Data Management Strategy
Authored by Jon Petron, VP of Advanced Services
In all industries, and certainly automotive & dealerships, consistent data management strategies are key for effective communication, whether to prospects, unsold leads, or customers. Successful dealers need to focus on the person and how to use the information you have captured about them toward a better understanding of where they have been, which leads to where they are most likely to go.
This allows you to focus on optimizing your efforts on how you engage consumers rather than executing marketing manually.
“Consistent data management practices are the key for effective communications, whether to prospects, unsold leads, or customers.”
This data management strategy chapter will cover the following:
- Data Sources (First, Second, & Third)
- Data Cleansing Best Practices
- Data Enhancement Techniques
- The Power of Artificial Intelligence
- Real Results Optimization
This is really your dealer data—the transactional data of sales, leases, and repair orders, as well as the data for your unsold leads and prospects, and any other data that you’re collecting within your dealership or at the group level.
Program data is also first-party data and can be seen through your marketing vendors. This is your engagement data, the opens and clicks from an email, a social ad, or the response from a direct mail. First-party data can also be the web browsing data that resides in Google Analytics or just in general looking at page views for your website.
Your CRM and DMS data, the base for your first-party data, should work in tandem with any program data collected from your sales & marketing efforts.
This data source isn’t talked about as much. It’s the data from your affiliates, people you do business with, such as your OEM/s or events you participate in.
This is the licensed data for things like demographics, location, aftermarket service, and many others that you may have purchased in the past. While all these data sources have some value, depending on your objectives, the most valuable is always your first-party data, because consumers who have had a transaction with you are going to be the most receptive to your communications and engage with your messaging.
However, it is one thing to have access to a data source. It’s quite another to be able to ingest it within a working marketing program and make it actionable and maintain it over time.
The key is to start with cleansing your data (and to keep it clean).
Various vendors and third-party providers can help you standardize physical addresses to meet USPS standards, scrub email lists, and validate both physical addresses and email. This sort of process can correct what we call fat-finger email addresses and remove national do not email records and addresses that have been identified as repeated SPAM traps.
Householding is also important, where you identify individual matched records and confirm whether they are an individual duplicate or unique individuals who are part of a household.
“Even the largest companies trying to consolidate data, such as for a credit report, can have some margin of error when doing this, but the good ones should stay below 10%.”
An effective marketing program should then be able to match and merge all this data—first, second, and third-party—and put all of it together in a single location with a comprehensive view. The reason this is so important is because siloed and dirty data lead to sloppy marketing and a poor customer experience.
Have you ever not had an email address for a consumer and so you filled in a fake one, or maybe one with your dealer name attached, to fill that field? DON’T DO THAT.
In the long run this adds more work, especially for the systems attempting to cleanse your data.
An ongoing data cleansing practice, validates and scrubs email addresses for suspicious duplications, undeliverable addresses, corrects fat-fingered domains, and removes potentially harmful domains or suspected SPAM traps. Outsell recommends regular email hygiene maintenance at least once a quarter, if not once a month.
Dirty data can’t be completely avoided. User error will occur—whether from you or the customer— but an ongoing data hygiene process helps shine a light on how many consumers are actually unreachable due to outdated data and discovers where data acquisition may be lacking, ensuring that both sales and service departments are regularly capturing email addresses and other pertinent information.
Regular cleansing also makes for easier linked attribution and consumer engagement reporting, which leads to understanding which channel a consumer is most likely to engage in, where they are in their lifecycle, and what vehicle or service they are most likely to be interested in at any given time. That knowledge is invaluable.
Data management goes beyond cleansing and normalizing addresses, removing duplicates, or consolidating data – but also includes how to best utilize other second and third-party sources to enhance your data or managing address changes.
Data enhancement is where additional vendor partnerships are a must. Various solutions can help you take consumer demographics, psychographics, previous transaction data, or whether a VIN is still owned by a consumer, as well as other attributes, to provide additional information on the type of consumer and their propensity to engage or transact with you.
Data enhancement can also be valuable to see how many of your consumers are prospective sales, service customers, or unsold leads, and it can reveal your transactional baseline of average new units sold versus used, as well as average services offered each month.
With the right partners, you can go deeper and deeper into validating phone records, appending additional phone numbers, adding street addresses where none may have been recorded before, and understand what more you might need to do to your data to have it as clean as possible and actionable for your marketing and sales efforts.
“You may think your CRM and DMS are clean enough without help but Outsell has found that a dealer’s database can often become 30% more reachable once their data is cleansed.”
So now what? What do you do with this data now that it is in the best condition it’s possibly ever been in? You could send out communications through your CRM, but your CRM can only send based on point in time triggers or time to transaction triggers.
A CRM doesn’t account for deliverability. And a CRM is not necessarily observing behavior and triggering campaigns off those to be more accurate to a consumer’s needs.
That is where Artificial Intelligence comes in.
