a guide to data-driven marketing for the automotive industry · marketing for the automotive...

A Guide to

Data-Driven Marketing for the Automotive Industry

Trends and technologies

that are shaping the industry

and techniques to help you

stay on top

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 1: Going Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 1: The Landscape of Online Marketing . . . . . . . . . . . . . . . . . . . . 5Automotive Consumers Are Making More Purchasing Decisions Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Don’t Neglect Traditional Methods . . . . . . . . . . . . . . . . . . . . . . . . . 7

Remember to Coordinate Between Online and Offline Channels . . . . . 9

Chapter 2: Millennials: Driving Marketing Change . . . . . . . . . . . . . . . . . 10

Creating the Starbucks Atmosphere . . . . . . . . . . . . . . . . . . . . . . . 10

Emulating Apple’s Customer Service . . . . . . . . . . . . . . . . . . . . . . . 11

Nurturing the Online Environment . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 2: Improving Your Techniques . . . . . . . . . . . . . . . . . . . . . 14

Chapter 3: Rethinking your Acquisition Strategy . . . . . . . . . . . . . . . . . . 14

Identifying Consumers Who Are in the Market Now . . . . . . . . . . . . . 14Identifying Consumers Who Can be Influenced to be In the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Chapter 4: Maximizing Your Messaging . . . . . . . . . . . . . . . . . . . . . . . . . 18

Who: Finding the Right Consumers . . . . . . . . . . . . . . . . . . . . . . . 18

What: Choosing a Marketing Channel . . . . . . . . . . . . . . . . . . . . . . 19

When: Timing is Everything . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Table of Contents

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Section 3: Marketing Tactics for the Automotive Sector . . . 22

Chapter 5: Expanding the Lender-Dealer Relationship . . . . . . . . . . . . . 22

Starting the Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

More Effective Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Expanding the Consumer Pool . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Chapter 6: Getting More Business from Defunct Brands . . . . . . . . . . . 26

Options for Orphan Car Owners . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Marketing to Orphan Car Owners . . . . . . . . . . . . . . . . . . . . . . . . . 27

Conclusion Finding the Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

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IntroductionSince the advent of big data, information has become a powerful

marketing ally, eliminating the guesswork and helping you zero

in on the right targets, the first time. But the dizzying array of

marketing tools and data choices make it difficult to know where

to start.

In the onslaught of new technologies, what should auto lenders

and dealers be paying attention to? Which marketing techniques

should we adopt, and which ones should we discard? How

can we best leverage new technologies and meet consumers

in this new digital space? This guide was designed to answer

all of these questions, helping automotive marketers learn how

to stay relevant by using data-driven marketing to connect with

consumers and close more sales.

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Chapter 1: The Landscape of Online Marketing

In the world of automotive marketing, online marketing is playing a bigger

and bigger role—for both lenders and dealers. Consumers are the ones

driving this trend, as more of them go online for work, socializing, network-

ing, and education.

To meet this demand, the automotive industry is spending more and

more on digital marketing and advertising. According to an article by

eMarketer.com in fall, 2013, the U.S. automotive industry spent about

$5.07 billion in 2013 on paid digital advertising, and that number is

expected to rise to $7.80 billion by 2017. The continued growth makes it

likely that the U.S. auto sector will become the second-biggest spender in

paid online and mobile media by 2015, surpassing the financial services

industry.

What does this mean for automotive lenders? With so many consumers

online, and so many marketing dollars allocated to this medium, it is more

important than ever to make sure that resources are spent wisely, and that

Section 1: Going OnlineAutomotive consumers spend increasing amounts of time

online, using the Internet to connect with brands and to make

purchasing decisions. In this section, we will set the stage

for automotive marketing in the digital age, showing how

auto marketing has been changed by the Internet, looking at

marketing techniques for leveraging the Internet, and learning

how to meet the consumer in this new environment.

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Section 1 GOING ONLINE

marketing campaigns are tracked, measured, and modified along the way.

But before you even get to tracking and measuring, you need to deter-

mine the right balance of online vs. traditional marketing. This chapter will

focus on three important factors to consider as you navigate this complex

digital world.

1. Automotive Consumers Are Making More Purchasing Decisions Online

Automotive consumers are online, and they’re using a variety

of devices to research and interact with brands and products.

