The digital landscape today looks vastly different than it did just a few short years ago. Today, sophisticated new tools and technologies allow business owners and operators to not only collect extraordinarily large amounts of data but also to organize and analyze that data in ways that yield valuable insights into everything from operational to customer preference and purchase habits.
The relatively new field of data analytics is exploding, and professionals in a wide range of different industries – from health care to manufacturing – are using these tools to turn raw data into refined and impactful business intelligence.
The automotive industry, in particular, has been using these technologies and applying these techniques to great effect. In the aftermath of the 2000s recession, OEMs and dealerships recognized the power and potential of this emerging field, and they have been aggressive in utilizing data analytics to help them better understand their business and their client base. That deeper understanding has led directly to data-driven solutions that produce new efficiencies and new opportunities.
Customized data-analytics solutions have helped lead to new sales and marketing strategies, more effective promotions and customer communications, enhanced service opportunities and inventory and scheduling optimization.
The result? A significant bottom-line impact for fixed-operations sales and profit margins, a department that accounts for approximately 80% of revenue for most dealerships.
Information Into Intelligence
High-quality fixed-operations data-analytics solutions are both enormously powerful and surprisingly simple to use and understand. They are capable of collecting and analyzing vast amounts of raw data, distilling information on everything from parts and processes to services and scheduling down into the essential business takeaways. The best of these systems are designed to pinpoint obscure or invisible connections, unearth the subtlety and nuance of previously hidden patterns and, in the process, turn basic data into specific and actionable intelligence.
The engine under the hood of the data-analytics revolution is predictive analytics, the ability to make informed predictions (and, ultimately, deliver specific and strategic recommendations) based on past performance. The result is an enormous leap forward in the ability of dealers to design operational processes and service and sales structures that satisfy customers while reducing waste and inefficiency. From staffing and service to inventory management (ensuring the right parts are available when a customer wants them), these new efficiencies lead directly to potential savings.
The impact of inventory enhancements alone can be dramatic: a national OEM recently saved nearly $80 million simply by optimizing port-installed parts and accessories inventory (reducing wasted space and limiting losses to aging and obsolescent parts). In the sales department, taking full advantage of the 30-day post-purchase window for new sales means having the right parts and accessories on hand when the customer wants them.
Predictive analytics leads to fewer missed sales and to strategic inventory guidance weeks and months ahead of time.
This enhanced data fluency, along with the ability to align observable metrics with key performance indicators, provides OEMs and dealerships a deeper and more nuanced understanding of customer purchase patterns, service preferences and overall priorities. Those insights subsequently can be used to design and deliver marketing and promotional communications and campaigns that are both strategically timed and highly personalized.
This approach has been proved to yield powerful results and is dramatically more effective at changing behaviors and driving new and repeat business and building and reinforcing brand loyalty than traditional (and far less precise) methods.
That personalized potential also carries over into the service and sales experience, where access to vehicle- and customer-specific data makes it possible to customize sales and service parts and processes with unparalleled precision.
New Tools and Techniques
While plenty of system-specific differences exist between different data-analytics solutions, there are key similarities across the board. The best offer dealer-specific user-friendly solutions that have been designed for use in a fixed-operations context. From an operational standpoint, these solutions integrate several different DMS data feeds into a single (and comprehensive) web-based platform. Quality control processes ensure the accuracy and integrity of the data through regular audits and real-time reviews.
Owners, operators and other authorized users then can view real-time system information through a custom interface: a virtual “dashboard” that is designed to be both visually dynamic and operationally intuitive. At a glance, users can access a host of metrics and measurables, including detailed sales trends (both cumulatively and broken down into individual product categories); inventory, parts and pricing data; service and operations details; and statistics tracking customer loyalty and retention.
In an industry segment that has traditionally faced difficult challenges associated with the complex and diverse nature of the business, access to this information in a readily available and immediately understandable format is a true game-changer. Dealership owners and operators now can view key performance indicators and evaluate performance in a way that not only provides a real-time window into events as they unfold but also in the all-important context of past performance and critical benchmarks.
With these new tools and techniques, the historic challenges and limitations facing dealerships not only are reduced, they actually can become helpful. Instead of a hindrance, complexity becomes an asset: a window into a more refined and sophisticated understanding of the business. The result is more efficient operations, a newfound ability to sell more parts and convert more customers to repeat service clients, better sales and service metrics, and improved performance and profitability across the board.
Neetu Seth is the founder of NITS Solutions, which works with automotive clients to transform information into intelligence by helping them navigate the intersection of big data, technology and marketing.
