Scot Eisenfelder explains why dealers shouldn't neglect selling pre-paid maintenance during the initial sale.

Marketing is becoming increasingly complex, with the proliferation of ‘Big Data,” predictive analytics and new mobile and digital channels. To leverage the power of these new technologies, a new marketing approach is needed.

Many dealers use multi-channel marketing to reach their customers, but fragmentation of channels presents a challenge. Reach is only one part of the marketing equation. When you factor in frequency and the fact it can take several customer touches to drive action, the cost of marketing across all channels can be prohibitively expensive.

Yet limiting channels is not the best solution. When it comes to communications, we are all omnivores. We consume different messages through different channels at different times.

Although the terms omnichannel and multi-channel are sometimes used interchangeably, omnichannel marketing allows you to increase reach x frequency in a much more cost-effective manner than multichannel marketing. Here are the major benefits of an omnichannel marketing strategy.

Leverages Data

Most dealers don’t have great contact information for many of their customers, and even worse for prospects. The average dealer’s DMS contains complete, actionable email addresses for only 65% of customers, before appending efforts.

If your database is better than average with 70% actionable emails, and an email campaign nets a 20% open rate, that means you’ve reached 14% of your customers. What about the other 86%?

How can you reach 100% of consumers with enough frequency to trigger an action?

First, look at your campaign objective. Are you trying to stimulate action among a loyal customer group, or among a group of prospects? For loyal customers, it may only take one to two touches. For prospects, the standard is the “Rule of 7,” meaning it takes an average of 7 touches to stimulate action.

Second, analyze the contact information you have. Physical mailing addresses are among the most complete and easiest to find in appending efforts, which is why we still use print and many dealers have great success with postcard mailings.

Social media advertising is also very effective because Facebook matches an average 80% of your DMS database to its users. If you add in Google properties you’re close to 100% reach. The more channels you use, the better your reach.

Based on Consumer Behavior

Omnichannel marketing analyzes actual behavior, instead of guessing what your customers might like and respond to. Guessing fails to deliver results because consumer consumption habits are ever-changing and not well described by demographics or personal preferences.

The idea that we need to market based on consumer preferences, or that Millennials are more socially engaged while Boomers still read newspapers is inaccurate.

Omnichannel marketing accounts for actual consumer behavior such as websites visited, Google search information, what the owner’s current vehicle is and driving habits. If you have enough of the right third-party data, your omnichannel partner can even factor in the restaurants that consumers frequent, income, group affiliations and more. Thanks to predictive analytics, you can then literally serve up the right message to the right customer at the right time on the right channel. This helps to keep marketing costs low, so the frequency part of the equation doesn’t get out of control.

Leverages Media Effectiveness

Every channel has a different role in the communication journey. Paper is great to inform but not so great for driving immediate action. Vice versa for text and phone calls, which is why you have your salespeople follow up emails with phone calls when they respond to new leads.

Digital ads are great for brand awareness while videos are ideal for building customer relationships and trust. PPC is a great way to reach consumers during their zero moment of truth (ZMOT), particularly for service and parts.

Omnichannel marketing leverages the right channel for a particular message, increasing overall cost efficiency.

Easily Tailored for Different Objectives

Too many dealerships are single-minded in their marketing objectives. Their goal is to either get customers in the door to buy vehicles, or bring customers into the service lane for repairs.

This approach is transaction-based, rather than relationship-based. Today’s consumers purchase from brands they know, trust and like. Marketing objectives should fall in two categories, and your dealership needs both:

1. Conversion: build brand awareness, win customers, encourage action

2. Retention: establish long term trust & loyalty, be top-of-mind when service or a new vehicle is needed, be a trusted resource.

For every campaign, define your business objective. Do you need a last-minute push to reach your monthly new vehicle sales goal, or do you want to promote a pre-owned incentive? Do you need more ROs, or more lines per RO? These are all different strategies for different audiences that require different messages.

When it comes to marketing, more isn’t always better. Relevant messaging at the right time on the right channel is what drives action. If your dealership doesn’t have an omnichannel marketing strategy, you’re missing out on the power of big data and predictive analytics to increase reach x frequency in the most cost-effective manner.

When a customer buys a pre-owned, off-make vehicle at your store, what are the chances that customer will return for service? One metric that every dealer should measure is the purchase to service rate (P2S), which is calculated by taking all deals within a certain timeframe and looking out 12 months from the deal date to see if that VIN had an RO.

Affinitiv recently analyzed deals conducted in the first six months of 2017 and in the first six months of 2018 to find out how many sales customers return to the dealership for service, and what, if any trends we could find in that timeframe.

