November 16th,  2022 Article

In an Ever-Changing Marketplace, You Need Timely and Actionable Defection Data on Your Side.

There are a number of factors contributing to the roller coaster-like ride of the automotive marketplace. Macro-economic conditions are slowing demand1 and moderating prices at the same time as production and inventory levels are rebounding off their pandemic-related lows. Meanwhile, a significant portion of the average dealer’s sales team is inexperienced and unprepared for the increased level of competition they will soon experience.

Given these factors, how can dealerships employ a more effective sales strategy to overcome these challenges and thrive in a more competitive marketplace? With defection data that’s specific, timely and deep.

Today, data can help refocus efforts in targeted ways that were previously unavailable.

Four Ways Dealers Can Use Data & Technology to Gain a Competitive Advantage.

Many of the challenges dealerships are facing aren’t new — but the approaches successful dealers are using to overcome those challenges using near real-time data and simple to use, intuitive technologies are.

1. A Better Way to Handle Defections. According to our studies, consumers are defecting at nearly twice the rate that they are closing (16.4% v. 8.3%), and nearly half of the defections are to competitive brands. How you handle those defections is critical, and the data surrounding that dynamic can be eye-opening. For example, “gut instinct” might lead you to conclude that defections are heavily dependent on inventory levels. Our data, however, show that though they take five to six days longer to occur, defections happen at the same rate across brands, regardless of inventory levels.
Unfortunately, dealers have not traditionally had access to the data that can identify competitive-brand defections — and without that information, you’re only getting half the story. Having access to all available defection data can greatly impact your ability to follow up with leads effectively and efficiently.

2. Effective Salespeople and Processes Will Be Key. Most dealers follow up with shoppers for up to 90 days after initial contact. The data, however, brings into question the wisdom of that 90-day strategy. That’s because most leads close at day nine, and defect at day 15.2 A better strategy would be to focus on consumers who are still in the market.

Dealers who have access to timely cross brand defection data, on average, can drive five additional units and realize up to $19,000 in incremental gross margin per month. The value of that data can quickly add up and go a long way to counter the mounting pressure of operational efficiency.

3. The Importance of Salesperson Confidence. Today, vehicle shoppers can easily find true market value, competitive sticker prices, and national inventory online. That means consumer choice has become less about which dealership offers the best price and more about which salesperson with whom they have the best relationship.3

The key to building a salesperson’s confidence in a dealer’s lead program and follow-up process is to provide them with high-quality leads who have not purchased elsewhere. In fact, a recent analysis from Urban Science shows that the top-scoring leads are more than twice as likely to defect (31%) than they are to close (14%). Focusing salesperson effort on high-quality, in-market leads will drive commissions, enhance confidence and strengthen the relationship between management and dealership employees.

Another factor in the equation is that dealerships are running lean. In fact, according to NADA, dealership workforces dropped 10% during the pandemic and still aren’t back to full capacity — all the more reason for salespeople to hone their efficiency skills which, in turn, will bolster their confidence and help contribute to more sales at the dealership level.

4. The Message to Your Customers Matters. In the past, the content and cadence of marketing communications were based on assumptions, since actual consumer-purchase behavior was difficult to determine. That led to follow-up communications going out to customers who had already purchased elsewhere.

The value of “the right message at the right time” is a time-tested marketing maxim. Conversely, reaching out to customers who have defected sends a message that can become annoying and unwanted, hurting the chance of maintaining the relationship going forward.

Furthermore, since half of defections are to a different dealer of the same brand, sending the wrong message harms the opportunity to keep the relationship through relevant messaging (i.e., for service and aftersales). But, how do you know who is defecting, and when and how to pivot your message to reach them most effectively? With data.

Using Data for Competitive Advantage.

Consumers are becoming more difficult to target and win over as economic pressures force them to think longer and harder about where or when to purchase a new vehicle. Plus, they have increasingly more options as production and inventory levels begin to find their new normal.

The job of dealership sales teams will become increasingly more difficult as more competitors up their game in response to these conditions — and all the more reason to leverage data to your advantage.

Having access to all timely, easy-to-use defection data works in your favor on four levels:

  • It nearly doubles the leads for your salespeople, significantly increasing their chance for sales success, and improves their confidence
  • It provides your dealership with the opportunity for more revenue and efficiency
  • It creates new opportunities for in-the-moment salesperson training
  • It allows you to focus your communications to reach customers with the right message at the right time in their buying journey — whether they’re still looking to purchase or open to service opportunities

Science as a Solution.

Since our founding over four decades ago, our proven, scientific approach to automotive retailing has continued to improve and evolve. It’s an approach that stays ahead of the technological curve to help improve marketing, sales and service performance — and continues to be the industry standard — giving you the best opportunity for success in your dealership.

Let us show you how we can help you out-compete the competition. If you’d like to talk to someone at Urban Science about how we can help you harness the power of timely defection data to help your dealership run more efficiently, call or email me.

Eric Demont
Global Practice Director
ekdemont@urbanscience.com
+1-313-748-7466

1. “Carmakers Start to See Weaker Demand Amid Inflation Squeeze”
https://www.reuters.com

2. “Most Leads Defect…”
Urban Science® DataHub™

3. “How to Be a Good Car Salesperson”
https://blog.hubspot.com

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