Increasingly, they are turning to the Internet to make purchasing

decisions. A January, 2014, automotive consumer survey by the

marketing agency Pepper Gang found that:

• 83% of respondents go online first when

researching their new car purchase

• 64% use online review websites as part of their research

• 58% use a mobile device to read reviews and compare

cars and prices while they are at a dealership

US Automotive Industry Digital Ad Spending, 2011-2017 billions, % of total digital ad spending and % change

Note: CAGE (2012-2017)=13.1%; includes advertising that appears on desktop and laptop com-puters as well as mobile phones and tablets, and includes all the various formats of advertising on those platforms; data through 2012 is derived from IAB/PwC data; includes all automotive-related categories including sale/purchase of vehicles and parts and maintenance.

Source: eMarketer, Aug 2013

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With access to the huge wealth of knowledge available online, con-

sumers are becoming more sophisticated in their product knowledge

and in their purchases.

TAKEAWAY:

With consumers increasingly taking on the role of product education,

research, and comparison, lenders and dealers should make it easy

for them to find and learn about loan and vehicle products. Messaging

should be clear, accurate, and as non-technical as possible. Content—

in the form of education or entertainment—must be high quality to

meet the expectations of these savvy shoppers.

2. Don’t Neglect Traditional Methods

With all of the recent attention paid to digital marketing, and in the

frantic race to reach consumers online, it’s easy to believe that tradi-

tional marketing methods are dead. But that’s a dangerous assump-

tion. Although more consumers are using technology to research and

interact with brands, there is still a strong place for traditional mar-

keting and education, particularly when it comes to direct mail and to

customer service.

Auto shoppers are doing more research than ever

Source: Millward Brown Digital/Google Vehicle Shopper Path to Purchase Study, September 2013

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A recent study by the research company fast.MAP showed that mar-

keters across all sectors tend to overestimate consumers’ preference

for using technology in customer service interactions. The firm also

found that marketers overestimated how many consumers were using

mobile and tablet devices to access the Internet. Studies like these

show that marketers are still trying to understand the uses and con-

straints of digital media, and that human contact is still a powerful part

of the sales process.

Direct mail still has a big role to play in marketing campaigns, as well.

It’s important to remember that many consumer segments are still less

familiar and comfortable with online channels. For these segments,

direct mail, dealership contact, and

phone calls will continue to play an

important role in the sales process.

But direct mail can be important

even for those “digital natives” who

have moved online for most of their

communication. This digital genera-

tion has become numb to the many

online marketing messages bom-

barding them, and they may never

open an email offer or respond to

an online offer. For these consum-

ers, a direct mail postcard may be

the only way of actually getting a

message in front of their eyes.

TAKEAWAY:

Don’t abandon traditional marketing techniques, as they still have a

powerful role to play in automotive marketing. Many of the lessons

learned from offline marketing and direct mail campaigns can be ap-

plied to digital marketing, including creating customer profiles, predic-

tive modeling, and targeting on display, to name just a few. The trick is

finding the most effective balance. Lenders and dealers should careful-

ly monitor the success and ROI of both offline and online techniques,

discarding those that are no longer working efficiently. We will discuss

this balance in the next section.

Consumers’ Customer Service Preferences Orange= Marketers’ Assumptions | White= Consumers’ Actual Preference

Email 17% | 32%

Company’s Facebook page 8% | 2%

Company website live online chat 10% | 7%

Twitter 7% | 1%

Phone 21% | 28%

In branch/face-to-face 16% | 18%

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3. Remember to Coordinate Between Online and Offline Channels

Increasingly, lenders are dividing their automotive marketing efforts into

online and offline channels, often under the jurisdiction of two totally

different departments. This kind of segregation can hurt your sales

efforts, as it is hard for one department to keep track of what the other

is doing.

A lack of coordination between online and offline marketing efforts

can waste money and turn off your consumers. If your offline market-

ing department is sending someone an offer for a 4% rate, and your

online department emails them with a 3% rate, you’ve not only wasted

money marketing to the same person, but you’ve also risked confusing

or annoying your consumer with mixed messaging. Is it necessary to

message the same person through multiple channels? Perhaps, but

this decision should be part of a deliberate strategy, rather than a hap-

hazard result of poor coordination.

TAKEAWAY:

A better plan is to coordinate, and even integrate, your online and

offline automotive marketing campaigns, understanding that all parts

must work together to produce a sale.

Keep the Baby and the Bathwater

In marketing, you need to meet your consumers where they

are accessing information . And in the automotive sector, that

is increasingly online, and on a variety of different devices . But

in the rush to adopt online marketing techniques, don’t throw

the baby out with the bathwater by forgetting about traditional

marketing . A carefully integrated approach, where online and

offline marketing efforts bolster and build on one another, is a

far more practical and efficient plan over the long-term .

