Coal mining is hard, dirty work that requires intensive physical effort as well as enormous capital investment. And for what? In 2015, a ton of coal brought in only $2.98 in cash margin.
Thankfully, automotive dealers operate in a much different environment. They don’t have to deal with that kind of labor-intensive, expensive work to get significant results.
The required investment for a dealership “mining” tool is fractional compared to the return. The average gross profit for a used car sale is $3,091, which, by all measures, is well worth the comparatively small time and investment. What’s the best way to get to that kind of return with minimum hands-on effort?
Seek Buried Treasure
We discovered in our Dealership Action Report (DAR) that data mining is key in identifying opportunities to generate appointments and close sales. In this report that includes input from more than 6,500 dealerships and 189,000 users of Revenue Radar, DealerSocket’s flagship data-mining solution, we show the value of exploring your data to find hidden gems:
- $424,000+ — Gross profit generated by data mining per dealership, per year
- 90% — Average closed sales based on leads that were identified by data mining
- 21 — Additional new vehicle sales per month generated by data mining
- 84% — The rate at which calls made to leads generated through data mining resulted in appointments (compared to 25 percent for other lead sources)
Leads generated through data-mining technology such as Revenue Radar are more likely to result in positive outcomes, and convert more often and more effectively than any other source.
Leverage Technology
One of the most efficient and effective ways to reduce fluctuations in month-to-month sales is to use data-mining technology to tap the wealth of valuable customer information stored in your dealership’s DMS.
An effective data-mining platform constantly scans your store’s customer data and identifies people in a favorable position to spend money with you; it then feeds warm leads into your CRM for follow-up. Above all, mining your book of business for new opportunities allows you to engage customers and prospects proactively, which not only keeps competitors at bay, but evens out the cyclical nature of vehicle sales.
We have found that despite its performance, cost-effectiveness, and widespread adoption in top-performing dealerships, data-mining technology is still largely underused at most dealerships. According to the DAR, only half of dealerships use data-mining technology, and of those that do, only 17 percent of data-mining leads generated are actually contacted. Considering the statistical likelihood that such leads will result in sales, these numbers reveal a significant gap that must be bridged to help dealerships reach their full potential.
Careful use of tools like Revenue Radar to set up targeted pings that are designed to assist both sales and service will have an immediate positive impact on bottom-line performance.
Early Adopters Win
In our experience, the first dealers to adopt data mining as a day-to-day strategy will be the ones to gain a competitive advantage. Late adopters will be stuck digging really deep for their leads just like today’s coal miners. The deeper you have to dig, the harder the work.
Why let your competition get the easy sales and service opportunities? If you’re thinking about using a data-mining platform or if your team could use an orientation or refresher, now’s the time to make it happen.
Dealerships that identify prospects interested in the wave of used vehicles headed our way — and that can quickly and effectively match them with their next vehicles — will enjoy a significant competitive advantage and a fruitful revenue stream for the foreseeable future.
Find out more by visiting dealersocket.com/boost-your-bottom-line.