As I mentioned in part two of this series, many DMS providers make it difficult for dealers to download their customer database. In some cases, it’s because there are control issues arising between dealers and their DMS (or CRM) as to who actually owns this data. Another issue can be that a provider fears their dealers will take the data and switch companies. Any dealership’s database of customer transactions should be treated as pure gold and it would be a catastrophe to lose this data when a change of providers occurs. Dealers would be wise to develop a business case surrounding their data. It is important to understand how vital it is to clean up this data. The time involved in so doing will actually save money by increasing the effectiveness of any marketing.
Most providers have tools built into their system that can be used to access and download this data. All big DMS providers have report writers or generator functions with which a dealer can download sets of users. Dealers can use this to generate reports on sets of customers and can use these reports to start the process in bite size chunks instead of trying to tackle their entire database all at once. In choosing whether to do this from your DMS or CRM, I would start with your DMS data. Both are important to clean. But your DMS data is the most prominent. This database is huge and can be mined more effectively. It contains all the long-term customers from which continuous revenue can be generated.
If a dealership does not have anyone with the proper skillset to accomplish this, there are third party companies such as Authenticon and StoneEagle that can assist. These companies have built workarounds with which they can use to access a dealership’s data, even from the most difficult providers.
The following is a good road map to use to clean up the dealership’s database.
1. Look for duplicates. Just about every DMS has a report generator that allows a dealer to export these files into an Excel format. In this format, it becomes relatively simple to sort fields and identify duplicate entries. Look for duplicated names, phone numbers, and addresses and attempt to consolidate these duplications into a single record. Start with the oldest records and work backwards to the present. Once one group is cleaned up, proceed to the next group. This makes the task a little more manageable.
2. Once the database is consolidated and duplicates removed, there are then two steps that should be done with two different USPS database services to ensure 100% address accuracy. It is important to get the sequence correct as follows:
a) First run the entire database through the USPS’ National Change of Address database (NCOA). This can be done directly with the post office using their NCOAlink System, or through third party suppliers such as Melissa Data. They will return the database with current mailing addresses.
b) After running the database through NCOA, then take the entire database and run it through another U.S. Postal Service database called ACS™ Service. Many DMS databases have a portion of address correct. Such as the address is 120 West Main Street, and the DMS has it as 120 Main Street; omitting the West from the address. NCOA updates the address and then ACS fixes such inaccuracies as this. So it is important to do both, one after the other.
Here is a link to the post office program for both of these: https://www.usps.com/business/move-update.htm
3. Once all of this has been done, import the updated database into the DMS or CRM.
4. Then move onto email addresses. There are a number of independent services that can verify the validity of an e-mail address and acquire any that are missing from the database. These services can be used to fill in the blanks. Once this is done, then look for any that are still missing and have an admin call the customers to get updated information. Once this is accomplished, enter these changes into the DMS or CRM.
Whether the dealership chooses to do this internally, or to outsource to another company, usually depends on how messed up the database is, and the scope of work required. In some cases the database is not a huge task to clean up and dealers can do a very effective job themselves. Some, however, are so messed up that the task becomes overwhelming and it is better to seek outside help.
This problem starts from the top and goes down. It’s industry-wide and not just confined to dealerships. At PLG we once worked with an OEM who sent us a database of all dealerships and a list of their salespeople. This was a current list and yet we found that half of the salespeople weren’t even employed at the dealerships anymore. The tragedy in all this is that there is so much upside to knowing this data and having it clean. Look at grocery stores. They know what cat food you buy and use it to cross-market. If you’re a loyal Purina cat food customer and all of a sudden you start buying a new brand, I bet you that the cash register spits out a coupon for Purina cat food.