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Chapter 2: Millennials: Driving Marketing Change

Millennials initially stumped the auto industry with their departure from

traditional spending habits and their hesitation to sink thousands into a

new ride. While Baby Boomers might consider a car vital to their freedom

of movement, the advent of public transit, the rising culture of “greenness,”

and the economic recession of the past half-decade have all contributed to

a generational shift in values. Even technology has driven Millennials away

from car ownership, as 18–34-year-olds are able to express their individu-

ality and connect with friends without leaving their living room.

As the economy recovers, however, the Millennial demographic is becom-

ing more and more powerful as twenty-somethings find jobs and enter the

marketplace as paying adults. Automobile marketers who hope to grab

Millennial market share need to start thinking about catering to the expec-

tations of this new consumer generation.

1. Creating the Starbucks Atmosphere

Today, it’s not enough to provide consumers with what they want—it

also matters how they feel about the process of getting it. And since

Millennials tend to place more value on experiences than on concrete

possessions, sales people should think about ways to keep them com-

fortable and happy.

The Millennials are driving this trend, and for them, it’s critical—an

expected part of the purchasing process. This doesn’t mean you have

to create separate experiences for different demographics, though, as

all customers will enjoy the added benefit of an upbeat association with

your company.

Many dealers have started improving the buying experience already.

For example, there’s been a noticeable change in service facilities, from

grimy waiting rooms with vending machines to more inviting spaces

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reminiscent of a Starbucks, complete with club chairs, big screen TVs,

and coffee bars making fresh espresso, and some even offering a de-

cent selection of fresh made sandwiches.

Still, this isn’t enough. Catering to the Millennial demographic means

ditching the old-fashioned salesperson persona altogether. Here are a

few considerations:

• Don’t be patronizing. After all, you’re pitching to

the most educated generation in the history of the

United States, and they’ll see right through it.

• Don’t be pushy. The stereotypical sales folk of yesteryear

would qualify for a restraining order with their high-

pressure vibes that repel the wary Millennial.

• Do provide information and assistance. Focus on being

helpful by sharing educational information and insights to which

your customer might not otherwise have access. We’ll talk

about customer interaction down below.

Remember: the ultimate goal is to provide your visitor with the most

positive sales experience possible, starting with a winning atmosphere

and a pleasant interaction.

2. Emulating Apple’s Customer Service

Stellar customer service is a critical component of this new environ-

ment. Let’s look at how Millennials are helping to shape this compo-

nent of the sales process, as well.

Millennials show an unusually strong penchant for interacting through

technology, with 41% citing a preference for electronic communication

over other modes of contact. They constantly have an electronic world

at their fingertips, through which they can quickly compare potential

lenders, car brands, and even customer reviews.

What does that mean for you as an auto financer? Lenders need to

shift to a more interactive, informative approach that builds trust. But

it’s more than technology—the Millennial came to you because they

need something done that their smartphone and computer can’t offer.

They need a recommendation customized to fit their life.

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And here’s the really good news: Millennials need and want your ad-

vice. Very few of them self-identify as finance-savvy, so they rely more

heavily on professional guidance than earlier generations.

In order to respond effectively, auto marketers and financers need to

take on an advisory role. A great model to emulate is the Mac special-

ist in an Apple store—ad-

vising, helping, and sharing

expertise without overtly

selling. This means creating a

partnership: the open, helpful

auto lender lays out the pros

and cons of various options,

and the consumer chooses

one. This is the level of infor-

mative, personalized service

expected by Millennials.

3. Nurturing the Online Environment

As a generation that relies on word-of-mouth more than any of its re-

cent predecessors, Millennials matter because they share their feelings

with everyone from friends to Twitter followers. For better or worse, this

creates a multiplier effect, driving conversation—both online and offline.

Your firm will only have one chance to make an impact, so you need to

make it a positive one. Your website, often the first place a Millennial

will go to check you out and conduct research, must be up to snuff.

For a generation raised in the digital world, there is a high expectation

of sophistication when it comes to online presentation. With your web-

site, a brand only has a few seconds to make an impression, so it has

to pack a punch.

From the website, Millennial consumers switch seamlessly to social

media, where they can either “like” a certain brand or broadcast their

discontent after a negative sales experience.

