Dealers mine data for repeat buyers
Skip to main content
Sister Publication Links
  • Automotive News Canada
  • Automotive News Europe
  • Automotive News Mexico
  • Automotive News China
AN-LOGO-BLUE
Subscribe
  • Subscribe
  • Account
  • login
  • HOME
  • NEWS
    • Dealers
    • Automakers & Suppliers
    • News by Brand
    • Cars & Concepts
    • Shift
    • Mobility Report
    • Special Reports
    • Digital Edition Archive
    • Q&A with Chris Bangle
      A penny for your thoughts
      Helping two cultures connect
      SEAT FEAT
    • Who wants VW's MEB architecture?
      GM will launch electric bike sales in Europe
      VW seeks to tap potentially lucrative ride-sharing market
      Apple stepped up AV testing to 80,000 miles in 2018
    • Dealerships owned by ex-NFL stars face collapse, litigation
      Want a luxury car? Try a Kia
      Costly lesson of tortuous legal battle: Get it in writing
      Denny Hecker: A changed man?
    • Access F&I
    • Fixed Ops Journal
    • Marketing
    • Used Cars
    • Sales
    • Best Practices
    • Dealership Buy/Sell
    • NADA
    • NADA Show
    • Automakers
    • Manufacturing
    • Suppliers
    • Regulations & Safety
    • Executives
    • Leading Woman Network
    • PACE Awards
    • CES
    • Management Briefing Seminars
    • World Congress
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Fiat Chrysler
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Ferrari
      • Fiat
      • Jeep
      • Maserati
      • Ram
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
      • Holden
    • Honda
      • Acura
    • Hyundai
      • Genesis
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • PSA
      • Citroen
      • Opel
      • Peugeot
      • Vauxhall
    • Renault
    • Subaru
    • Suzuki
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
      • Seat
      • Skoda
    • Volvo
    • (Discontinued Brands)
    • Auto Shows
      • Detroit Auto Show
      • New York Auto Show
      • Los Angeles Auto Show
      • Chicago Auto Show
      • Geneva Auto Show
      • Paris Auto Show
      • Frankfurt Auto Show
      • Toronto Auto Show
      • Tokyo Auto Show
      • Shanghai Auto Show
      • Beijing Auto Show
    • Future Product Pipeline
    • Photo Galleries
    • Car Cutaways
    • Design
  • OPINION
    • Blogs
    • Cartoons
    • Keith Crain
    • Automotive Views with Jason Stein
    • Columnists
    • Editorials
    • Letters to the Editor
    • Send us a Letter
    • Will Jaguar replace XE, XF sedans with a single EV?
      Could auto tariff threat be a turning point?
      Ram Chassis Cab goes high-tech
      Chevy's 2019 Blazer: More Camaro, less Equinox
    • Dealers need to be ready for anything
      EVs will come with economic cost
      Spend money on sales, not stores
      Put it on your bucket list
    • Elaine Chao: A speedier path for innovation
      Industry initiatives seek to ease tech shortage, but challenges remain
      Drivers for ride-hailing services can be a prime source of fixed ops profits
      Dealers' ads for service techs need major repairs to be effective
    • NADA can help fight stair step incentives
      Let dealers invest in innovation, not renovations
      Hackett's vision for Ford is still a blur
      The last temptation of Elon Musk
    • Deeper issues in tech shortage
      Odds poor for Cadillac rebirth
      A boycott is not the answer
      Lincoln, Cadillac interiors need work
  • DATA CENTER
  • VIDEO
    • AutoNews Now
    • First Shift
    • Special Video Reports
    • Weekend Drive
  • EVENTS & AWARDS
    • Events
    • Awards
    • World Congress
    • Retail Forum: NADA
    • Canada Congress
    • Marketing 360: L.A.
    • Europe Congress
    • Fixed Ops Journal Forum
    • Retail Forum: Chicago
    • Leading Women Conference Detroit
    • 100 Leading Woman
    • 40 Under 40 Retail
    • All-Stars
    • Best Dealership To Work For
    • PACE Awards
    • Rising Stars
    • Europe Rising Stars
  • JOBS
  • +MORE
    • Webinars
    • Leading Women Network
    • Custom Features
    • Classifieds
    • People on the Move
    • Newsletters
    • Contact Us
    • Media Kit
    • Ally: Do It Right
    • Guide To Economic Development
MENU
Breadcrumb
  1. Home
  2. Dealers
February 20, 2012 12:00 AM