In 2017, 55.2% of domestic vehicle owners, 63.6% of import vehicle owners and 57.2% of luxury vehicle owners who purchased new vehicles returned to the dealership for service at least once in the next 12 months.

In 2018, the domestic P2S rate stayed at 55.2%. Import dealers did a little better, attracting 65.8% of new vehicle customers back for service, while luxury vehicle owners had a 58.9% P2S rate.

In this blog I’m not going to address how dismal I think these percentages are and how dealers are conceding way too much service business to the independent repair facilities.

What I really want to address here are the P2S rates for customers who purchased pre-owned vehicles, and how dealer groups in particular are not even attempting to cross-market to customers who purchase used, off-make vehicles at stores within their group.

First, let’s create a scenario. John buys a 2016 Toyota Camry at his local Ford dealership. It’s unrealistic to expect John to return to that store for service. Why would he? John probably wants to take his pre-owned Camry to a dealership with Toyota certified technicians.

Indeed, that’s what the numbers in our analysis reflect. The 2018 P2S rates for customers who purchased used, off-make vehicles are 26.1% for domestic brands, 28.5% for import brands and 19.8% for luxury brands. Chances are, John will be one of the nearly 74% of domestic-brand customers who won’t bring his off-make vehicle back to that dealership for service.

But what if that Ford dealership belongs to an auto group that also owns a Toyota dealership? The salesperson who sold John his Camry should at the very least refer John to the Toyota store within their group for service. Ideally, John would receive a first-visit service coupon to the Toyota dealership, or perhaps the F&I manager could even sell John a pre-paid maintenance package for the Toyota dealership. If nothing else, the Ford dealership should send John’s name, contact and deal info over to their sister store so the Toyota dealership could market to John, congratulate him on his vehicle purchase and try to win his service business.

I don’t see any of this type of cross-marketing happening at any dealer groups. As a result, these dealers are losing a significant amount of potential service revenue that should and could be easy pickings.

How much revenue? We calculated lost service revenue opportunities per store, based off the average CP$ per RO, the average number of non-responders within 12 months of purchase and the average number of ROs per year, per VIN.

Even factoring all these in, dealers are losing an estimated $20,000 in CP service revenue in 2019. This adds up to a lot of missed opportunities in the service drive, especially in multi-store groups.

If you’re part of a group, wouldn’t you rather keep all of your customers in the same family of dealerships, rather than lose them to competitors or independents? There’s no excuse for letting buyers of used, off-make vehicles walk off your lots and into oblivion. A cross-marketing strategy is easy to implement, and should add a healthy chunk of service revenue to the bottom line of those dealer groups that make the effort.

Predictive personalization key to matching precedent set by non-auto retailers

Chicago, IL—November 11, 2019— The online shopping experience offered by the majority of dealerships fails to meet customer expectations, according to a new Affinitiv survey of 1,000 automotive consumers. While 76% of recent car buyers said it was important for the dealer website to be personalized, only 26% of respondents agreed that dealers provide a highly personalized experience on their website. The data is highlighted in the Affinitiv whitepaper Predictive Personalization: The Evolution of the Customer Experience.

“The website is often the first point of contact with a dealership, but most dealer websites were built using unsophisticated technologies that reflect an antiquated notion of how consumers buy cars,” said Doug Van Sach, Affinitiv’s Vice President, Strategy & Analytics. “To meet customer expectations, auto retailers must evolve their shopping experience to match the precedent set by retailers in other industries.”

Predictive personalization is the key to making this happen, according to the survey. Every day, consumers interact with non-auto retailers who provide a highly personalized online shopping experience. Amazon, Nordstrom and Apple are role models that consumers expect dealers to follow.

Affinitiv’s survey found that the online shopping experience offered by dealers falls short in three key areas. When customers were asked what part of the website experience they wanted dealers to personalize, the top items were vehicles of interest, vehicle features and vehicles within my budget.

While 65% of consumers want websites to personalize vehicles of interest, only 47% of dealer websites proactively recommend vehicles of interest based on the customer’s browsing behavior.

Fifty-eight percent of consumers want vehicle recommendations based on specific features of interest, but in the study sample of websites, not a single dealer website recommended vehicles based on features of interest.

“Considering its high importance, recommending vehicles with relevant features is one of the single greatest opportunities for dealer websites to increase conversion rates and better meet the expectations of online shoppers,” said Van Sach.