It’s up to you to ensure that a customer’s entire interaction with your

company is positive, starting with a sophisticated and informational

Millennials rely more heavily on a salesperson for information than older generations.

(MILLENNIALS: 49%, GEN X: 41%, BOOMERS: 38%)

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website, and moving out into social channels—but only as appropriate

and relevant to your audience.

Perfecting the Positive Experience

Auto lenders and dealers can learn a lot from great “experience

providers” like Apple and Starbucks . By delivering the

atmosphere and customer service that Millennials have come

to expect, we can perpetuate positive messaging and let the

customers do our advertising for us .

This demographic is seeking out fulfilling experiences in

the wake of the roughest economic crisis since the Great

Depression . Make choosing and paying for a car one of

these positive moments, and watch yourself surge ahead of

the competition .

Millennials depend more heavily on word-of-mouth when shopping for a car more than other generations...

(MILLENNIALS: 43%, GEN X: 28%, BOOMERS: 32%)

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Chapter 3: Rethinking your Acquisition Strategy

In automotive sales, timing is paramount—making a sale requires you to

market to the right consumer at exactly the right time. To do this, it helps

to separate your target consumer base into two different groups: 1) con-

sumers who are in the market for a car now, and 2) consumers who are

not in the auto market currently, but who could be influenced into buying a

car in the near future. Acquiring automotive leads in each of these groups

requires a distinct strategy, but the commonality is that you’ll need the right

data to help uncover the opportunities. To make your auto marketing tasks

a little easier, we’ve put together some considerations for improving your

customer acquisition strategy and closing more sales this year.

1. Identifying Consumers Who Are in the Market Now

Consumers who are actively looking to buy a car are the hottest

of all leads. But you have a very limited time to reach these pow-

erful leads. So how do you find car shoppers who are in the auto

Section 2: Improving Your TechniquesIn the day-to-day challenge of providing lending services, it’s

easy to fall back on patterns that are familiar and comfortable.

And while your regular marketing techniques might work just

fine, there are always areas for adjustment and improvement,

especially in the area of data. In this section, we will dive into

marketing strategy, offering tips on how to leverage data to

maximize your success, across the board. Are you ready to take

auto marketing to the next level?

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Section 2 IMPROVING YOUR TECHNIQUES

market? Using technology and predictive modeling, it’s now possible

to pinpoint these consumers. Your data provider should look for the

following characteristics:

Consumers With a Short Time Left on Their Existing Loan or Lease

Potential auto buyers whose lease is about to expire or who are

close to paying off their auto loans are probably looking for a

new car—if not now, then

very soon. Experience has

taught us that the sweet

spot, for auto marketing

purposes, is targeting

those consumers who have

only six to nine months left

on their lease or loan.

People Undergoing a Significant Lifestyle Change

Consumers who have

recently experienced a sig-

nificant, non-credit-related

lifestyle change will often

need a new car to accom-

modate that change. For

example, a couple who has

had a new baby might be

in the auto market for a bigger car, SUV, or minivan. Indicators

of lifestyle change include growing families, moving to a new lo-

cation, graduating from college, finding a new job, having adult

children go to college or move out of the house, and more.

Consumers Making a Credit Inquiry

Consumers who have requested an auto loan inquiry through

one of the three major credit bureaus are signaling their immedi-

ate intention to buy a new car. To ensure that you’re not missing

any of these in-the-market automotive consumers, look for

data providers that monitor all three credit bureaus—Experian,

Equifax, and TransUnion.

Consumers who have requested an auto loan inquiry through one of the three major credit bureaus are signaling their immediate intention to buy a new car.

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2. Identifying Consumers Who Can be Influenced to be In the Market

Active auto shoppers may be the hottest leads, but the window of

opportunity to reach them is short, and it’s likely that other lenders are

also wooing them. But what if you could convert a non-shopper into

an active shopper? Again, using predictive modeling, it’s now possible

to target certain automotive consumers, employing marketing and ed-

ucation to move them into the market. Here’s how to recognize these

receptive car shoppers:

Consumers Who Can Upgrade Without Changing Their Current Monthly Payments

Often, consumers driving older cars are those whose payment

plans are costing them more, or the same, as upgrading to a

new car—as well as increased maintenance costs. After iden-

tifying these consumers, educate them about the low costs of

purchasing a new car through your loan plan. Some of these

consumers will suddenly be in the auto market.