Dealers mine data for repeat buyers

David Barkholz
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    DANIELLE EMERSON
    Rodger Lau, vice president of the Jeffrey Tamaroff Automotive Family, says: "It's a lot cheaper to retain a customer than go get a fresh one."

    Rodger Lau, vice president of the six-franchise Jeffrey Tamaroff Automotive Family in suburban Detroit, said he knew that retaining customers was far more cost-effective than fishing for new ones.

    Yet for weeks, Lau resisted trying an online tool that would plumb the dealership computer data and identify customers in the best position to buy or lease again. These customers typically have owned their vehicles for many months and have high equity in the vehicles. Equity is the market value of a vehicle minus unpaid loans.

    After getting over his inertia last June, Lau said he used a software tool called Deal Activator from Dominion Dealer Solutions to send mailers to 500 prospects who had been Nissan customers of Tamaroff's store in Detroit's eastern suburbs.

    Lau's main pitch: The prospects could, with a trade-in, buy or lease a new car for the same or lower monthly payment. The test was a huge success.

    "We sold 32 cars from the mailer and got back 28 late-model cars as a result," Lau said.

    "We turned around and retailed 16 of those trade-ins in the first 30 days at an average gross profit of $2,200 a car."

    Software that searches through a dealer's roster of customers saves the sales staff a mountain of tedious work. The tools can instantly calculate the variables to determine a likely candidate for a sales offer, including the vehicle's residual value, the owner's equity, remaining term on the lease, interest rates on a new vehicle and factory incentives.

    Low interest rates help

    A small but growing number of dealerships are using software tools that search in-house for so-called in-equity prospects.

    AutoAlert, a pioneer of equity-management tools, has about 1,300 stores using its products, said AutoAlert CEO Boyd Warner. Other vendors include Driving Loyalty, Dealer Wizard, DealerSocket and the equity calculator of Reynolds and Reynolds.

    Warner estimated that at any given time, about 10 percent of a dealer's customers have substantial equity in their vehicles and are prime prospects for new vehicles.

    Today's low interest rates and high used-car residuals mean a growing number of customers can buy new vehicles at the same or lower payments, Warner said.

    Warner estimates that less than 10 percent of U.S. dealers use top-of-the-line in-equity tools such as AutoAlert for finding and pitching customers, though the technology "is catching on briskly." The company's sales doubled in 2011, he said.

    In-equity tools come in different degrees of sophistication and cost dealers between $600 and $2,500 per month.

    Lau said the east-side dealership's full rollout of the in-equity tool among its Honda, Acura and Kia customers also yielded successful results. The dealership sold or leased 224 vehicles generated by in-equity alerts between July and December, which translated to $685,000 in gross profit, he said.

    In about 70 percent of those sales, Lau said, the store met the goal of at least matching the current vehicle's monthly payment. And with the rest, the increase was usually only $10 to $20 a month for a new vehicle.

    Lau said he sees 25 to 30 in-equity alerts every day at the east-side store. Typically, salespeople phone customers with a "good news" message that the dealership can switch them into a new car at the existing or lower monthly payment, he said.

    Jeffrey Tamaroff's two stores sold about 6,000 new and used vehicles last year.

    "It's a lot cheaper to retain a customer than go get a fresh one," Lau said.

    Prime prospects

    By pitching customers with high equity in their vehicles, dealers can

    • Contact customers before they start shopping

    • Get high-quality trade-ins

    • Offer customers warranties or other services if they don't want to sell

    • Save marketing dollars by selling to existing customers

    Same payment

    Michael McHenry, director of sales and business development at Benzel-Busch Motor Car Corp., said he brought AutoAlert to the suburban New York Mercedes-Benz store when he arrived there in September 2010.

