When most consumers buy a car these days, they begin their search online. That’s good news for dealers and automakers, who can take advantage of the trend by analyzing the mountains of customer data available.
“Car shopping generally includes a tremendous amount of comparative research between brands, models, trim levels and, of course, prices,” says Avi Steinlauf, CEO of the car-research site Edmunds. “The automakers and dealers know that if they show up well in those comparisons, they’ll get onto shopping lists and gain market share.”
That means analyzing the data — whether it’s from the Internet or their own showrooms — to understand what consumers are looking for.
“To show up well, they must maximize opportunities,” says Steinlauf. “And that starts with understanding the variety of data that is being captured and working with it effectively.”
Looking at data online
Collecting the data is the first step. According to John McBride of IHS Automotive, there are software tools that can collect information from a dealer’s customer database and website along with search engines and social media.
“Using an increasing number of tools available, dealers also have access to and are measuring consumer shopping data,” says McBride.
Dealers can either go through data from search sites like Edmunds or Carfax, or they can look at their own digital stores.
“Digital retailing is a typical example that can show an increase in car sales due to newer retailing strategies based on data mining,” says Niranjan Manohar, auto and transportation program manager at Frost & Sullivan.
“For example, Audi City Digital Car Showroom saw a 55 to 70 percent increase in new car sales in the first quarter of 2013,” Manohar says.
Dealers also can take their own customer database and compare it with the local demographics.
“We recommend that dealers collect as much data about their existing customers as possible,” McBride says. “This data can be used to target ’lookalikes’ or to understand gaps.”
Selling by demographics
For example, McBride says, “a dealer may sell 10 percent of their new vehicles to Hispanic buyers. But using data, a dealer can learn that in their local market, Hispanics purchase 20 percent of new vehicles. This dealer is clearly underperforming within the Hispanic segment. Investing in some local Hispanic media may be smart.”
Dealers should also look at geographic data to figure out what people are looking for.
“A dealer needs to understand the share of the market they are capturing,” says McBride. “By comparing their sales with total brand sales at a zip-code level, it becomes simple to understand the geographies where a dealer over and under performs. Some of the most successful dealers we work with focus on ’owning their backyard,’ and being opportunistic outside of that backyard.”
Vast.com, another automotive research site similar to Edmunds, has developed CarStory, an app that allows dealers to look at detailed information about the cars on their lots, including mileage, features, popularity, price and availability.Salespeople can then share that information with their customers and help them make informed decisions.
“It makes them smart about cars on their lot,” says David Franke, chief data scientist at Vast.com.
Though this data alone won’t lead to a sale, it brings the dealer one step closer.
“While big data may not move the needle on total car sales, it certainly can change the game for the individual automakers and dealers who use it well,” says Edmunds’ Steinlauf.