Additionally, 52% of consumers expect a dealer’s website to help them find affordable vehicles and 62% said that finding a vehicle with a specific monthly payment was as important, or even more important than finding a vehicle within a specific price range. However, only 9% of dealer websites allow customers to search by payment range and 11% of websites incorporated the customer’s credit score into the payment estimate.

“If websites aren’t dramatically improved to elevate the shopping experience and make personalized recommendations based on browsing behavior, dealers risk alienating potential buyers before they ever visit a showroom,” said Van Sach. “It’s up to dealers to challenge their vendors to demonstrate how their websites react to browsing behavior and deliver relevant vehicles with the right mix of features within a customer’s budget.”

Affinitiv’s Predictive Personalization study surveyed 1,000 auto consumers and analyzed a sample of 100 dealership websites to better understand the level of personalization that dealers are offering.

For more information about Affinitiv, visit www.affinitiv.com or call 847-955-9740.

About Affinitiv

Affinitiv is a leading marketing technology company serving automotive manufacturers (OEMs), dealership groups, and individual dealerships. Through a technology-driven and consultative approach, Affinitiv enables dealerships to produce, manage, measure and optimize omni-channel communications to drive brand loyalty and increase revenue.

Affinitiv’s marketing automation and technology platform is designed to provide a 360° view of customer, vehicle, dealership and marketing campaign effectiveness all in one place. Affinitiv’s digital and analytics capabilities support a consistent customer experience through the entire ownership lifecycle. Affinitiv was formed in 2016 and is headquartered in Chicago, IL.

Scot Eisenfelder shares how equity mining is important in transitioning customers from service to sales.

Chicago, IL—September 3rd, 2019— Affinitiv, Inc. (“Affinitiv”) and Loop LLC (“AutoLoop”), leading providers of data-driven marketing automation and software solutions to the automotive market, announced that they have received all customary regulatory approvals and that the merger of the two companies is complete.

The combined company will operate under the Affinitiv brand name and will be headquartered in Chicago, IL, with more than 800 employees and revenues of approximately $200 million, supporting over 6,500 dealerships and strategic relationships with 15 OEM partners. NY-based private equity firm CIP Capital will continue as majority owners of the business.

Over the next several months, AutoLoop’s suite of software products, including equity mining, scheduling, service lane technology and appraisal tools, will be strategically integrated with Affinitiv’s digital and direct marketing products, offering auto dealers a comprehensive, end-to-end solution designed to maximize dealership revenue and customer retention throughout the entire ownership lifecycle.

Affinitiv’s CEO Scot Eisenfelder will continue in his current role as CEO, while Steve Anderson, AutoLoop’s CEO, will assume the position of Executive Chairman of the combined entity.

“I’m excited about this merger, as it allows us to rapidly accelerate the adoption of our best-in-class technology and products across the automotive market,” said Anderson. “In addition, having a considerably larger organization operating at scale will provide our OEM and dealer customers a rich array of solutions with outstanding support.”

“Dealerships need to evolve in order to thrive,” said Eisenfelder. “The combined company will join two leading industry platforms to provide the best data-driven marketing and software solution that will guide dealers through each touchpoint in the customer journey, creating an optimal customer experience while growing dealership revenue.”

The newly combined company will create the largest provider of data-driven marketing and software solutions exclusively focused on the automotive customer lifecycle. Key highlights include:

• Modern and scalable SaaS offering, purposebuilt for automotive OEMs and dealerships
• Fully integrated product portfolio across retention marketing, equity mining, online scheduling, service lane software, digital marketing and appraisal solutions
• Proprietary analytics platform that provides sophisticated customer and marketing insights based on the combination of unique data sets from OEMs, dealerships and third parties
• Customized solutions for each dealer via a consultative field staff working closely with dealers to customize and evolve marketing plans – a method proven to deliver better ROI
• Inhouse digital agency that leverages deep technical, strategic and creative expertise to develop and deploy data-driven, multi-channel campaigns that are innovative, effective and OEM-compliant, ultimately creating a best-in-class customer experience and driving strong brand loyalty

AutoLoop customers will gain immediate access to enhanced digital and social campaigns through Affinitiv’s CK Advertising and Affinitiv Digital offerings. Affinitiv’s customers will benefit from AutoLoop’s integrated product offering across marketing, scheduling, equity mining and service lane software.

For more information, visit www.Affinitiv.com or call 847-955-9740.