Dealerships have the ability to do this as well. If a customer has changed their oil with you for 6 years and all of a sudden stops coming in, you can encourage them to come back in with a relevant offer tailored specifically to that customer. This type of offer has proven time and again to be highly effective. The point is to have this customer data readily available and then use it to correctly target customers. However, most dealers aren’t doing this. I still get service reminders for vehicles I haven’t owned in 8 or 9 years. I recently bought a new vehicle and 2 weeks later I received an offer in the mail for new tires! It’s a new vehicle. Why would I need new tires? Sending irrelevant messages to your customers only alienates them and makes them less open to receiving and paying attention to future communications from you.
In part four of this series, we’ll explore what to do with the data after a dealer has obtained it and cleaned it up.
In part one of this series, I discussed the importance of dealerships using their data effectively in marketing and how, when done properly, it can increase vehicle and service sales while improving customer loyalty. Now I’d like to discuss why a great majority of dealers aren’t already using their data to its full potential. I can’t think of another business today that is as antiquated as we are in the automotive business when it comes to truly understanding our customers purchase habits and buying preferences. That’s primarily because we don’t take the time and make the effort to understand them, even though we have the data right at our fingertips.
The principal reason that many dealers aren’t using their data correctly is a lack of understanding about exactly what data they have, how to access it, and how to segregate it into valuable subsets of customers. Most dealers realize and understand that data mining can be an important asset and do use it in some very broad, general ways. It is most frequently used for following up with orphan owners and customers coming off-lease. While this is certainly a start, there are surely many more practical and effective ways to use the data. The underlining issue always seems to be a lack dealership knowledge as to how to get the data, segment it and then market it properly to the correct audience.
The big DMS providers like Reynolds and ADP certainly don’t make this process easy for dealers. In-fact they have implemented changes that actually make it harder for a dealer to effectively use their own customer data, especially if the dealer chooses to enlist the help of a third party marketer. There have been numerous public conflicts between dealers and their DMS providers regarding who actually owns the dealerships customer and transaction data, and just as importantly, who should have access to it. Despite the hurdles you might encounter with your DMS provider, it is well worth the effort to familiarize yourself with the process for extracting and marketing to these very valuable customers. If you don’t currently have an ongoing business practice in place for this you should add it to the top of your to-do-list.
Getting the data is one thing. But another challenge is that your data is only as good as the information that was put into the system by your employees. If customer data isn’t collected with diligence and accuracy every time a customer visits your store, you are missing a significant opportunity to learn more about that customers contact information and buying preferences. Do you have a process in place that every service writer asks the customer if their email or mailing address has changed? A recent survey of over 100 individual service departments indicated that only 6% routinely asked for updated customer contact information. The most recent US Census indicated that approximately 36 million Americans changed physical addresses last year. At a 6% update rate, dealers missed out on 34 million new customer contact points, just last year alone. Add in the number of email address and phone number changes and the total number of outdated customer contact records in dealers systems is staggering.
Compounding these issues, many dealerships don’t police how data is entered into their system and end up with multiple entries for the same customer. Not only does this make it more difficult to accurately track the customer’s transactional history, it also does a disservice to the customer, as the dealer will thus be frustrated in the effort to provide accurate detailed service records or tie the purchase of the vehicle to its entire service history.
There are many points along the way in which a customer can be duplicated. They can be entered multiple times in the CRM during the sales process. For example, if handled by multiple salespeople, or if the original record was in one person’s name, but the actual sale happened in another person’s. They could be entered as different customers if the husband brings a vehicle in for service on one occasion, and the wife brings the vehicle in a separate time. It’s even possible that a customer makes a purchase within the parts department and is then entered another time. Many dealerships work with CRM companies that create a database on top of the DMS that serves to further increase duplication.
Dealerships should have a strong business policy in place regarding their data and implement best practices for the collection of good, clean data, including full information on every customer contained in a single record. It would be wise to verify with each customer at every touch point that the information contained in their system is accurate, complete and current. Mandate that each customer has a single customer ID and that every transaction is recorded within that ID. Invest the time into cleaning up your CRM and DMS, with the ultimate goal of having identical databases with the cleanest data possible. This is an ongoing process that should be policed consistently. Unfortunately, many dealerships don’t have anyone tasked with marketing that has the right skill set to effectively accomplish this.
