With auto sales volume slowing, many dealers are wondering how to acquire enough new customers to stay profitable. But dealers already have a gold mine of sales opportunities at their fingertips: their existing customers.
Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one, according to Harvard Business Review.
According to a Marketing Metrics study, you have a 15 percent chance of selling to a new customer, but a 65 percent chance of selling to an existing one.
Increasing customer retention rates by five percent can increase profits by 25 to 95 percent, according to research from business consulting firm Bain & Company
Data mining—using technology to find specific signals that someone is a good candidate for a sale—is the best way to identify those existing customers who may be ready to buy. The data you've already captured in your CRM can give you the insight you need to make timely, relevant offers to customers you already know, and who already know you — if you know how to use your data.
Use the right data, in the right database
According to business management consultant TDWI, inaccurate customer data costs U.S. businesses $611 billion a year, so data hygiene—or cleaning up customer records stored in your software to ensure accuracy—should your top priority. Without an accurate view of your customers, you'll waste time and money marketing irrelevant offers.
Your data should live in a robust CRM like our Connect CRM with an integrated data mining tool like TargetPro. A good, useful tool will sort your data by a number of factors: sold, unsold, equity, service history and activity and, website behavior.
Find resale opportunities
Once you've built your foundation, make data mining a team effort. Your service department, internet sales manager, and dealership management should all use your data mining tool regularly. At bigger dealerships, your BDC will likely take the lead.
Regardless of who uses the tool, you're looking for one thing: ready-to-buy customers. The following are the three biggest indicators of a resale opportunity.
1. Equity standing
Customers who have been making payments on the same vehicle for several years could be excellent resale targets. If they're in positive equity, you can get them into a newer vehicle without increasing their payments—which could be too good a deal to pass up.
Integrating third-party lender and APR data can help sweeten the deal. If customers' credit scores have improved, you may be able to get them a lower APR on their next vehicle loan, which could make a new vehicle even more attractive.
2. Service activity and history
Another strong source of resale opportunities is your service department. Service lets you build an ongoing relationship with customers after the sale.
Using DMS data or integrated third-party data, segment service customers based on their last visit and engine type. This will help you send tailored and relevant service offers that bring customers through the door, so you can start building that critical relationship.
3. Website Activity
Today's customers spend 60 percent of the car-buying process online, according to Cox Automotive's 2017 Car Buyer Journey study. So when customers are considering their next vehicle purchase, one of the first places they go is your website.
Integrate a web behavior tracking tool like VinLens in your CRM to see when customers in your database visit your website, and what they are browsing. A good tool with notify you with CRM alerts when specific customers are browsing your site, so you can follow up right away—and never miss another opportunity.
Even if winning new customers becomes more difficult, there are more sales opportunities already in your database than you might think. And if you search for these three signals of ready-to-buy customers, you'll find them in no time. Happy mining!
A version of this post originally appeared in Dealer Marketing Magazine.