About Affinitiv

Affinitiv is a leading marketing technology company serving automotive manufacturers (OEMs), dealership groups, and individual dealerships. Through a technology-driven and consultative approach, Affinitiv enables dealerships to produce, manage, measure and optimize omni-channel communications to drive brand loyalty and increase revenue. Affinitiv’s marketing automation and technology platform is designed to provide a 360° view of customer, vehicle, dealership and marketing campaign effectiveness all in one place. Affinitiv’s digital and analytics capabilities support a consistent customer experience through the entire ownership lifecycle. Affinitiv was formed in 2016 and is headquartered in Chicago, IL.

If you ask a dealership GM or controller “What’s your marketing per vehicle retail (PVR)?” not only will you get a precise answer, but likely a dissertation on the drivers, trends and plans to optimize. That’s because auto retailers understand that marketing efficiency and effectiveness is the lifeblood of their new and used vehicle departments.

However, if you ask the same GM or controller “What’s your service marketing per repair order (PRO)?” at best you will get “That’s a good question!” More likely you will get a blank stare.

I have never seen service marketing PRO on any monthly operating report. In fact, most dealers don’t break out service marketing from sales marketing in their PVR calculations, which contributes to the perverse behavior of cutting back on service marketing when sales decline to achieve PVR goals.

The implication is that most dealers aren’t managing the marketing budget that drives half of their stores’ profitability against an objective, results-oriented benchmark.

Most dealerships’ service marketing budgets are based on historical norms or the co-opable portion of the OEM owner retention program (ORP). Dealers may calculate the return on individual campaigns, e.g. how many ROs did the fall tire campaign produce? But few dealers compare their total budget against the total business it supports.

Calculate Your Service Marketing PRO

What should your store’s service marketing PRO be?

First, let’s reformulate sales PVR from a number to a gross margin percent, which I believe is a more relevant perspective, since my bank does not allow me to deposit vehicles, only profits.

In addition, I should be willing to spend more to sell a Mercedes than a Nissan. According to the NADA composite, the average marketing PVR is $547, which represents 28% of vehicle gross profit including F&I.

Given the average RO gross profit is $179, an equivalent investment level would be $50 per RO, compared to the average current marketing spend of $2.43 per RO today. That’s a 20X increase in service marketing budgets!

I admit that given Affinitiv’s business, this comparison may seem self-serving, but that doesn’t make it less true. Some dealers push back saying the comparison isn’t valid because many of their ROs—particularly warranty ROs—would come without any marketing.

The same argument could be made in sales, yet we spread marketing over loyal and conquest sales equally.

More importantly, we need to recognize the recommended investment level is consistent with Independent Repair chains who are typically investing 4-6% of their revenue in marketing. At 4-6% revenue, the equivalent spending per RO would range from $15 to $25, or 6-10X greater than the current spending!

Like all benchmarks, this is a guideline to establish a budget level, but it doesn’t tell you how to most effectively spend your money.

The Four Pillars of Service Marketing

Successful service marketing is built on four key pillars, including:

1. Execute a comprehensive (ORP)

This means addressing your units in operation (UIO) with the appropriate “reach x frequency” to drive behavior. It’s critical to not cede a single customer to independents. While it may require different tactics to attract distant or off-brand used vehicle customers, there are strategies that can yield results.

Success requires an omnichannel approach for two reasons. First, dealers don’t have accurate, complete data on all customers, so a single channel approach can’t provide comprehensive reach. Second, today’s consumers’ fragmented media habits make it impossible to achieve the required frequency through a single channel.

Finally, dealer communication must go beyond soliciting regular service intervals to include tailored campaigns that address all fixed ops profit centers – e.g. replace wear items, repairs, collision and recalls. Additionally, marketing must sometimes provide valuable ownership information or demonstre appreciation. 

2. Emphasize moments of truth

While ORPs need a comprehensive communication plan, this does not mean every touchpoint is of equal value and hence not each should receive equal investment.

Among the most valuable touchpoints are declines, first service appointment, last within warranty service and first post warranty service. Given the importance of these touchpoints, we recommend dealers invest in more channels and creative offers to drive incremental visits.

3. Close process leakage points

Marketing alone cannot drive incremental service. Dealers must plug key leakage points between consumer intent and service completion. Inadequate appointment capture due to poor technology or coverage can be addressed through an outsourced BDC.

Dealers also need to check online scheduling set ups to ensure maximum available hours and enough information, such as pricing, to encourage scheduling.

Website content must be current and useful to prospective service customers. Few dealers match the operating hours of their independent competitors.

Finally, dealers must encourage more complete multi-point inspections (MPIs) and invest in technology to present professional and timely additional service recommendations (ASRs) to waiters and drop-off customers. Addressing these operational issues will dramatically improve return on investment.

