Barb Sheehan
Marketing Manager

Auto Dealerships Drive Sales with Multichannel Marketing / Segmentation

While auto sales plummeted in the early days of the pandemic, the market returned with a vengeance as people steered clear of public transportation and used their cars to hit the road instead of flying. This sales glut eventually lead to car shortages and a negotiation advantage for dealerships. The resulting increase in auto prices lead to soring profits for auto manufacturers and dealerships alike. And while overall growth projections continue to look healthy for car dealers, there are challenges ahead. Still battling supply chain disruptions, growing emissions regulation, and an uncertain economy, auto marketers will need to adapt and find more efficient ways to grow both their customer base and ROI.

Additional obstacles include:

1. Increasing competition and direct to purchase: The automobile industry is highly competitive, and new players such as Tesla, Rivian, and Lucid are disrupting traditional models. Rumblings continue as some manufacturers applaud the price advantages available through direct to purchase models.  Though most manufacturers do not seem reticent to move to this, new demands may be placed on dealerships going forward.

2. Changing consumer behavior: The COVID-19 pandemic has accelerated the shift towards online and contactless transactions, which can impact dealership sales and service models.

3. Affordability: Rising interest rates are increasing auto payments, affecting the affordability amongst many potential buyers.

4. Electric vehicle adoption: The increasing adoption of electric vehicles (EVs) presents both opportunities and challenges for dealerships. While EVs offer lower operating costs and environmental benefits, they require different sales and service models than traditional gasoline vehicles.

Clearly automobile dealerships will need to be agile, innovative, and customer-centric to navigate the challenges and opportunities of the evolving automobile industry. