SCORE! Improve ROI on your service marketing campaigns
Vehicle sales have plummeted in 2009 as customers retrench in the midst of the global recession and hold on to their vehicles longer. With the average duration of new ownership over 4.5 years, dealer profitability is increasingly dependent on customer-pay service work. However, dealers are only seeing 35-50% of their customers returning for service.
OEMs can help improve profitability on their service marketing campaigns, as well as service loyalty for their dealers even during this economic downturn by targeting customers that are not only more likely to respond to service offers, but also likely to spend more money when they do.
Customer segmentation and modeling can help OEMs design campaigns that will capture more revenue from their existing customers.
Rather than targeting the entire customer database with the same service offer, Urban Science recommends identifying the right offer for the right customer to generate the highest response rates and profitability possible. Using customer data, service history, and historical campaign data, accurate and robust models can be created to predict not only a customer’s likelihood to respond to a campaign, but also how much they are likely to spend. Customer segments can then be scored based on the likely revenue they will generate from a given campaign. (See the Service Segmentation Matrix below.)
Service Segmentation Matrix
OEMs can use the matrix to test multiple offer scenarios and forecast campaign profit by analyzing the number of customers in each segment, the profit margin on the revenue generated, the cost of marketing (e.g., a direct mailer), and the desired offer (e.g., 10% discount or $30 coupon). The chart below shows an offer scenario likely to generate a profit and maximize response rates, versus a flat offer that would have resulted in negative profitability in some cells and depressed response rates in other cells.
Service Segmentation Matrix: ROI Assessment
By leveraging the Service Segmentation Matrix, OEMs can better plan campaigns that will drive service sales and ROI, and build a base of engaged customers to fuel future vehicle sales. To learn more about how to create a Service Segmentation Matrix for your service marketing campaigns, contact Urban Science.
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