UK dealers could be missing out on millions in lost revenues due to leaving customer data segmentation on the “too difficult pile”, according to Auto Data Solutions (ADS).
The automotive data specialists have compared UK dealer databases to their counterparts in the US and estimated that businesses here are up to five years behind when it comes to the level of sophistication with customer data segmentation.
ADS said the problem stems from relegating true data segmentation to the ‘too difficult pile’ among the priorities of many dealers.
Jon Sheard, operations director of ADS, said: “Genuinely personalised communication with customers always unlocks additional revenue, but it’s only possible with true customer segmentation – which dealers often tend to leave on the ‘too difficult’ pile.
“That’s a mistake. Rigorously cleansing their data – ideally in real-time – and establishing a single point of truth for every customer will pay for itself many times over, as those who have done it will confirm.”
Lack of connectivity between multiple databases
In one recent dealer group database analysis ADS found that 12% of customer plate changes had not been recorded.
In this case the dealer had in fact cleansed its customer data but then failed to update their systems for 12 months, costing hundreds of thousands in lost revenue.
ADS also estimates more than 500 potential additional car sales were also missed.
ADS contrasts UK motor retail with the approach of the grocery sector in Britain and the “highly sophisticated” data-led marketing of American dealers.
At the heart of the issue is the lack of connectivity between multiple databases in the typical dealership – a problem already widely overcome in the US by implementing a ‘single point of truth’ through dedicated Customer Database Platforms (CDPs).
In Britain, customer information is typically spread between a Dealer Management System (DMS), a showroom system, an aftersales booking system, a CRM system and ad hoc databases such as website sign-up lists for newsletters.
Some dealer groups even run multiple DMS, often containing misaligned data.
It means that even when customer details are updated in one place they often remain incorrect in other systems.
As analysis by ADS has previously identified, this means up to three quarters of customer data points are flawed in the typical dealership.
ADS suggests that the minimum level of segmentation for any dealer means accurately answering at least 15 simple questions for each customer, ranging from basics such as address and contact details, through finance term data, previous change cycle behaviour and even factors such as the age and mileage of their tyres.
The business said one client drove seven-figure additional profits by simply asking customers who were booked in for service work whether they had begun considering a change of car.
ADS points out that such practices help secure an existing relationship before the customer begins shopping around.
A single point of truth
Sheard said even the highest quality data is of little use if it’s trapped in one part of a dealership’s many business management tools.
He added: “You cannot make the most of a key contact moment if you don’t know when a customer’s MOT is due, or if you’re relying on outdated details from a system that contains the wrong address.
“That’s why a single point of truth, provided by one customer database platform, is so valuable.
“We’ve all experienced dealer communications based on out-of-date details, and when that issue is scaled to a national level, it represents millions in missed revenue opportunities. Properly cleansed data in a single system can capture those opportunities.
“When we compare this to the US approach, where true customer segmentation is already driving marketing success, we estimate that UK dealers are currently three-to-five years behind in unlocking the full potential of their customer data to generate revenue and strengthen customer relationships.”
