Drilling data for repeat sales
Records show who's ready for a new car
 | Dan O’Brien, general manager of Daytona Toyota-Scion: Software points to potential buyers. |
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Software that peers into a dealership's own data to anticipate when customers are ripe for a new vehicle has helped Daytona Toyota-Scion almost double monthly vehicle sales since November, says General Manager Dan O'Brien.
Of a record 450 new and used vehicles sold in December, O'Brien said about 200 of the deals were flagged by the "equity mining" tools that Daytona Toyota began employing aggressively when he returned to the store in August after a short stint at another dealership.
The software scours the customer database at Daytona Toyota to identify customers who have equity in their vehicles, are nearing lease expiration or can benefit from lower interest rates.
In many cases, one of the store's 37 salespeople can offer lower payments to customers, who might not even be looking to buy. The store uses the software tools of vendor Xtream Service in Charlotte, N.C.
"Your best customers are always the ones you've already sold a car to," said O'Brien, who spent two years as general sales manager of Daytona Toyota before working for a short time at another dealership last year. Daytona Toyota is in Daytona Beach, Fla.
Underused resource
Equity mining, or database mining as O'Brien prefers to call it, has been around for years. But by the estimate of one prominent vendor of the software, just 15 percent of U.S. dealerships use the software regularly to retain customers.
The low penetration, says Robert Morris, general manager of Park Place Motorcars Dallas, is the result of dealerships either not knowing about the power of equity mining or failing to get staff to use it effectively.
Morris said 24 percent of the 2,900 new Mercedes vehicles sold at the store last year came from customers identified by his vendor, AutoAlert.
Every morning his staff gets a list of the top prospects for vehicles either coming in for service that day or who can be contacted by phone, e-mail or text, Morris said. Salespeople go through regular training on how to pitch customers from the information gleaned from the equity tools, he said.
Because the software yields specific information about the equity status of individuals, loan interest rates and the latest incentives offered by the factory, the conversation can be customized, Morris said.
That makes for more effective communication than a cold call, especially when the salesperson can offer a new vehicle at a monthly payment at or near that of the existing vehicle, he said. The added benefit of early vehicle returns is lots of used cars to sell, including late-model ones that can be marketed as certified-used.
"We keep selling cars to the same people by getting them out of their leases early," Morris said.
AutoAlert has about 2,000 franchises under contract.
Personal contacts, calls
O'Brien said his sales staff has 10 to 30 conversations every day with customers coming into service with vehicles ripe for trade-in.
He said the lists provided by Xtream of good prospects often lead to sales or at least allow salespeople to connect with previous customers.
His salespeople are required to make 25 outbound calls a day, and many of the calls are generated by the equity-mining tools, O'Brien said.
Meanwhile, Daytona Toyota has been cutting its monthly advertising budget as the internal tools have yielded prospects.
O'Brien said the store now spends about $80,000 a month in advertising, down from $150,000 before August, largely by eliminating regional TV spots. The store continues to use direct mail and some cable and newspaper advertising. Xtream, with 522 dealership customers, is an outgrowth of Hendrick Automotive Group, also of Charlotte, N.C. Xtream is an independent company now, said Steve Jaros, Xtream president who left an executive sales position at American Honda to join the company. The service costs about $2,000 per month for single-point stores with a discount possible for groups.
About half of Hendrick Automotive Group's 87 stores use Xtream. The others are being brought online over time, said Hendrick Vice President Chris Little. Hendrick is the sixth-largest U.S. dealership group.
Retaining a customer costs about half what it costs to attract a new one, Little said.
Other vendors of equity mining software include Dominion Dealer Solutions, Driving Loyalty, Dealer Wizard, DealerSocket and the equity calculators of Reynolds and Reynolds, ADP Dealer Services and Dealertrack Technologies. O'Brien said equity mining gives salespeople reasons to contact customers before they even start looking for a different vehicle. Those customers already have a rapport with the store and are typically easier to pitch than conquest prospects.
He said: "It's the easiest possible sale."
You can reach David Barkholz at dbarkholz@crain.com. -- Follow David on 
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