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.

CEO & Executive Chairman of Affinitiv, Scot Eisenfelder, shares why dealerships should ignore the grinders and focus on their most valuable customers.

Combination creates a leading provider of marketing technology and software solutions exclusively serving automotive manufacturers and dealerships in the U.S.

Chicago, IL and Clearwater, FL—July 18, 2019— Affinitiv, Inc. (“Affinitiv”) and Loop LLC (“AutoLoop”), leading providers of data-driven marketing automation and software solutions to the automotive market, today announced that they have signed a definitive agreement to merge the two companies. The transaction is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”).

The highly strategic merger will combine two industry-leading platforms to create the largest provider of data-driven marketing and software solutions exclusively focused on the automotive customer lifecycle. Key highlights of the combined company include:

• Modern and scalable SaaS offering, purpose-built 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
• Long-term and highly strategic relationships with over 10 OEM partners and over 6,500 dealerships

The merger will result in a combined company with revenues of approximately $200 million and over 800 employees. The combined company will operate under the Affinitiv brand name, but will continue to leverage the AutoLoop brand across its product portfolio. NY-based private equity firm CIP Capital will continue as majority owners of the combined business going forward.

“The combined company is ideally suited to help guide OEMs and dealerships through the major disruptors that are facing the automobile industry, putting tremendous pressure on the profitability of dealers including lengthening servicing intervals, digital presence, and the ever increasing complexity in marketing with the proliferation of ‘Big Data’ and new mobile and digital channels,” said Scot Eisenfelder, CEO of Affinitiv.

AutoLoop CEO Steve Anderson continued, “The pace of technological evolution has accelerated tremendously over the past decade, and we’re committed to staying at the forefront of innovation as we continue to invest aggressively in new software and analytics capabilities for our clients. Partnering with Affinitiv gives us an extraordinary opportunity to enhance our existing products, expand our offerings and better serve our customer base as they navigate the industry challenges ahead.”

The combined company will continue to leverage its scale, resources and unique set of marketing, software and analytics offerings to drive innovation while providing clients with world-class levels of customer support for all Affinitiv and AutoLoop solutions.

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 Connectiv1 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.

About AutoLoop

Since 2005, AutoLoop has been helping automotive dealerships grow their businesses. It all began with the AutoLoop Sales and Service Suite, a set of seamlessly interconnected Sales, Service, and Engagement tools designed to give dealerships industry-leading features, intelligent analytics, and streamlined performance. Together, these elements enable dealers to boost sales, optimize service, market with precision, and – most importantly – drive revenue. AutoLoop products are built by dealers for dealers, and are constantly evolving to help over 2,100 franchise dealerships elevate their automotive businesses every day. An Inc. 500 company with nearly 70 million names in its database and over 2 billion individual communications initiated, AutoLoop is passionate about being America's best customer retention partner for progressive dealerships. AutoLoop is headquartered in Clearwater, FL.

In the last seven years, new vehicle gross margins have declined from four percent to two percent. If that pace continues, profit margins will be wiped out by 2025. It appears that the front-end grosses dealers enjoyed 10 or 15 years ago are never coming back.

F&I profits have made up for some of these lost profits, but this trend is not sustainable for the long-term for three reasons:

1) Dealers have pretty much maxed out what they can reasonably charge customers for F&I packages

2) The same transparency that drove down new-vehicle per vehicle retail (PVR) is likely to drive down F&I PVR

3) F&I gross margins are vulnerable to rising interest rates and increased regulation

Remaining profitable in the future requires learning how to operate a razor and razor-blade business model. With this business model, the manufacturers' strategy is to sell their products (e.g. razors and printers) at zero profit and make all the money on the back end, selling razor blades and ink cartridges.

When applied to dealerships, this strategy necessitates full transparency on the price of the vehicle, with the acceptance that there will be little to no profit. Then, focus all money-making efforts on the back end, in the maintenance and servicing of that vehicle.

For dealers, this business model forces a fundamental shift in mindset and operations. Here are a few recommendations on how to make it work.

View the customer differently
Instead of viewing how much profit you make from each sale, you have to look at what the lifetime value of that customer is. Instead of asking, "How many cars can we sell this month?" you have to ask "How many new customers can I acquire this month, and how can we convince those customers to continue servicing with us?"

