Asked to identify their biggest challenge, nearly 50% of the 500 dealers polled by Strategy Analytics listed "Identifying the best places to invest marketing spend” as their No. 1 pain point. Listed at No. 2 was “Sourcing and pricing vehicles to maximize profits.”
Solutions to both challenges could be buried in dealers' data.
But it’s more than just digging out consumers’ names and contact information and having an inventory management tool. It’s knowing how to wade through a sea of data stored in customer relationship management (CRM) and dealership management systems, extracting what's salient, overlaying it with local market data, and then using it to drive dealer strategies.
A daunting task, for sure. That might explain why two-thirds of the dealers polled by Strategy Analytics believe artificial intelligence/machine learning will be the most significant development in the next five years.
Brad Perry, founder and chief product officer for DealerSocket, says dealers using the company's CRM in conjunction with its data-mining tool are experiencing an early form of AI. The tool employs predictive algorithms capable of stitching together a customer's story. And based on the buyer's patterns, it tells dealers the likelihood a customer is ready to buy.
Perry says these predictions will become even more precise in the not-so-distant future, which he believes will bring about a major transformation in the automotive retail industry.
"That's really where things are moving, because machine learning can take in such large quantities of data over such a large period of time that humans can’t possibly process," he says. "And as it's learning, it’s taking into account real-time conditions and changing its predictive algorithms and results.”