Dealers now spend about $400 per vehicle on advertising per vehicle, much of it going to mass market media — newspapers, television and radio.
Now, however, because of advancements in technology, dealers are able to advertise to narrow and select groups of potential customers. The advantages of this new wave of targeted, one-to-one marketing are incredible, says Jim Roche, vice president, Product Technology for Autobytel, Inc.
“It's going to drive down the cost of marketing and increase the return on investment. Dealers are going to demand a better response rate than the one-tenth of 1% they get now from mass marketing.”
The technology has advanced along three fronts, according Roche. First, the creation of the Internet allows dealers to have access to sophisticated data much faster today.
Second, improvements in database technology allows for the aggregation of data from many sources.
Third, the advent of digital fulfillment allows dealers to create a large scale customized targeted marketing campaign with just a few clicks of the mouse. The campaigns can be driven by call centers, direct mail or email. It's the dealer's choice.
The space is quickly becoming crowded. Just a couple of years ago, R. L. Polk and Company and Newgen were the big boys selling data for marketing purposes. Even though those two companies are still big players, the landscape changed dramatically this year.
In the past year, Experian has made an aggressive move into the space and launched its Auto4Customers and Auto Prospect online customer management tools. Ken Kauppila, Experian's executive vice president, acknowledges the environment is “highly competitive.”
The Cobalt Group, partnering with Axciom, a data company, also has entered the fray introducing its Automarket In.Sight product.
Cobalt CEO John Holt estimates it could reduce customer acquisition costs in half for the dealer.
Autobytel is touting its RPM (Retention-Performance-Marketing) tool — a product that is somewhat different from the others because it focuses on the service department, although it relies on the same premise of targeted marketing as the others.
Although these products have their own strengths and weaknesses, the operating principles are common across the board. The first step is making sure the data is good.
“Good customer relationships start with good customer data,” says Charles Morgan of Axciom.
That means “cleansing” data extracted from dealer management systems (DMS), says Holt.
Cobalt's internal studies reveal as much as 10 to 30% of the DMS data is invalid — many of those records being duplicates. Depending on the geography, as much as 75% of the addresses may need to be updated. And approximately 2% of the records are of people who have died or who have requested that marketers not call or mail them.
The second step is merging the cleansed DMS data with data from any number of outside sources — depending on the product the dealership uses.
Typically, companies like Polk, Experian and Axciom have created their own databases that are updated constantly. Once that data is merged with the DMS data, dealers can create marketing campaigns based on criteria they set.
The technology incorporates intelligence that filters the data dependent on the dealer's criteria. For example, a dealer could run a certified used-car promotion and target those people who have children that are of driving age. Or maybe, the dealer wants to target people of a certain income level. It's all about finding and targeting those people who are most likely to buy from your dealership.
The success of each campaign is measured and tracked giving the dealer an accurate picture of what's working.
The marketing campaigns can be conducted by e-mail, direct mail and call center. All of the involved companies offer fulfillment services. But the dealer can just as easily create a campaign on his or her computer in minutes.
This is just the first generation of these tools. Already, applications are being developed that will work across all of the dealership's profit centers and across all fulfillment channels.
Says Roche. “Everyone is asking ‘Can't anybody do it all?’ That one total CRM solution will revolutionize what happens in the call centers and with advertising.”