In Automotive, 2016 is the year of data. I’ve been saying that in every speaking engagement I’ve had over the last six months. Since founding Showroom Logic seven years ago, I’ve witnessed a lot of different shifts and trends. This shift toward data and actionable analytics has me the most excited because the availability of data and technology to analyze it has been improving at a rapid pace.
Still, I am amazed at how little support dealerships get from their respective OEMs. Sure, OEMs provide all sorts of charts, graphs, indexes, spreadsheets, etc. They rarely, however, offer any recommendations on how to take action. At the end of the day, it all comes down to selling cars for the dealer and the OEM, right? So, it’s puzzling why OEMs are not more supportive of their sales engine.
For example, OEMs will grade a dealership based on how well they are performing within their assigned market area. Although each OEM has a slightly different way of measuring the data, it usually looks something like this:
They look at Honda’s overall market share by model at the state level, and apply that as an expectation for each dealer. Although this method of benchmarking is facing some scrutiny, you can use it to your advantage with the right understanding. In other words, the OEM assumes that a dealership should perform (within their market) at the same level at which Honda is able to perform collectively in the state. Whether that’s a good way to look at it or not, this score can have an affect on a dealer’s inventory allocation, rebates and whether Honda will add another point in the market to try and make up the difference. Honda isn’t the only one that looks at your performance this way.
There is something crucial that is missing in these reports:
An understanding of how competing models are performing within your market area.
Here is the simple truth: An OEM would rather have you conquest competing models than other franchises! Imagine their surprise if you put together a sound conquesting strategy based on data in your market. Our new Conquest Report in ZipDriven will make you a rockstar.
Why does this new report matter? According to Google*,
87% of people consider multiple brands during the shopping process
71% of buyers switch brands with only 12% being brand-loyal
79% of search activity (digital) while in-market is brand comparison
*Source: Google Influential Experiences: Auto Shopper Insights for 2015 Planning
Most in-market shoppers are open to buying different brands.
Many dealerships have told me that “conquesting” is for the OEM, not them. What?
Thinking about the data above, wouldn’t you want to reach a shopper while they are in consideration mode? Of course you do. Well, not so fast. Remember, you need three things to run a successful model-specific campaign.
Sticking with the Honda example, let’s say that the Volkswagen Jetta is doing better than expected against your Honda Accord in your dealership’s market area. You need to know where those shoppers live in order to better target them. You’d be surprised how often we see clusters of similar buyers because of similar demographics. Our ZipDriven tool makes it easy to see where those sales are coming from.
If you had a shot to explain to the buyer how your accord compares to their Jetta, what would you say? Would you talk about the difference in price? Would you show them how an Accord lease would be much cheaper? Would you compare performance? Did you take the time to look at what the competitive dealers are talking about?
You need to understand what messages consumers in your market are receiving about Jetta to determine the right message for your dealership. If you get a shot to show an in-market buyer how you fare against a competing model, don’t blow it by thinking that a generic Accord message will cut it.
Even though you don’t have an unlimited budget, you need to ensure you have enough budget to fuel the campaign. For starters, don’t try to conquest EVERY competing model for EVERY model you have in stock. Pick 3-4 models where you need to increase your volume and select 3-4 models worth conquesting. Then, start with a healthy budget and adapt as necessary. What’s healthy? I would recommend at least 100% of what you spend on your Accord digital advertising in a given month. Yes, that’s 100%. You have to pay to play (and gain market share).
Once you’ve aligned your targeting, crafted the right message and fueled your campaign with a healthy budget, you’ll need to track performance. Be careful here: Although people are open to switching brands, you’ll have to work a little harder to convince them to switch in that moment. Don’t try and measure apples to apples.
The various digital campaigns you run for your brand, new models or used cars will all vary in performance. Digital conquesting is no exception. Watch your conquesting campaigns for 60-90 days at a minimum, making sound adjustments as you go. At the end of that period, make a decision about moving forward (spend more, less, stay the same) based on your advertising performance data.
Can I guarantee that this strategy will ALWAYS increase your sales? Nope. But, I can guarantee that this data-driven strategy puts you in a better position than when you pull out your conquest shotgun and start spraying. Here is the bottom-line:
If you were able to know which competing models are performing better-than-expected in your market, AND understand the dynamic of each to create the right message, wouldn’t you rather put your marketing dollars in that bucket than on a strategy using no data at all?
My prediction: As data drives your digital conquesting strategies, your OEM will get excited and take notice. And, even if they aren’t the ones offering the recommendations (gasp!), you’ll have a sound strategy that they’ll want to help fund through co-op dollars.
The future of your success is right here, right now. Let’s all start making smarter decisions using the wealth of data automotive has to offer.
To learn more about Data-Driven Digital Conquesting, register now to attend our exclusive DrivingSales Webinar on Thursday, May 19th.