerd. The social skills involved in selling were more valuable than analytical skills. Today, if you don't have enough nerd power going for you there won't be enough store traffic to keep the homecoming king in business. Getting the data is cheap and often free. Start there and begin putting the data to work for better decision making about advertising buys, vehicle acquisitions, pricing, merchandising decisions, and store operations. 

Bryant Gibby
I agre with using vauto as a means for advertising. Many people just consider it to be a tool to help manage their used car inventory, but it can be so much more depending on how agressive you want to be on pricing. If I am pricing a vehicle and there is 20 cars like mine within 100 miles & I price mine first or second, that alone will help generate traffic for the dealership. We have had one of the best years for used cars that our store has ever had and I attribute most of our success to using vauto dilligently.
Larry Bruce
Dennis I have had a saying since the AIMData days in 1999: Data Information Activation Action The bottom line it’s not enough to have access to data, in fact data has been all around us for 20 years and as a dealer body we haven’t used it. Why? Because you have to turn that data into information, data alone is useless until someone turns the data into useful information and therein lies the problem with tools and company’s like Polk, JD Power, Dataium ect. They give a lot of data to the dealer but no real information. It’s not enough just to have information though once you have it you have to activate it with a plan or a strategy. I had a saying about requests for custom reports when I had AIMData “When we build this report, what are you going to do with the information?” I rarely got an answer, and when I did it was always we just want to see how we are doing in this area. Well that statement led to another question “Ok what is the definition of a bad performance here?” That was where my conversation with the dealer usually ended. Information without understanding cannot lead to a plan. Finally when you do get the data, turn it into information and activate with a plan then you have to do the hardest part of all… ACT / Execute. Someone has to execute on that plan people have to be held accountible for their part in the plan and you have to have the Testicular Fortitude to stick with your plan and not abandon it if it doesn’t make a immediate impact, just keep tweaking until you have it right. That’s why I think dealers don't use the tools you're asking them to use. There is a whole business in putting together a plan for a dealer, setting up an execution strategy and assigning responsible dealership personnel, setting bench marks and KPI’s and helping them act, measure and tweak that strategy. Just my 2 cents, but whatta I know :) Larry Bruce @pcmguy
Scott Joseph
Larry you could not be more accurate. One of the greatest benefits to come out of the last couple of years is that it has has forced everyone to refocus their marketing efforts. Advertising had to become more efficient and produce a good measurable ROI, or more than likely it was eliminated. Now the buzz is all about targeting the right customers and narrowing down your list. Let's provide people with all kinds of information. When you say... “When we build this report, what are you going to do with the information?”... Exactly! The problem with info when it comes to marketing... and in my opinion where Larry is right is… narrowing down your list with simple segmentation usually does not go far enough – especially today. And the bottom line is dealers need to know what to do with the data they get or have someone actually provide them with a plan. Marketing communication is moving away from mass media toward an approach driven by firms with integrated customer data, a technology infrastructure and real customer analysis skills. Firms with this infrastructure and skill set provide this and will improve your net results. But to really move the needle, firms must have deep customer insight and skills that that translate that insight to sales, profit, and differentiation and provide dealers with a competitive advantage. Markters need to think beyond the basic identifying characteristics and the obvious relationships. What Larry is asking for is what will really impact showroom traffic, sales and the bottom line. Dealers need to incorporate advanced analytics into their strategy. Take a second and imagine this example... let’s say you are looking to resell “inactive” customers – people who you’ve lost for whatever reason and have defected to your competition. Mailing to the entire inactive customer segment is very expensive. There’s a reason these people are inactive and because of that reason the majority will ignore your offer. Direct mail is too expensive for you to justify that expense and more than likely you will not have a high percentage of email addresses for inactive customers. A firm with a strong analytic team will start by identifying your inactive customers. Analytical algorithms are then created by analyzing data, combining information on past circumstances and present events to predict or project which people of those inactive customers have the highest propensity to respond to your offer and more importantly re-buy or service with you. Identifying which inactive customers will reactivate rather than targeting the entire segment will save you an incredible amount of money up front and produce a much better ROI. A great analytic team can become an indispensable asset to you, which you will rely on for strategic decisions. For example, let’s go back to your inactive customers. After the inactive analytic algorithms are created and a target list is found you could look for more ways to leverage that information with more analytics. The firm could identify behaviors of these inactive customers when they were active by analyzing past usage, spending, other behavior patterns and how those behaviors started to change before they left you. This is what recognizing “changing customer behavior” means. Now analytic algorithms can be created to identify customers who are “at risk” or have likelihood to leave you in the near future. Previous customer databases offer a wealth of customer data. But without the analytical discipline to turn that data into insight your left with a lot of useless info. Real data success comes when you’re able to increase the behaviors you want. Sorry for the long wided reply but this is a great topic.
Dennis Galbraith
Larry and Scott, I'm with you. I think we all agree there is no ROI from data, or even information, until it is used to make make a better decision and that decision is acted on. It's equally easy to agree that good analysis takes skill, and acting on that analysis often requires strong management. So business is hard, and sometimes you needs some help, but that is not news to dealers. The news is that the cost of not doing business with acted upon information is climbing with each passing month. Community banks are being bought out or driven out of business and replaced with branch offices of mega banks that do all this thinking centrally. Local grocery and hardware store have given way to supermarkets and home improvement centers using the same model. On a local level, no other large retail business has the kind of analytical and managerial power we are all saying dealers need. It is all handled through a corporate headquarters. Is consolidation followed by centralization of decision making the only model for local retailers? I think there is an opportunity for vendors to provide more than data and information. There is an opportunity for some dealers to make analysis and the ability to manage change a competitive advantage. There is even an opportunity for new service businesses to emerge and fill this gap. However, none of this will happen until there is a recognition that leaders who are blind to the facts lose to those who are not. The faster the market changes the greater the bottom-line difference between those who act on information and those who operate on gut feel.

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