Positive customer equity can help you stock your lot, and help your customer purchase their dream car. Let's see how...
Car dealerships have been faced with a used car inventory shortage as a result of COVID-19. How are they going to restock their lot? Let’s talk a bit about customer equity.
As not only professionals in the automotive industry but also as consumers ourselves, equity is one of those topics in which we can all relate. Put in simple terms, equity relates to the difference in value between how much the car is worth and the amount that is owed on the contract or lease. As a customer pays off their vehicle, the car value will eventually become greater than the amount owed, which puts the customer in a positive equity position. So, the positive equity customer can take the value of the car and deduct that from the purchase of their next car. In addition to the deduction, a down payment can be made and result in the same or even a lesser amount than they were paying before. Except now they may even upgrade to the car of their dreams. The customer gets their dream car and the seller makes a sale and brings in inventory. Equity can be a mutual win-win for all.
Customers change their minds and are not always interested in trading in their vehicle for the same make and model that they currently own or lease. They might simply want to upgrade to a newer year, but may even want to purchase an entirely different model or even brand. In fact, according to AutoTrader, most car buyers are undecided at the start of the shopping process. When they first begin to shop, 6 out of 10 of them are open to considering multiple vehicle options. Luckily, you do not have to be a mind reader to attract all in-equity customers to your dealership for a trade.
With the help of 3 Birds, dealers can go beyond a keys-for-keys approach. Our business intelligence platform uses behavioral data to provide deeper insights into a buyer’s purchase intent. We combine known customer information and purchasing history and funnel interest down through ongoing marketing that stops the guesswork of an entirely predictive model. It allows us to help you bring existing customers back and potentially bring in new customers as well. According to Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Not only do we provide you the chance to bring customers back, it allows the opportunity to increase profits. Increasing customer retention rates by five percent can increase profits by 25 to 95 percent, according to research from business consulting firm Bain & Company. Happy, returning customers, more inventory, and more profit – yes, please.
This continued data collection and holistic view across datapoints not only provides the ability to target customers, but also vehicles. Successful dealers use this technology to bring in more inventory, especially vehicles that are in-demand. Imagine the ability to locate hot vehicles in your database and deliver a dynamic message to effectively get them on your lot. If you could mine not only the data but know how to market to that data to turn inventory with a profit, could you use that?
How We Do it
We target customers in the Dealer Management System (DMS) who are in the equity position based on our Blackbook integration, which helps to provide values on new and used vehicles. The main target is typically customers who have not purchased in the last 12 months and who have an estimated $2k or more in equity, for example.
It is all about personalized communication. With our Equity Advantage program, engaged interactions increase by 27% and it influences up to 74% of total monthly revenue. We deliver this specific communication monthly and can combine it with other relevant sales and service messaging to establish a consistent and trusted relationship with customers. The information provided in these communications helps the customer and the dealer. The customer has the chance to get their ideal car, keep or lower their payment, and improve car safety. The dealerships acquire more quality used vehicles.
Let us help you restock your lot!