Is Your Dealership Driven by Data?

Car dealerships are currently dealing with evolving customer expectations as well as diminishing revenues. What was previously known as a "fat and happy" sector in the 1990s is now feeling the effects of growing competition. Car dealerships who do not begin making changes to adapt to the changing business are placing themselves in a very dangerous situation for the future.

A range of diverse actors from outside the business are putting pressure on the market as a whole. As a consequence of new technology and industry disruptors like Carvana and Vroom, buyers are relocating their activity online and away from your showroom. When you combine this with the overall trend of purchasers becoming more aware, it's clear to understand why dealerships' reach and profitability are dwindling over time. Indeed, industry data predicts that between 10 and 25 percent of new automobile transactions will be made online by 2030, with that number expected to treble for used vehicle sales. These findings underscore the need of dealership organizations digitizing in order to maintain their profit lines, including financing and insurance (F&I) options, which are at risk of leaving the dealership due to an increase in the number of online auto transactions.

Why Is Being Data-Driven Important?

To stay relevant in the market and protect their profits, innovative dealers must improve both their operational efficiency and their capacity to better understand their customer base. Your data is both the beginning and the end of this. A dealership is said to be data-driven if it collects and uses relevant data to fulfill its business goals. This may appear to be a lofty goal, yet it is not out of reach. There isn't a single dealer in the world who doesn't want to know how their present sales compare to their earnings. Who among us wouldn't profit from real-time reporting on daily operations? The most essential thing is to develop a data strategy, find out how to consolidate all of your data into a single spot, and then build useful reports and dashboards to support your efforts.

Strategy for Data

The process of designing a data strategy may look daunting at first, but it does not have to be! A data strategy consists of three components: understanding your systems, where your data originates from, and your top priorities. It is your strategy for how you anticipate your data to help you become more profitable in an ever-changing industry. To begin, do an audit of all the different data sources you utilize. This includes both your organization's marketing and dealership systems, as well as any external information sources related to the industry.

Example Sources of Data for Your Dealership!

Dealer Management Software (DMS)

Google Analytics and AdWords Campaigns underpin the Customer Relationship Management (CRM) system. Using Social Media and Other Marketing Techniques

External Data Sources

• Motor Vehicle Title and Registration Information System
• Determine your market share by examining the titles at each of your dealerships.
• The Census of the United States
  
  Understand how market and socioeconomic factors, such as average yearly income and population density, affect the functioning of your business.

The most efficient approach to do this is to investigate whether problems, if remedied, may result in an increase in profits or a decrease in costs. In the current day, the improvement of a dealer's bottom line earnings should be related to the dealer's data goals. Whether it's increasing your omnichannel presence, improving the efficiency of your sales and marketing processes, or expanding into relevant geographic regions.

When you've identified three to five high-value questions, the following step is to establish which data sources are needed to answer them. After that, the data must be displayed in a legible way.

Facility for Data Storage

At this stage in the process, a data warehouse comes in handy. When we say "data warehouse," we simply mean storing all of your company's data in one location under one roof. Multiple data sources will give solutions to your most pressing business concerns. To change your dealership into a data-driven one, you must properly capture and aggregate all of this information in a logical manner. You will profit from this by having a better understanding of your own performance and the outcomes of your company. Unfortunately, the great majority of organizations overlook this stage of their data journey. However, you cannot expect to be able to make well-informed judgments about what is going on in your organization in a timely manner if you do not organize your data and have it all in one place. Your data may be combined in a data warehouse, which will resolve the issue and allow you to see the larger picture.

Visualization of Data

The majority of people instantly think of this when they hear the phrases "data-driven" or "data analytics." It is the graphic depiction of your company's analytical outcomes that may be simply comprehended. Consider charts and graphs, as well as the dynamic dashboards and reports described when discussing business intelligence. When it comes to data visualization, there are several options. When your data warehouse is well-organized and well-built, you can obtain value from nearly any reporting tool you pick. Spreadsheets created in Excel will also have more uses. The most critical step is to identify the reports and key performance indicators (KPIs) that will help your dealership move the needle ahead.

For example, if you want to have a better understanding of your sales and margins across locations, you'll need data that breaks out each location's sales by car make, model, and year. This will provide you the most accurate view of your whole organization. This might help you acquire a better knowledge of the state of your inventory in all of your different geographic locations. From there, you'll be able to hone in on the stock that truly sells off the lot and make better educated decisions about inventory placement across all of your dealership locations. Let's say you want to have a deeper understanding of your company's operations. The data visualization you construct would contain metrics for lead reporting and scoring, daily financials, and F&I attachment rates.

Key Focus Areas

Based on market research findings and what we have seen in the business with our clients, we have picked three primary focus areas for dealerships interested in becoming data-driven.

Comprehensive Performance Monitoring

When you offer your sales and floor staff with the information they need to accomplish their jobs successfully, you will be amazed by the outcomes. We've helped multi-location dealerships acquire a better knowledge of individual sales rep performance so they can deliver more "data-driven" performance sessions. This helps to increase team productivity, identify flaws in your sales funnel, and build a more strong sales engine. Furthermore, at this stage in your data journey, a data warehouse becomes critical. Because the necessary information and statistics will be made available to them, your staff will be able to watch and grasp their day-to-day performance.

Management of Digital Leads

Improving your dealership's marketing and digital performance should be at the top of your priority list today if you work for one. When you understand where your clients are coming from and how they want to purchase autos, you will be able to answer to their demands and market to them more effectively. If you give your dealership locations with a full marketing dashboard and rich data, they will be able to obtain an insight of how they are managing leads and maximizing their marketing spend. If you have visibility into all of your omnichannel traffic data, you will be able to see how each location is performing in terms of marketing efforts, lead quality, and conversion rates across all channels. This enables your dealership to decide what is working, keep doing it, and eliminate what is not. By improving benchmarking, forecasting, and decision-making, you may increase the effectiveness of your marketing budget as well as overall lead use.

Customized Advertising and Marketing Strategies

You will be able to participate in more intelligent selling if all of your customer data is saved in one spot and connected with sales and marketing analytics. It is critical for any company functioning in today's market to minimize friction in the purchase cycle. As more people buy automobiles online, they have grown to expect a more simplified and faster purchasing experience. Your dealership may react to this trend by ensuring that your management team has access to the necessary data. If they have access to the right information, they can improve their judgment and the overall experience for your customers. All of this is simplified and made easier when the in-dealership process is digitized with a data warehousing solution and a customer relationship management system.