Prediction: Car Dealers Will Rely More on Predictive Analytics

Crystal balls predicting the future would help dealers sell cars.

Alas, those legendary orbs don’t exist. But predictive analytics software developers are making strides in forecasting which customers are likely to buy – as well as what vehicles, and when.

A growing number of dealerships are using such digital tools to better understand – and then leverage – customer buying behavior.

It’s an evolving field, especially as artificial intelligence and machine learning come more into play. 

Accordingly, two automotive data companies – automotiveMastermind and Urban Science – are introducing stepped-up versions of digital tools for dealers.

Urban Science’s In-Market Audiences software focuses on dealerships advertising directly to active car shoppers searching for particular vehicles.

automotiveMastermind’s scoring system tells dealers which customers are more ready to buy than others.     

Changing Auto Retailing

Executives from both companies say their products help change auto retailing.

automotiveMastermind offers enhanced machine learning and predictive data algorithms in their scoring of which buyers are hotter prospects than others.

It does that by extracting thousands of customer data points from assorted sources.

Those include social media, financial records, buying-cycle patterns, demographics, dealership management systems, customer relationship management systems and information from participating automakers and their captive financing units.

The company’s software predicts car-consumer behavior, ranks buying probability, foretells what influences shoppers’ behavior and even who could possibly defect to another automotive brand.

The enhanced system empowers sales teams to create timely and effective sales outreach to prospects, says Aaron Baldwin, automotiveMastermind’s chief product officer.

“It’s the latest enhancement that gets deeper into predicting who will buy what, when and what deal structure they are likely to transact with,” he tells WardsAuto.

Demographics include how many family members are in a household. That can determine what kind of vehicle they might buy. For instance, a growing young amily may move to a larger vehicle, says Baldwin..

The company also redesigned its Customer Deal Sheet user interface – which includes talking points – for easier use by dealership staffers.

The new Deal Sheet is “packed with great customer insights,” says Lovelie Balmes, business development and internet director at Team Chevrolet in Las Vegas. “That means more time selling and less time training.”

S&P Global Mobility owns automotiveMastermind, but it has direct dealership roots.

That’s because, while working in sales for Mercedes-Benz Manhattan in New York, Marco Schnabl and Johannes Gnauck researched ways to use technology to understand consumer behavior better.

They went on to found automotiveMastermind in 2012.

“We were first to market with anything predictive for the auto vertical,” Schnabl tells WardsAuto. “Amazon is the model we thought was relevant to the auto industry.”

New-Age Target Marketing

Urban Science's enhanced In-Market Audiences tool harnesses the company’s “unrivaled” industry sales data that are updated daily to help dealers and their ad agencies specifically target car shoppers.

The company’s enhanced digital tool empowers marketers to reach prospects who are predicted to buy a vehicle in the next 90 days.

The results show that purchase rates are up to 10 times higher for overall audiences and up to 25 times higher for vehicle brand audiences, according to Carl Matter, Urban Science’s director of AdTech Performance.

“It’s a higher-qualified audience,” he tells WardsAuto, noting that today’s advertising includes a slew of outlets ranging from social media to printed mailers.

“There’s a lot of noise out there,” Matter tells WardsAuto. “You’ve got to cut through that. Dealers are always interested in getting more value for their ad spend.”

Urban Science’s In-Market Audiences system uses household demographics and advanced machine learning for its advanced target marketing.

The approach identifies patterns in vehicle purchase behavior and predicts which vehicle someone might buy next.

It’s not always obvious.

For example, Matter says, “We’ve seen owners of pickup trucks (powered by internal-combustion engines) interested in buying an electric vehicle. It seems counterintuitive but they’re usually buying the EV as a second or third car.”   

Predictive analytics is rooted in science, not speculation.

“As the need for accurate and actionable data across the automotive media landscape intensifies – particularly in the EV and hybrid segments – leveraging the industry’s most recent and accurate data will remain crucial,” says Rick Jones, vice president of Urban Science’s AdTech.
What’s in the Future
Predictive analytics will become more important to dealers, says automotiveMastermind’s Baldwin, who formerly worked for the Asbury Automotive dealership group. “We see interest from not only big dealerships but small ones too.”

His company initially concentrated on luxury vehicle segments but went mainstream about five years ago.

Dealers want more data and insights, Derek Hansen, Cox Automotive’s vice president-operations, tells WardsAuto. “You have to be leading edge to stay in the game.”

Predictive analytics is relatively new, but its growth is inevitable because “there is so much data out there,” says Ed Roberts, chief operating officer at Bozard Ford Lincoln in St. Augustine, FL.  

Moreover, AI and machine learning systems have become more powerful in processing that ocean of data.

Such systems help dealers better connect with customers, he adds. “When we can make connections, we can make sales. It’s no longer a cold call.”