In a razor and razor blade model, your goal is to keep every customer through the entire ownership lifecycle.

Move from transaction-based mindset to a relationship-based mindset
Dealerships were set up to optimize individual transactions instead of relationships. This has to change. Even the sale of the vehicle is split into two different transactions: the sale and F&I. Going forward, merge the sales and F&I functions. Have a product presenter and a deal manager.

In service, develop a pre- to post-warranty customer retention strategy. Dealers give up too easily as a car moves out of warranty, ceding valuable business to independent facilities.

As customers move from pre-warranty to post-warranty, buyer values start to shift. Issues of price and value matter more as they pick up more of the bill. This requires a change in the way you market to and communicate with that customer.

Change Pay Plans
The original concept of sales commissions was based on the idea that gross margin was determined by the strength of the salespersons' ability to negotiate. Today salespeople don't have the opportunity to influence gross margins, so why pay them on that basis?

We have to reconsider the traditional approach to 100% variable compensation and move towards a model where we're incenting employees to bring customers back into the dealership. Variable pay plans in both sales and service encourage the wrong behavior and are thus out of alignment with an optimal customer experience.

Develop a less mercenary pay plan. Pay someone a minimal salary so they're not dependent on individual transactions to put food on the table. Bonus your employees on metrics other than gross sales, such as repeat business and positive reviews.

In the next few years, learning how to operate a razor and razor-blade business model will allow dealers to continue growing profits, even as front-end profit margins go the way of the dodo bird.

Scot Eisenfelder shares his opinion on whether third-party leads are worth the expense for dealerships in this video blog.

Scot Eisenfelder shares his opinion on why consumers have adopted online scheduling in other industries but only use it in low numbers within the automotive industry.

CEO & Executive Chairman Scot Eisenfelder explains why customers defect in service in this video blog.

eBook shares 9 marketing campaign strategies proven to increase customer loyalty and service revenue 

Chicago, IL—June 3, 2019— Affinitiv, the retail auto industry's leading marketing technology provider, today announced the release of a free eBook for auto dealers: Turbocharge Your Owner Retention Program (ORP) Marketing. The eBook reveals the most effective way to measure ORP marketing results and shares nine marketing campaign strategies proven to maximize results from manufacturer ORPs.

“Most dealers do some if not all of their service marketing with their manufacturer ORP, but results from these programs can be all over the board, depending on the chosen vendor, channel strategies and messaging,” said Scot Eisenfelder, CEO of Affinitiv. "The fact is many dealers underinvest in service marketing even though front-end profit margins are shrinking and customer retention is more important than ever."

"This eBook helps dealers assess the effectiveness of their ORP and gives them actionable strategies so they can improve results," said Courtney Evans, VP of Product for Affinitiv. "If you're interested in learning what other dealers are doing to increase their service business, this eBook will help you identify and fix the weak areas in your own service marketing strategy."

Many dealerships use a cookie-cutter approach to their ORPs, limiting customer communications to direct mail and email campaigns. The eBook stresses the importance of using on omnichannel approach to greatly increase frequency, reach and response rates.

The eBook also features four case studies of dealerships that improved ORP results with customized marketing strategies. Each dealership had a different and distinct goal, from increasing parts revenue to improving online presence, filling new service bays and re-engaging lapsed customers. The dealerships attained these goals using their ORP, optimized with campaign strategies that leveraged their customer data and third-party data to deliver targeted messages and offers.

Dealers who want to elevate their ORP from a marketing tool to a relationship-building tool can learn proven strategies in this free eBook.

To download, click on this link: Turbocharge Your Owner Retention Program (ORP) Marketing. For more information, visit www.affinitiv.com

About Affinitiv:

Affinitiv is a leading marketing technology company serving a dozen automotive manufacturers (OEMs) and more than 5,500 franchise dealerships. Affinitiv’s Connectiv1 Platform is designed to provide a 360° view of customer, vehicle, dealership and marketing campaign effectiveness all in one place. Affinitiv makes it easy for auto dealerships to leverage data and target customers with the right message at the right time on the right communication channel.

Affinitiv enables dealerships to produce, manage, measure and optimize omni-channel communications to drive brand loyalty and increase revenue. Affinitiv’s digital and analytic 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 dealerships can take future predictions and turn them into revenue opportunities in this video blog.