People Who Have Experienced Credit Changes

People who have experienced credit changes are often good

candidates for auto loan marketing. This tactic works for both

categories of people: those who have increased their credit rat-

ing and now qualify for a more expensive car, as well as people

whose credit has dropped, indicating that their financial situa-

tion could have changed and their current car payments may

be too high. Obviously each category will require different loan

products and auto loan marketing and education.

People Who Are Unlikely to Re-purchase Their Current Car or Brand

This category describes the group of consumers who are un-

likely to purchase another car from their current brand. This can

happen because the brand has become defunct, like Hummer

or Saturn, or not available in the U.S. market, like Suzuki. This

can also happen because a current owner is unhappy with his

or her current car—for example because it is a lemon or has

had many recalls. Predictive and behavioral modeling can iden-

tify this receptive consumer group, and then your auto market-

ing can turn them into active auto buyers.

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Starting with the Data

Marketing to consumers who are currently in the auto market,

as well as those who can be influenced to be in the auto

market, should be part of your strategy for improving customer

acquisition and closing more sales . But your customer

acquisition strategy needs to start even earlier, with finding

the right data provider . Not only should providers be able

to help you identify receptive auto buyers using both credit

and non-credit indicators, but they also need to take it a

step further . What activities have been working for your firm?

Which demographics are consistently buying, or avoiding, your

product? The very best providers will comb through previous

data to find answers to these questions, identifying trends to

help you maximize your auto loan marketing resources, saving

money and converting more customers .

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Chapter 4: Maximizing Your Messaging

Effective automotive marketing requires sending the right message, to

the right person, at the right time. Firms that fine-tune this process enjoy

a higher conversion rate. This chapter examines the messaging process,

with specific steps aimed at maximizing your efficiency across all three

variables: the who, the what, and the when.

1. Who: Finding the Right Consumers

Reducing the number of wrong-fit customers in your marketing list

saves time and money. But how do you find the right audience seg-

ments? Using a combination of predictive modeling and data assets

will enable you to craft your offer customer by customer, achieving

more effective messaging across both traditional and digital channels.

Your data provider should be able to help you in this effort by determin-

ing who is likely to be in the market, and what kinds of cars they are

interested in.

DETERMINING WHO IS LIKELY TO PURCHASE

To help you find your ideal customer, predictive modeling and data

resources will identify key characteristics of people who are good

fit for your product and are likely to be in the market. Here are a

few examples:

• People who have recently posted credit inquiries

• People who would not experience a significant increase

in monthly payments if they purchased a new car

• People who have experienced recent credit changes

• People with one or more of many possible

life events or lifestyle changes

• People with certain buying behaviors

• People who are close to completing their loans or leases

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DETERMINING WHAT KIND OF CAR

Once you identify your ideal customers, predictive modeling and da-

tabase resources can help you personalize your offers even further by

helping you figure out which type of vehicle to push. Look for:

• People going through lifestyle changes that could result

in the need for a different type of vehicle—moves, family

changes, income/job changes are some examples

• People who are driving vehicles from makes that

are no longer available, vehicles which have had

recall issues, or reliability problem could be looking

to simplify the vehicle ownership experience

• People who could be interested in certain types of

vehicle features, such as hybrid, all wheel drive, etc.

• Most importantly, predictive models which

identify the most likely, as well as unlikely, vehicle

segments for each target customer

2. What: Choosing a Marketing Channel

After you’ve established your list of ideal customers and figured out

which car to market to them, the next step is figuring out how to reach

them. Email, direct mail, telemarketing, social, video, mobile—which

marketing channel should you use? Channel selection is driven by sev-

eral key factors, all of which can be determined through data:

Personal preference of consumer

Not all marketing channels work for all consumers. Some

consumers are more email responsive, while others respond

to direct mail. Using demographic and behavioral data points

including, but not limited to, consumer age, location, and

income level, you can help determine which channel to use for

which consumer.

Consumer Value

Not all consumers are created equal, and it makes sense to

spend more dollars targeting the leads that are more likely

to result in a sale. Your data provider can help you establish

categories of consumers (first tier, second tier, etc.), based on

their value. For example, if a certain consumer fits your profile

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perfectly and has demonstrated that they are in the market, you

will want to spend more effort and money marketing to them,

and fewer resources marketing to a consumer who fits your

profile but is not actively in the market.

Consumer Position on the Sales Timeline

The effectiveness of various marketing channels can differ,

depending on where a consumer is on the sales timeline. For

example, online messaging will be more important to a custom-

er in the research or very early stages of buying. As the con-

sumer moves forward in the decision process, other channels

or combinations of channels may be more effective for channel

spend and consumer response. We will explore this further in

the following section.

