Mining for More Money

Friend Scott Harris, dealer principal and general manager of Bill Harris Auto Center, tells me, “We don't wait for customers to show up. We go to them.”

Instead of regular advertising, they actively campaign for customers by mining information in their retail management system. The result: new business and better customer retention.

Data mining is not new. It's something all dealerships should be doing. It's simply the process of extracting customer and dealership data from your system and using that information to market campaign and make more informed decisions.

A necessary step in every marketing program, data mining is not limited to the sales department. Dealerships can leverage data in their system to uncover profit opportunities in other departments and to cut costs.

Data mining and customer market campaigning needn't be time-consuming to be effective. As part of your dealership strategy, it should be viewed as a regular activity. It requires commitment and a little creativity. Look at how they can work together in the service department:

Let's say an auto maker issues a recall. Instead of waiting for customers to come in, you approach them first. Your database shows the records of 200 customers who own the recalled model. After sending each a letter to encourage a service visit, 50 customers bring in their vehicles for service as well as for the recall work. Simple math shows that 50 vehicles multiplied by a $100 repair order returns $5,000 in additional service revenue.

Not bad for one campaign. Now multiply that figure by a few stores. The bottom-line impact is clear. Achieving just one $5,000 campaign each quarter will add $20,000 in annual revenue. Conduct multiple campaigns across your service and sales departments and the impact of data mining increases.

The secret to data mining is simple: do it. If you don't regularly mine your data, potential profits remain locked up. The how of data mining is determined by your current processes and DMS capabilities. From management on down, processes need to be understood and carried out by every employee.

Technology and integration are vital. Together they enable employees to work with data and see an instant snapshot of your customers and business.

With real-time access to the latest data and reports, your dealership can turn raw data into valuable information. With a fully integrated dealer or retail management system, you can see a complete snapshot of your customers and dealership performance. Your sales team can mine data to identify your most loyal and valuable customers. If a new product launch is approaching, the team can proactively identify and invite owners of older models for a test drive. Managers can analyze trade-ins and inventory levels to make better advertising decisions. In the service department, they can identify and campaign for customers who haven't been in for six months or more. The options are endless.

With data mining, profit potential is determined by data accessibility and accuracy. Give employees the tools and technology to turn data into business knowledge, and they will make informed decisions. Challenge them to be proactive and effective with customer campaigning. You will see the results.

Customers will benefit from personalized attention and your dealership will earn additional business and higher satisfaction scores.

Gillis West is a vice president at Reynolds and Reynolds and the solutions executive for Reynolds Generations Series® Suite.