Consumers want individualization—they expect it. 87% of Americans are willing to have various details of their activity tracked in exchange for more personalized rewards and brand experiences. Customers want quality content and will exchange data to be more than just another nameless, faceless consumer receiving the same offer as everyone else.
Given the demand for personalized customer engagement, artificial intelligence-driven technology is a critical component of any dealer’s marketing arsenal.
So, what is artificial intelligence anyway, and how do you recognize what tools have it and which ones are simply using the latest buzzwords?
Artificial Intelligence (AI) — Computer systems that can perform tasks by “thinking” as a human might, while processing more data faster and with increased efficiency.
Some examples of what AI looks like in real life are:
- Self-driving cars,
- Image recognition, and
- Machine learning.
That last one may be another buzzword you’ve heard of.
Machine Learning — A specific way of using AI, where the machine can learn and achieve desired results without being explicitly programmed to do so.
Let’s not forget predictive modelling.
Predictive Modelling — A specific use of machine learning that can predict future behavior.
Predictive modelling through machine learning allows you to prioritize your resources and make meaningful outreach to consumers when it is most impactful to their decision making.
By taking data from their behavior—shopping patterns, browsing habits, past purchases, etc.—AI can help dealers interact with customers and prospects smartly, providing consumers with the information they desire at the time they most need it, rather than firing irrelevant messages randomly.
The individualization of messaging and channel targeting that can be done from models based on first-party data overshadows any list you could ever buy from a third-party vendor. Even unsold lead data is more effective at converting a potential prospect than any Conquest program, because these are people you already know something about.
To give you some idea of how impossible all this would be without AI, Outsell has 100s of millions of individual consumer data records across all our customers, with about 100 plus data points per record—and that is constantly growing. We also utilize an AI brain that looks through billions of historical data points to perfect our predictive models over time.
AI is critical in making sense of all this data to provide the experience consumers expect. It allows for near real-time execution of scoring and list generation and does so in an automated fashion that is always on.
In order to deploy truly dynamic, personalized offers, you must have the data behind it – and you also need an automated means to act on that data. This allows for personalization across channels and for cross-channel efficiency. You wouldn’t want to send a direct mail piece to someone who just responded via email.
You also need continuity of messaging, since even if you’re a single-point store, you must consider your OEM, and if you’re part of a group, you must consider each store as well as the group brand.
“Practicing data management and then utilizing that data through AI delivers a consistent and tailored experience at every stage across the customer journey.”
No longer can you simply do a conquest campaign or a retention campaign or an after-sale campaign or a loyalty campaign. You must consider the holistic journey, and what Outsell sees for dealers who follow these best practices is higher retention, more service revenue, and greater profitability from individual consumers across their databases.
You may be wondering: if data management so important, what can I expect from all this effort?
In 2019, Outsell engaged RXA, a leading analytics firm, along with Experian to study the long-term impact of this type of lifecycle engagement. The study was not based on leads or clicks, but rather at the change in sales and service behavior over time, comparing those who received lifecycle communications to those who did not.
The study included 960 dealerships, 5.6 million consumers, and more than 63 million vehicle purchases over 3 years, as well as more than 60,000 cohorts—or segmented groups of consumers based on life stage, purchase type, and service frequency—from all brands and all regions across the United States.
The study found that consumers who received lifecycle communications were more loyal than those who did not, resulting in improved dealer retention and profitability across all customer life stages.
- Lifecycle marketing increases the rate of repurchase by more than 23% on average across all life stages.
- For those who did repurchase, those that were treated with lifecycle marketing were 49% more likely to purchase from the same dealer.
- Customers who received communications throughout their lifecycle also serviced 31% more frequently than those who did not.
- Frequent servicers at each dealership repurchased 19% more often after receiving lifecycle marketing communications.
- When comparing the 3-year gross profit from those who received lifecycle communications and those who did not, they averaged $427 more gross profit. Multiply that across a dealership’s entire database and it represents a significant increase in profits—a 65% increase over customers who did not receive lifecycle communications.
Many solutions out there that say they are powered by AI are limited. They follow business rules, or a cadence based on the VIN rather than listening and capturing consumer behaviors to continually refine the messaging toward the experience the consumer expects and how they wish to be engaged with.
Anybody can store data but understanding who each consumer is from data source to data source, consolidating that data, and using it to drive models that send personalized content & offers is impossible without the right tools.
Take a close look at your data and make sure it is being managed in a way that serves your goals rather than sitting stagnant.
“Take a close look at your data and make sure it is being managed in a way that serves our goals rather than sitting stagnant.”
About the Author
Jon Petron, VP of Advanced Services at Outsell
Jon Petron is an accomplished leader who builds SaaS professional services, customer success and marketing operations teams that produce industry leading programs in automotive, retail, durable goods and financial services.
Jon’s specialties include strategic development of integrated database and interactive marketing programs, implementation and management of distributed cross-channel marketing platforms, team leadership within cross functional organizations, and improving operations, building executional excellence with high accountability.