4. Conquest to replace and grow

Even with the best retention efforts, every month some consumers will defect. In a flat market, new vehicle sales won’t replenish inactive VINs sufficiently to grow the servicing UIO base, so dealers need a strategy to constantly replenish its customer base through conquest.

Service pay-per-click (PPC) is a critical part of this strategy. Dealers need to invest in PPC because this is where Independents are stealing the dealers’ customers. As evidenced in search results, dealers are being dramatically outspent. Direct marketing from third party lists must also be part of the strategy, but keep in mind not all lists are equal.

When allocating a total service marketing budget, we recommend dealers fund the basics in each area and then tailor incremental spending based on their individual performance gaps. For example, ensure that all known owners are contacted across enough channels to assure an acceptable “reach x frequency” to drive impact.

Next, emphasize Moments of Truth with increased attempts and/or channels. Before investing in more expensive conquest activities, we recommend plugging the largest leaks to maximize ROI on conquest activities. After all, there’s no point in pouring more water into a leaky bucket.

Once operations are streamlined, conquest will be more productive and should become a consistent, planned activity funded based on retention success, store growth goals and investment appetite.

Scot Eisenfelder shares why the service write-up is critical to increased revenue in this video blog.

Scot Eisenfelder shares his opinion on whether dealerships should be sending holiday cards to their customers in this video blog.

Dealerships aren't always the first place that vehicle owners think of when it's time for service. According to the Cox 2017 Car Buying Journey study, 23% of new vehicle owners and 53% of used vehicle owners did not return for service to the dealership where they purchased the vehicle.

To retain more of their sold customers, dealers are becoming more aggressive with their service marketing strategies. And similar to what we saw on the sales side in 2005 and 2006, they're adding digital channels into their marketing mix.

This is a sound strategy, as omnichannel marketing is proven to increase reach, frequency and results.  In marketing, there's something called the Rule of 7, which states that a customer needs to hear and see your message at least seven times before he or she takes action.

Digital omnichannel marketing campaigns are a cost-effective method for delivering multiple, personalized messages to a single customer. In many cases, dealers can get results while spending the same as they currently spend on their owner's retention program (ORP). This is possible because digital campaigns are much more targeted than mass mailers and email blasts.

To maximize service campaign response rates and ROI, make sure you’re using the following channels, in addition to direct mail and email.

1) PPC/Search Marketing

Pay-Per-Click (PPC) is highly effective because it targets prospects who are actively looking for service and repairs. 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 for your service department, you won't show up in the results and you'll never even be in consideration.

2) Social Media

Currently Facebook has 207 million users in the U.S. and the average session is 20 minutes. Instagram has 96 million users and 80% of users follow at least one business. The reason your dealership needs to have a presence on these platforms is because that's where your customers and prospects are spending their time.

Advances in marketing automation make it possible to match the customers in your DMS with their social media profiles. It's now possible to deliver service reminders, overdue maintenance reminders, appointment reminders and relevant coupons right into your customers' news feeds.

When you cross-reference Facebook and Instagram users with your own customer data, these two platforms become highly influential channels that deliver incredible results.

3) Display Ads/Retargeting

Google properties offer a variety of display advertising options that allow you to deliver specific messages to your customers based on their online behavior or physical location.

For example, if someone visits the service pages on your website, you can retarget that person with a display ad and relevant offer. Another effective strategy is to identify customers who are in an equity position with their vehicles and target them with a discounted oil change. Once they're in your service department, a salesperson can approach them and offer a free trade-in appraisal.

Geotargeting and IP targeting allows you to deliver offers to customers based on their physical location, such as customers within 10 miles of your dealership, or at a competitor's dealership. Or you can deliver an offer to people attending a sporting event or concert in a nearby stadium or arena.

4) Video ads

Video is the new television. For video ads, YouTube offers an array of targeting capabilities based on demographics, interests, life events, shopping behavior and the video content that your intended audience is currently watching.

YouTube's greatest advantage is that you only have to pay for video views and interactions. This means there's a huge opportunity to raise brand awareness without having to pay for video views.

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

If you create a video 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!

Ideally, your message is compelling enough to appeal to service intenders, and they won't skip your ad. Either way, it's a win-win situation.

5) BDC Campaigns

While not digital, BDC campaigns are important to mention because they're highly effective. They can also be expensive, so reserve use for opportunities with significant revenue potential. Examples include declined service follow up, telematics notifications or recall completion events.

As more dealers rely on their fixed ops revenue to increase profitability, the effectiveness of their service marketing is coming under scrutiny. In sales, digital omnichannel marketing campaigns have become an accepted best practice, and soon it will be the same in service.