An Introduction to Data-Driven Marketing for the Auto Industry

Without a doubt, data has become the currency that fuels competitive advantage in today’s economy. The concept of data-driven marketing has become an integral strategy across a broad range of industries, and the automotive industry is certainly no exception. Consumers expect relevant messages delivered across the channels they prefer and at the timing they choose. And when brands fail to deliver, customers are annoyed and often even driven away. To deliver this type of hyper-targeted marketing, a data-driven approach is the essential ingredient for success.

Automotive brands who implement data-driven marketing in their overall strategies will reap the rewards in improved customer acquisition and retention, enhanced customer experiences, and higher revenue. Here are a few ways to get started:

Data-Driven Marketing Begins with Good Data

Data today is bigger and more pervasive than ever before, and the automotive industry can no longer rely on internal data alone. Information that is sitting in CRM systems, billing and shipping databases, or customer service centers is a great starting point, but in order to step up their competitive advantage, automotive companies must apply third-party sources of highly specialized automotive intelligence.

Consumers produce mountains of data every day. Digging though the piles of available information to find the data that truly can make a difference often leads to a state of “analysis paralysis.” Automotive companies are increasingly turning to data solution providers who have already sifted through thousands of data sources, aggregating the most comprehensive automotive intelligence and marketing data that will have a direct impact on the bottom line.

customer profiles

Types of third party data that should be included in a CRM or prospecting database include:

  1. Demographic Data: Information such as households with new children (may upgrade to a larger vehicle), teenage drivers (may purchase a first car), or lifestyle attributes such as environmentalism or an interest in the outdoors (hybrids or four-wheel drive) can take targeted marketing to the next step. Income, marital status, occupation, hobbies, lifestyle, and age are other examples of demographics that can be used to create targeted marketing messages to which consumers are most apt to relate.
  2. Specialized Auto Data: Several specialized data solution providers can provide detailed information on vehicles and their owners. Data can include information such as Make, Model and Year as derived directly from VINs; selections such as engine size, fuel type, drive train, engine block, and engine cylinders; response performance indicator models, and auto equity data.
  3. In-Market Model Data: Dealers can target consumers who may be ready to purchase a car within the next several months with statistically modeled values that indicate a household’s inclination to purchase a vehicle. This means targeting the consumer before they head to a competitive dealership. In combination with other consumer variables, this brings dealerships closer to finding the ready to buy, sell, or lease prospects in a targeted geographical area.
  4. Follow the Car Data: This data identifies cars that a dealership sold or performed regular service on after they are sold to a new owner, so the dealer can contact the new owner with service offers. This means less wasted marketing efforts sending vehicle specific pieces to consumers who may not own that car anymore, new service prospects by targeting new owners of vehicles that the center is familiar with, and optimized audience targeting with enhanced data and consumer insights.

email campaigns

Multi-Channel Marketing Campaigns

As more consumers turn to digital channels to look and research their next automobile, dealerships must keep up by embracing multi-channel, data-driven campaigns such as email marketing, direct mail, and digital advertising.

Email Marketing

Email brings in about 39% of a dealership’s leads, according to Larry Bruce, Vice President of Naked Lime. According to Naked Lime research, “emails fetch more than three times as many leads as direct mail (12%), paid search (11%) and organic search (9%). Traditional media, such as TV and radio, account for 4% and social media 2%.”

The key to successful email marketing lies in using analytics and data to segment marketing lists. Email segmentation lets you cut through the clutter by providing offers and communications based on segmented audiences or groups of consumers. There are countless ways to use segmentation. For example, you may segment by demographics. One group of consumers may have school age children and an offer for a larger family vehicle would be more appealing than an offer for a sports car. Different offers and different vehicles will appeal to outdoor enthusiasts as compared to a retired couple. Consider a range of characteristics such as age; income; lifestyle; hobbies; make, model and age of their current vehicle; whether they own or lease; location; and so on.

While irrelevant emails may cause a significant loss in opportunities, a highly targeted email has quite the opposite effect. According to Lyris, email list segmentation results in:

  • 39% – Increased Open Rates
  • 34% – Greater Email Relevance
  • 28% – Lower Opt-Out/Unsubscribe Rates
  • 24% – Better Deliverability
  • 24% – Increased Sales Leads
  • 24% – Greater Revenue

direct mail pieces

Direct Mail

With the rising emphasis on digital channels, old-fashioned direct mail is often overlooked. However, the advent of Big Data has given new life to direct mail marketing, giving dealerships and auto brands new ways to pinpoint consumers with tailored offers.

By enhancing 1st party dealership data with 3rd party specialty automotive data, marketers can achieve a holistic customer view to craft highly targeted offers. So information you have on John Smith with the email now becomes John Smith at 5555 Waverly Way, owner of a 2010 Ford Explorer that has been in the shop 3 times for various mechanical issues in the past 3 months. John also just recently retired and his online ID has shown purchase indicators (searches, likes, conversations) that he’s interested in buying a certain brand of sports car. Now it’s pretty clear to marketers what type of marketing message John will most likely respond to.

The use of auto data appending is especially pertinent in automotive direct mail marketing, because in this case the 360-degree customer view isn’t complete without the consideration of the current vehicles owned by the prospects. Some consumers are absolutely loyal to one brand of car and this information is necessary so that marketers don’t waste dollars sending offers for a type of vehicle the consumer would never even consider. This data can also be used for buy-back offers and to target customers in current positive equity who are looking to purchase.

While direct mail can see positive results, it’s really going to show the most ROI when it’s implemented as a multichannel campaign. The most popular channels to integrate with a direct mail campaign are email and social media (cited by 44% of survey respondents), and it’s important to consider your web page as well. Research shows that 44% of customers visit a brand’s website after receiving direct mail marketing, and 48% retain the piece for future reference. So make sure your website is optimized for mobile and ready for traffic before your piece is sent out.

Digital Advertising

The auto industry was the second-largest digital ad spender in the US in 2015, after retail. By 2019, 13.2% of US digital ad spending will be auto industry-related (eMarketer). As the consumer purchase path spans more digital channels, there is tremendous opportunity for automotive brands to influence consumers at key stages of decision making.

US Automotive Industry Digital Ad Spending, 2013-2019 (billions, % of total digital ad spending and % change)

The use of data has become more sophisticated in the use of digital advertising, allowing for finely tuned audience targeting. Auto brands can choose to target consumers by a range of criteria and across platforms, such as Facebook, Twitter, Google, and more.  Examples segments to target may include a mix of vehicle type, make, model, year, in-market consumers, vehicle history and garage data, demographics, and credit score ranges.

The data is there to tell you who is buying what, what types of vehicles they drive, where they live, and which channels and messages are most likely to compel them to act. Now is the time to make data the guiding force for your automotive marketing strategies.

For the most informative resources on data-driven marketing for the automotive industry, download this free success kit.

success kit

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