3. When: Timing is Everything

Timing plays an important role in automotive marketing. Let’s say you

have identified the perfect consumer, established that he’s currently in

the market, and figured out that he is not email responsive. So a direct

mail campaign is the logical marketing channel, right? Maybe not!

Before you make that decision, take a look at where the consumer is

positioned on the sales timeline. If this consumer has just applied for

financing, a direct mail campaign could be too late to reach him. Our

analysis indicates that more than 50% of the people who apply for

automotive credit are still in the market in the days after the trigger,

however timing is important and a mix of direct mail, email, digital and

phone should be utilized. In this case, a direct phone call would make

the most sense. Timing is a critical part of messaging, and you need to

factor it into any larger marketing campaign.

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Creating a Seamless Messaging Process

The last piece of the messaging puzzle is coordination . In many

organizations, there is a disconnect between digital marketing

strategy and the marketing strategy for other offline channels .

It is further complicated by different agencies and teams

working in silos .

In the worst cases, this lack of coordination actually impedes

sales performance, as mixed messaging can confuse or

frustrate potential customers . For instance, if you send a

consumer an email saying he is eligible for a 2 .9% interest

rate and a piece of direct mail saying he is eligible for a 4%

rate, he is likely to walk away confused and annoyed—two

characteristics that are unlikely to result in a sale . The same

thing can happen if that consumer receives conflicting

messages about which car he should buy .

Instead of thinking of your digital capabilities as a separate

activity, your digital strategy should be pulled into your overall

customer marketing strategy . The goal should be to create a

seamless messaging process that encompasses all channels:

digital, direct mail, email, phone, and more .

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Chapter 5: Expanding the Lender-Dealer Relationship

For lenders engaged in automotive marketing, a powerful way to expand

your pool of customers is by partnering with car dealers. After all, the more

dealers you can create relationships with, the better your chances are that

their customers will finance through you. This chapter will help you un-

derstand how to begin or enhance those relationships, and what benefits

dealers will enjoy from these efforts.

1. Starting the Relationship

If you want to create a relationship with a dealer, you have to go to

where they are. Here are some ideas to get you started:

Events

One of the best ways to reach multiple dealers is to attend

industry events where dealers are also participating. Events

include car shows, trade shows, and conferences hosted by

reputable industry organizations like the National Automobile

Section 3: Marketing Tactics for the Automotive SectorThe automotive sector is a unique industry, and there are certain

marketing strategies that only apply to this sector. In this section,

we will explore tactics that are specific to the auto marketing

sector—ones that we believe are vastly underutilized. Add these

to your marketing toolkit and get a jump on the competition.

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Section 3 MARKETING TACTICS FOR THE AUTOMOTIVE SECTOR

Dealers Association. Participating in these events offers valu-

able networking opportunities, but speaking is even better.

Event organizers are often looking for speakers, and this is a

powerful way to demonstrate your expertise to dealers. Just re-

member that any talk you give should be educational and valu-

able to your audience, rather than self-promotional or “salesy.”

Focus on best practices and broad solutions. You may only play

a partial role in the broad solutions but your goal is to share the

approach and its potential.

Online

These days, a large part of networking occurs online. Find out

which social channels are frequented by dealers and then go

there. Besides connecting with dealers through their profiles,

LinkedIn offers a “Groups” function that has become a powerful

way to network and facilitate discussions with others in your in-

dustry. Another way to connect with dealers online is by search-

ing for them on Twitter and Facebook pages, engaging them by

starting a discussion or helping them solve a problem.

Home Turf

Many lenders use sales reps to meet with dealers on their home

turf. The advantage here is that you have a captive audience.

The disadvantage is that the visit could be intrusive, especially

if the dealer is caught off guard or has had negative experience

with other providers of auto marketing services. Make sure that

your reps are highly knowledgeable, and be as respectful of the

dealer’s time as possible. Connecting first through one of the

two channels mentioned above often makes a rep’s visit much

more productive.

2. More Effective Marketing

When it comes to marketing, many dealers still rely on traditional

methods—blanketing an entire zip code of consumers with direct

mailings, for instance. But partnering with a lender can greatly increase

the effectiveness of marketing campaigns. Lenders who use data as

the backbone of their auto marketing services can help dealers in-

crease ROI by: 1) not wasting money targeting people who are very

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unlikely to buy 2) and targeting those who demonstrate high need

and qualifications.

