I first became aware of equity mining in the spring of 2003 when the salesperson who sold me a vehicle some 22 months earlier phoned to gauge my interest in trading for a shiny new replacement.
“Who? What? … I haven’t finished paying it off yet. … Sorry, I’m not interested.” Obviously I wasn’t the ideal equity mining prospect.
Presented by DealerSocket via the Automotive News Webinars page, “Selling More Vehicles with Equity Mining” is a free multimedia combination of audio, slide show, viewer surveys and Q&A via email and social channels such as Twitter. The webinar is available for viewing on the Archives tab at the above web address until February 2019.
Organizers frame it as follows on the webinar’s landing page: “Chances are you are using equity mining in your business, but do you give it the attention it deserves? In this webinar, you will learn how to maximize your equity mining return on investment. Get tips on how to improve appointment show rates, create follow-up processes that close deals, and know what to look for when selecting an equity-mining partner.”
By partner, they mean data mining software vendor. In fact, the market is flooded with producers of said services discussing the moving parts of equity mining:
- Mine the service drive for sales opportunities.
- Mine the "high-lifetime value" customers.
- Data-mining software can help dealerships encourage service customers to trade up.
- Service departments, internet sales managers, and dealership management should all use data mining tools.
- 10-15 percent of existing auto dealership customers are eligible to upgrade at any time.
- Identify eligible customers before they enter the ultra-aggressive car shopping cycle.
- 50 percent of service customers purchased their vehicles at another dealership.
“Selling More Vehicles with Equity Mining”
The DealerSocket webinar is presented by Brand Manager Julie Jamison who put together a compelling slide show for auto dealerships. After explaining that equity mining is a type of data mining, she offers related stats such as equity mining appointments having a 5 percent higher show rate, a 3 percent higher sold rate, and $300 higher gross per deal.
During her discussion of “untouched notifications,” she points out that low performing stores are only touching 33 percent of their leads — leaving potentially 16 appointments, four deals and $6,692 in gross on the table.”
She also stresses the importance of having a dedicated equity mining team that works opportunities on sales drives.
Next, she conducted a real-time survey of viewers to determine how many had “a dedicated team for equity mining leads.” This was modern-day multimedia business polling at its best with results compiled in about 10 seconds: 64 percent or those responding said they did not have a dedicated team.
Key Settings for Auto Dealerships
Jamison digs in deep during the “Creating the Best Possible Leads” section by recommending that dealers conduct the proper research before mining customers:
- Payment savings has a significant effect on lead volume, so be sure to make customer offers that reduce payments by more than a few dollars per month.
- Suggest a new vehicle with the closest MSPR match. “A significantly lower MSRP is going to create a lot of pings with a trim ‘trade-down.’”
- Review valuation sources (e.g. Kelly Blue Book), valuation type and potential mark down to ensure accurate equity calculations.
Her next slide shows the dashboard for RevenueRadar, DealerSocket’s equity mining software, and specifically the Ping Status tab showing a plethora of relevant metrics such as Equity, Validity, Status, Service Event and Inventory Stock Number. RevenueRadar is compatible with every major DMS as well as DealerSocket CRM, allowing Pings to appear throughout CRMs.
Revenue Radar constantly searches a DMS for customers in a favorable position to spend money (i.e have equity). Using 11 different database queries called “Radars,” sales and service opportunities (“Pings”) are highlighted to maximize marketing efforts and reach customers before they shop elsewhere. (Note: the term “Ping” appears to have flexible meaning since it is also used to describe sales leads as well as related notifications within a CRM.)
She cautions that the actual state of a customer’s trade and credit situation are both unknown, so dealers should “avoid quoting hard numbers over the phone.”
Jamison conducted a second real-time survey to query viewers: “Do you use equity mining technology to prospect in your service drive?” Only 44 percent of those responding said “yes.”
She concluded the presentation with a list of items for dealers to consider while selecting equity mining technology:
- Versatile CRM, DMS and platform integration
- Control over the flow of sales leads
- A variety of filters (i.e. “Radars”)
- Opportunity ranking
Other Viewpoints About Equity Mining
A review of recent articles about data mining at auto dealerships reveals some interesting considerations.
First, a dealership will surrender potential service department revenue if data mining allows a service customer to trade up for a new model. On the other hand, equity mining “builds a stock of high-quality, relatively new cars for used car sales and allows dealerships to retain customers who are loyal to the dealership and the brand.”
According to AutoLoop: “Customers are ready for an upgrade sooner than you think. The average vehicle ownership length is 6.5 years, but new data reveals trade-ins peak around 3 years for any loan term. Quote targets customers before they shop your competition, continuously data-mining and generating personalized upgrade offers automatically.”
Finally, two excerpts from “Equity Mining … ‘The Million Dollar Secret’” in Digital Dealer by Jeff Bounds:
“According to Marketing Metrics, the probability of selling to an existing customer is 60-70 percent, in contrast to a new prospect 5-20 percent. The question is why are we not fully embracing this in our industry?”
“In automotive, many people are signing up for long term loans (up to 84 months), so the likelihood of them keeping that vehicle to maturity is very low. Equity mining is the vehicle (no pun intended) that escalates the trade cycle and gives the consumer viable options to consider.”
Equity mining clearly works as a means of saving time and money for today’s savvy auto consumer. Dealerships effectively do all of the research and calculations, enabling buyers to make easy choices.
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Download the free guide to learn how C.A.R.S. can support equity mining at your dealership.
Tags: Auto Dealerships