New sources of information about consumers are giving auto retail managers better potential tools to sharpen their brands and win customer loyalty. At the same time, rapid changes in how consumers shop in physical and digital dealerships, and how vehicles are serviced and used add to the urgency.
How can dealership employees create value for customers using market foresight from new data sources?
How dealers and their managers respond is reshaping the delivery system that customers value. Dealership teams must focus on finding the right data partners to improve marketplace insight.
The process should answer two key questions:
1. Whose data provides the best insight on potential customers?
2. Which data partners will help (or harm) us as retailers?
Once, the franchised auto dealership system was simple: using retailers' private capital to buy vehicles "pushed" from factories. Auto manufacturers produced and franchised retailers dealt with potential buyers.
The system effectively let automakers outsource customer acquisition and customer service to independent entities.
But the digital world is changing that. Now marketing by manufacturers and distributors and sharing dealership customer data underlies all marketing activities.
That growing digital disruption, with attendant cyber risks and faster customer feedback, involves manufacturers more directly in the customer experience, both sales and service.
Factory-sponsored programs intervene in dealership marketing and operations. Many brands are creating new revenue streams based on customer vehicle use. Connected vehicles will spur creation of more such services.
Each initiative creates new streams of customer data, which add value when combined with dealership data.
As a result, dealerships' historic marketing independence is being replaced with more interdependent digital data networks of customer information. And even more interconnections of devices and fresh data streams are on the way.
One consultancy, the Gartner Group, forecasts that by 2018, households will contain an average of 40 devices that will talk to each other, creating a continuous digital consumer experience that some label "digital mesh."
Clearly, seamless digital customer experiences are reversing the historic outsourcing of customer service designed into the franchise system. This intensified battleground of new ways to access and create experiences is filled with data seekers and providers whose strategies may or may not have the retailers' best interests in mind.
Despite that, individual dealerships still must play the primary role in coping with privacy and permission issues.
For a retailer, the challenge is ensuring that data partners, including one's own franchiser, enhance rather than dilute the role of branded dealerships. Some partners might want to shrink that role by using dealership data for their own purposes.
Dealerships must protect customer information. No matter where it originates, any customer data breach hurts the local retailer the most because it kills customer trust.
The dealer role also will shrink if customer data are ultimately used against those customers, so dealers must always know what data any partners create and take.
Every dealership team must decide whether a prospective data partner's marketing initiatives help or hurt. As cyber risks rise, potential partners should be clear about how they protect dealer data.
Partners that want data but add little insight are unlikely to give dealerships any competitive advantage.
Adapting to the digital world means dealership teams will manage multiple data sources and partners.
Questioning the give and take of data partners is now an essential skill for dealership teams.
Dealerships remain the front line of understanding and relating to the customer. They need to keep the central role for any foresight derived from combined data sets and improve their internal analytic skills to remain in that role.
Innovating at retail involves offense and defense. For dealers, it means seeking data partners that want the dealer's role to grow. Avoid or fire the others. Question even factory marketing programs.
Asking what it does for the dealership's brand and relationship role will be the key to maintaining independence.