Credit-based Data

Partnering with a lender offers a huge advantage to a dealer

who wants to market to qualified consumers. Why? Legally,

lenders are allowed to prescreen consumers by pulling their

credit info—but a dealer cannot. (But keep in mind that a lender

who pulls credit info must follow up with a firm offer of credit.)

Using this information, a lender can provide dealers with highly

targeted marketing info, including which consumers in their area

qualify for certain products and which ones are actively shop-

ping for cars, and are more likely to be in the market due to

these driving factors.

Predictive Modeling

Lenders can also help dealers identify consumers who are

likely to be in the market in the near future. Using predictive

modeling, lenders can find consumers in the dealer’s area who

have recently experienced life-event changes, such as having

a new baby, getting a new job, or sending kids to college, and

are more likely to be in the market due to these driving factors.

Lenders can use this data to help predict what kind of car the

consumer should consider next. A good data partner will have

prebuilt models indicating the likelihood to be in the market, so

you don’t have to start from scratch.

3. Expanding the Consumer Pool

Besides helping dealers make their marketing program more effi-

cient, lenders can also expand a dealer’s pool of possible consumers.

Here’s how:

Identifying Invisible Consumers

Invisible consumers are potential customers who live in the

dealer’s area, but who are unknown to the dealer. There are a

number of reasons why these consumers might be invisible:

they have just moved to the area; they purchased a car from

classified listings, eBay, or Craig’s List (private party automotive

sales account for high number of all used car sales in U.S.);

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or they are young adults who have never purchased their own

vehicle. Since they are off the dealer’s radar, they are lost mar-

keting opportunities—a Honda owner who bought his used car

from Craig’s List could be living across the street from a Honda

dealership, and the dealer would probably have no idea.

Using data, a lender can identify those consumers, helping

the dealer start to build relationships. Invisible consumers offer

multiple opportunities: dealers can profit immediately by attract-

ing these owners in for servicing, they can market to those who

demonstrate need and qualification, and they can “conquest”

invisible consumers who own other makes but might be influ-

enced to try a new brand.

Targeting Existing Customers who are In-the-Market

Lenders can also use data to help dealers monitor their own

customers to see if they are shopping. Lenders can get an

instant alert if the existing consumer’s credit information gets

pulled for an automotive inquiry, demonstrating that the cus-

tomer is shopping. Lenders can share these red-hot leads with

the dealer, who can now reach these customers before they are

poached by someone else.

Bottom Line: Are You Adding Value?

When setting up partnerships with dealers, always think about

where you can add value . At the end of the day, dealers simply

want to sell more cars . If lenders can show how their marketing

strategies will drive more traffic onto dealers’ lots, they are very

likely to partner with you .

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Chapter 6: Getting More Business from Defunct Brands

Due to brand discontinuation and companies exiting the U.S. market, a

number of automobile brands have disappeared from the marketplace over

the past few years. But these brands still have many vehicles in operation.

In fact, roughly two-and-a-half-million owners are driving these “orphan ve-

hicles” today—owners who are ripe for jumping to a new brand. And we’re

not talking about owners of decades-old brands such as Geo, non-main-

stream makes like Aptera or Vector, or exotics like Maybach. We’re talking

about owners of mainstream brands, including Saturn, Pontiac, Saab,

and Hummer.

Overall, the automotive industry has an average vehicle brand loyalty of

58%, according to IHS Polk. But the number of orphan vehicle owners

staying with the same original equipment manufacturer (OEM) has de-

creased from 57% to 39% over a period of five years. The takeaway? With

low brand loyalty, orphan vehicle owners can often be persuaded to buy

another make—a challenge for the parent OEM as they try to retain these

owners, but a conquest opportunity for competitors for the win-over.

Number of Orphaned Cars Still on the Road, By Make and Year

Hummer

Isuzu

Mercur

y

Oldsmob

ile

Plymou

th

Pontia

cSaa

b

Saturn

Suzuk

i

100k90k80k70k60k50k40k30k20k10k

0

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1. Options for Orphan Car Owners

Since buying a new model of the same car is no longer an option,

there are three possible scenarios for orphan car owners who are back

in the market:

Purchase a Rival Brand

If a model and brand are both being discontinued, there is a

great opportunity for dealers, as well as captive and non-cap-

tive lenders, to convert orphan owners over to a rival brand. In

this scenario, the Suzuki Kizashi car owner could be positioned

into the Mazda 6—a totally different brand and OEM.