    McHenry said the 10 to 15 vehicles sold per month from in-equity alerts were low-hanging fruit for a store that sold about 3,200 new vehicles and 1,000 used vehicles in 2011. The store pays about $2,500 a month for the service.

    McHenry said it's not just the in-equity customers that are flagged by AutoAlert. The tool automatically tabulates factory incentives, residuals and things like lease expirations to allow sales staff to find good prospects among its customer base. The tool also peers into the equity position of customers seeking service.

    During Mercedes-Benz's Winter Sales Event, Benzel-Busch Mercedes-Benz used the AutoAlert tool to pull ahead eight E-class sedan owners by as much as eight months on their leases to get them in new cars, McHenry said. The dealership is making a tidy profit on the resale of those low-mileage certified used cars, he said.

    McHenry said: "It's mutually beneficial. We can get people out of their old lease" and into a new one "often for the same price as before."

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Digital Edition
    THIS WEEK'S EDITION
    See our archive
    Fixed Ops Journal
    Thumbnail
    Read the issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Now

    Get access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that's vital to your business.

    Subscribe
    Connect With Us
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter

    Our Mission

    The Automotive News mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in North America.

    AN-LOGO-BLUE
    Contact Us

    1155 Gratiot Avenue
    Detroit, Michigan
    48207-2997

    (877) 812-1584

    Email us

    Resources
    • About us
    • Contact Us
    • Media Kit
    • Subscribe
    • Manage your account
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • NEWS
      • Dealers
        • Access F&I
        • Fixed Ops Journal
        • Marketing
        • Used Cars
        • Sales
        • Best Practices
        • Dealership Buy/Sell
        • NADA
        • NADA Show
      • Automakers & Suppliers
        • Automakers
        • Manufacturing
        • Suppliers
        • Regulations & Safety
        • Executives
        • Leading Woman Network
        • PACE Awards
        • CES
        • Management Briefing Seminars
        • World Congress
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Fiat Chrysler
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Ferrari
          • Fiat
          • Jeep
          • Maserati
          • Ram
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
          • Holden
        • Honda
          • Acura
        • Hyundai
          • Genesis
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • PSA
          • Citroen
          • Opel
          • Peugeot
          • Vauxhall
        • Renault
        • Subaru
        • Suzuki
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
          • Seat
          • Skoda
        • Volvo
        • (Discontinued Brands)
      • Cars & Concepts
        • Auto Shows
          • Detroit Auto Show
          • New York Auto Show
          • Los Angeles Auto Show
          • Chicago Auto Show
          • Geneva Auto Show
          • Paris Auto Show
          • Frankfurt Auto Show
          • Toronto Auto Show
          • Tokyo Auto Show
          • Shanghai Auto Show
          • Beijing Auto Show
        • Future Product Pipeline
        • Photo Galleries
        • Car Cutaways
        • Design
      • Shift
      • Mobility Report
      • Special Reports
      • Digital Edition Archive
    • OPINION
      • Blogs
      • Cartoons
      • Keith Crain
      • Automotive Views with Jason Stein
      • Columnists
      • Editorials
      • Letters to the Editor
      • Send us a Letter
    • DATA CENTER
    • VIDEO
      • AutoNews Now
      • First Shift
      • Special Video Reports
      • Weekend Drive
    • EVENTS & AWARDS
      • Events
        • World Congress
        • Retail Forum: NADA
        • Canada Congress
        • Marketing 360: L.A.
        • Europe Congress
        • Fixed Ops Journal Forum
        • Retail Forum: Chicago
        • Leading Women Conference Detroit
      • Awards
        • 100 Leading Woman
        • 40 Under 40 Retail
        • All-Stars
        • Best Dealership To Work For
        • PACE Awards
        • Rising Stars
        • Europe Rising Stars
    • JOBS
    • +MORE
      • Webinars
      • Leading Women Network
      • Custom Features
        • Ally: Do It Right
        • Guide To Economic Development
      • Classifieds
      • People on the Move
      • Newsletters
      • Contact Us
      • Media Kit