Most marketers think of third-party data as something to be used in conquest marketing. While it's true that we must rely on 3rd-party data to acquire new customers, it's important not to overlook the value of this data in marketing to your current customers.
Most companies use only 12 percent of the data they have on hand, which means 88 percent of their data is not being used effectively. In dealerships, that 12 percent is typically contact information. Most customer records are limited to names, phone numbers and emails, if that.
This limited data gives us very little insight to our customers, which makes it difficult to market to them effectively.
For example, the July Fourth holiday is coming up. Did your dealership send out postcards or email blasts to everyone in your database? If so, you've just wasted a lot of your marketing budget on customers who have purchased cars within the last few years and/or who have recently been in for service.
Not only did you waste money, but you also delivered a customer experience that was less than optimal. Remember that customer experience doesn't just happen in your store; most of your customers' experience with your store happens online, with every impression or email they see.
Infrequent, mass marketing campaigns are largely ineffective with low response rates and ROI. Frequent, targeted marketing campaigns to smaller groups of individuals based on their needs will always deliver higher response rates and ROI—with no change to your current marketing budget.
When third-party data is added to your customer records, it allows you to create complete customer profiles, which gives you a better understanding of what types of messages and offers your customers will respond to.
Three Types of Data
There are three types of data that will be most useful in your current marketing campaigns:
1) Vehicle Data
Vehicle type, age and mileage can be used to predict what type of service the owner might need. Additionally, what other vehicles are sitting in your customer's garage that belong to other household members?
2) Customer Data
This data can include demographics, life events and credit scores. For example, we know that newlyweds, new parents and parents of high school and college-aged children all make great potential prospects for new or used vehicles.
Additionally, you might want to target prospects by zip code or within a certain income range. There are literally hundreds of demographic data points to filter through and you can get as specific as you like.
3) Shopper Data
Vehicle and customer data become even more useful when they are layered with specific shopper data. Is a former customer getting vehicle service done at an independent repair facility (IRF) or at a competing dealership?
You can also determine whether someone fits your ideal customer profile by filtering through shopper data from restaurants, department stores, sporting events, or even the kind of wine they like to drink!
Create a Customer Profile
Once you populate your customer records with this data, you have more complete customer profiles. Now you can look at a customer record and gain a lot of insight by asking questions such as:
How can this data help you? Let's say you're having a big July Fourth Sale. I already mentioned how it's not a good idea to target customers who have purchased a vehicle within the last three years—UNLESS they've had a major life event change. For example, if a customer recently had a baby, you'll definitely want to add that person to a list of prospects for a mini-van or SUV.
If you discover that a customer frequents an IRF for vehicle service, but has a luxury brand vehicle sitting in their garage and eats at upscale restaurants, that person is definitely worth spending some extra money on to try and win their service business.
However, this type of customer probably won't respond to a coupon; so, promoting your service expertise and offering incentives like a loaner car is a better strategy.
Third-party data can also tell you how the customer is more likely to respond. For example, as a marketing professional I deal with a ton of emails every day so I am pretty diligent about unsubscribing and deleting all unnecessary emails. But if I know I need an oil change and I get a postcard with a coupon in the mail, I'm likely to use it.
On the other hand, someone who travels a lot for business and/or pleasure probably throws most of their 'junk mail' away without looking at it. To reach them, social media would probably be the best option because social media travels with you.
Then comes the fun part of marketing. Frequent, targeted campaigns allow you to switch up channels, messaging and timing to see what's more effective. And because your messaging is so targeted, you're delivering a better customer experience.
Every individual is unique, and your marketing should be too. Using third-party data is a very cost-effective way to make your marketing campaigns more timely, relevant and customized—all of which returns a higher response rate and ROI.