Move to Another Model in the Same Brand

If it is only a specific model that is no longer being manufac-

tured, but the brand is still strong, the company has a great

opportunity to move the client into a different car by the same

brand. An example here would be moving an orphaned

orphaned Honda Element owner to a Honda CRV. This works

especially well if the brand is offering a similar style model that

can be seen as an upgrade.

Transfer to Another Brand in the OEM Family

When a vehicle brand is discontinued, the parent company

may be able to convince the owner to switch to another of its

brands. With only 39% brand loyalty among orphan car own-

ers, the big question is whether the loyalty is transferable to a

different make within that OEM’s lineup. Automotive marketers

working for the parent company should proceed carefully, as

there could be negative feelings about a brand being discontin-

ued. An example of this scenario is Ford, the parent company,

wooing an orphaned Mercury owner.

2. Marketing to Orphan Car Owners

With low loyalty among orphan car owners, the playing field is wide

open—for OEMs as well as rival brands. The good news is that the

marketing strategy is the same for all three of the scenarios discussed

above. But how do you know where to start? Which orphan owners

should you target, and which car should you market to them? To de-

termine your marketing path, follow these three steps:

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Target Based on Behavioral Profiling of Current Owners

Which orphan car owners are the best fit for your current

offerings? Who are these consumers? For example, do you

understand who the recent Saab 9-3 buyers are, and which

other brand and model owners they most closely resemble?

Researching these commonalities is the first step. Uncovering

other behavioral preferences in the various demographics will

help you further determine what messaging will best resonate

with them.

Target Based on the Consumer’s Current Status

Some sellers make the mistake of trying to sell a consumer

the same type of car they are already driving, not realizing that

the consumer has changed over time. In fact, the longer the

owner has owned the car, the more likely they are to demon-

strate change preferences. For example, a person might have

more income than they did eight years ago, or may have added

children to the family. You need to analyze the owner’s current

status to determine the most likely segment for them today.

This is especially important for entry level and intermediate

vehicle owners.

Target Based on Right Timing

How do you know when orphan car owners are ready to buy?

Today, there are a host of online marketing and analytic tools

that can help marketers target potential customers and track

their pipelines. Use predictive software modeling system, like

In-the-Market Alerts, to help you to understand which buyers

are likely to be in the market or are in the market currently.

These system pull data from credit bureaus and other lending

agencies, sending you alerts when these orphan owners have

started actively shopping for a new vehicle.

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Putting it All Together

Faced with the impossibility of upgrading to a new

model of their existing car, and with their current cars

aging and becoming more difficult to service, orphan

car owners are a demographic asking to be marketed

to . Savvy automotive marketers who put time and

research into the demographic, who look at the

whole customer, and who use online marketing tools,

should find themelves in a good position to put these

orphans in a new car .

A good data partner will have prebuilt models indicating the likelihood to be in the market, so you don’t have to start from scratch.

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Conclusion Finding the BalanceTechnology and the subsequent availability of big data have

radically altered the landscape of automotive marketing, allowing

marketers to go further than ever before in their pursuit of finding

and converting leads. For many marketers, that change can feel

intimidating. But remember, even in this new environment many

tactics will stay the same:

• Finding consumers who demonstrate both need

and qualification

• Reaching the customer where they feel most

comfortable (whether that is online, in the mail,

or at a dealership)

• Realizing that some traditional marketing

methods, like direct mail, will still play a major

role in marketing campaigns

• Providing the best customer experience possible

Marketers who learn to strike a balance between old and new,

leveraging data while retaining the off-line techniques and

values that are evergreen, will find themselves riding the wave to

marketing success.

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About the AuthorSince its inception in 1997, Datamyx has emerged to become

a leading risk-based, data-driven marketing solutions provider

that helps consumer marketers optimize the prospect-to-

customer lifecycle with relevant insights across traditional and

digital channels. Our clients span the financial, automotive,

insurance and consumer services industries, and our solutions

help CMOs and marketing leaders make informed business

decisions and improve ROI by intelligently connecting the

right people to the right products at the right time. For more

information, visit http://www.datamyx.com

301 Yamato Road, Suite 4150

Boca Raton, FL 33431

How Many Customers Are Slipping Through Your Net?Find out how many opportunities you’re missing on

a monthly basis, including what this means for your

retention goals, conversion rates, and the bottom line.

Contact us for a Complimentary, Risk-Free Analysis at

1-800-488-9113.

a guide to data-driven marketing for the automotive industry · marketing for the automotive...

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