In my next blog, part three of this series, I will talk about how to get your data then clean it up so that it can be used effectively in target marketing.
This blog is the first in a series I plan based around how to better use dealer data in marketing to customers. There is a reason that ‘Big Data’ has been a hot topic in the automotive industry for the last few years. Many retailers in other industries are using it quite successfully to target their marketing and offers to their customers based on transactional and behavioral data. Aside from some off-lease marketing, most dealers aren’t even paying attention to the data they have, much less using it in combination with outside data. It is very difficult, if not impossible, to create customer loyalty by utilizing a shotgun approach in your marketing communications for your entire customer base.
However, this is what many dealers still do and what many vendors are still advocating. A perfect example of this “old school” mentality and outdated approach is in the continued use of service reminders. For example, I continually get service reminders from my local Ford dealer regarding a vehicle I have not owned in almost 5 years. Not only is it a waste of the dealer’s marketing dollars — as I am sure I am not the only customer in his database that no longer owns the vehicle — but it is also a contrary practice to building lasting customer retention though the use of meaningful interactions. It is proven that relevant messages to highly targeted groups of customers converts into more sales, while building significantly increased customer loyalty. Impressing upon your customers that you are paying attention to their specific needs and wants is far more effective than sending them a bunch of communications that don’t pertain to their individual circumstances.
Most major retailers track their customer’s behavior through the use of loyalty programs and other internal SKU tracking methods. Take Costco and Sam’s Club, for example. They track everything their customers buy from them. Through skewing and product codes, they know exactly what their customers have purchased and what they are likely to repurchase from them in the future. They also have the ability to calculate a profit margin for each customer, and to track their customer lifetime value to the dealership.
Why is this important? In the event you lose a long time customer with a high lifetime value, it may require the acquisition of many “smaller” customers to make up the revenue and profit loss of the one higher value customer. Most retail manufacturers know this. They work cooperatively with retailers to deliver relevant coupons and offers tailored for specific customers based on their past purchase behavior. Dealers have the same ability to utilize this data using parts numbers and labor operation codes to generate relevant offers for their customers. For example, with the recent increase in vehicle recalls, dealers should be segregating their recall customers from non-recall customers and communicating with them utilizing a different message.
On the vehicle sales side, NADA publishes their formula as to how to identify what customers, based upon a number of factors that can be easily pulled from your DMS, are “in market” for a new vehicle. But surprisingly, many aren’t using the data. Even many of the vendors that dealers hire, which claim to use the dealers’ data, aren’t using it effectively. This is evidenced by the low ROI these communications generate. Vehicle OEM’s are notorious for using saturation marketing such as that utilized during the current NBA playoffs. This is being sent to audiences that are much less tolerant today than they were even five years ago. Marketing needs to be about communicating useful information that is memorable and meaningful, not about the repetition of a non-relevant offer (remember your service reminders here).
Blasting a generic sales message to a list of customers that have not brought a car in the last few years will most likely only result in a couple of sales. And you risk the opportunity of alienating that customer for a lifetime.
A much better approach is to use predictive analysis – look at what the customer has purchased, the type of vehicle they own and the mileage on those vehicles, so that you may come up with a targeted, accurate analysis of when and what action the customer is pre-disposed to take. Through the use of transactional data dealers already have, they could instead create a more specific list of customers that would have a much higher propensity to respond. Such a list of segmented customers could be those who own a specific model with 90,000 miles or more, who have also spent more than $5,000 in maintenance costs, and are approaching a major service interval. A targeted mailer sent to this precise list will produce dramatically better results than the aforementioned blast to your entire customer base. The message delivered is more relevant, more meaningful and will generate a higher ROI.
In my next few blogs I plan a series to more fully cover why dealers aren’t using the data they have, show dealers how to get the data they already possess, what to do with it when they have it and how to measure the results after they’ve used it. Using your own customer data to target your message to the most relevant customer segment will produce better results, increase the likelihood that your customers pay attention to your message and take action.