[Part five in the “What’s the Big Deal With Data Anyways?” series. To read part four, click here]
Segmentation of DMS data can be defined as the process of dividing up your customer data into specific groups for the purpose of defining a more precise behavioral profile that will lead to a predisposition or higher purchase rate for a specific offering. Data Segmentation is when you break your customer base into groups and identify generally when, why and how a customer interacts or engages with your dealership. Did they previously respond to a specific product or service offering? Do they prefer a certain model? Did they stop purchasing? Do they only respond to discounts or price incentives, or do they only purchase a singular item from you?
The real goal of segmentation marketing is to deploy profitable marketing communications based on behavioral patterns exhibited previously by your customer. Segmentation is not just for the retail customer, but can be used in all of the dealership’s departments. For example, BMW has a program solely for independent body shops to increase the sales of certain OEM replacement parts purchased through their dealer network.
Data segmentation allows a dealership to focus on the customer segments that are strongest and to put less emphasis on those that are weaker.
Data segmentation will provide a dealership with, at a minimum, five basic insights into its customer base which will allow it to build a framework for segmentation campaigns as follows:
- Who are my customers?
- What do they like?
- What are they purchasing exactly?
- How often to they purchase or visit?
- What marketing channels are they responding to?
So what segments would could you potentially extract or filter from the volumes of customer DMS data you have already gathered? Think store wide, departmentally, and what each department offers in the way of all products and services.
By starting with some basic data filters, you can build some very specific marketing groups, singularly or by grouping multiple filters:
- New vehicle purchasers within a certain time parameter
- Pre owned vehicle purchasers within a certain time parameter
- Service department customers who purchased elsewhere
- Mileage parameters – Between, greater than, less than
- Purchase date (both sales and service) – Between certain dates, or before and after a date
- Vehicle type (pre owned and new)
- Extended Warranty Purchase – Still eligible
- Customer Spend – Between, greater than, less than
- Last Dealership Visit – Before or after a certain date
- Campaign response – Those who responded to specific campaigns in the past
- Total number of service visits – indicator of possible new vehicle purchase
- Preferred method of contact – text, email, etc.
- Wholesale parts purchases – frequency
- Accessory purchases
The basic frame-work for a successful data segmentation and subsequent marketing initiative should not be daunting. Actually it can be very simple if you start small.
- Identify your key customer segments or groups. For example one segment may be; customers with vehicles that have eclipsed over 90,000 miles and are 6 model years old. Another may be; customers who only respond to discounts or special offers. Yet another; those customers who have not come back for a specific period of time or those who have defected.
- Create four to six target groups. Combine your segmented groups into just four or six sub groups to start. If possible, group those together with like demographics. As an example, group those customers who live more then 25 miles away from your dealership into one sub group. Another group may be those customers who respond to service reminders.
- Deliver different messages and engagement experiences. Deliver a different product messages and each approach should be tailored to the specific group you are targeting, realizing their preferences and demographics.
- Keep it as simple as possible. Leave the complicated mass marketing stuff to your manufacturer. After all, they have the big marketing budgets to handle it. Simply choose your five or six target groups and focus your campaigns and efforts on them. You can always change them later if you feel your initial strategy is proving less than successful.
- Measure the effectiveness of each campaign and adjust your strategy when necessary. By measuring how your customers respond to your campaigns, you will be in a better position to predict their future buying habits and to polish your future marketing strategies.
By utilizing a more customer-focused approach, and by shifting resources away from the typical “shotgun” style mass marketing used by many dealerships today, you will be able respond more quickly to any market changes. This is while focusing foremost on your best customers up front while increasing profits and decreasing costs.
When deploying such a strategy, ensure that everyone in the dealership is on the same page when interacting with a customer who has responded to one of your segmented communications. This includes receptionists, BDC or call center scripting, service writers and sales employees. It is extremely important that all customers receive the same messaging, tone and product or service positioning that was offered in the communication. The more consistency you employ, the higher your ROI will be. To your success!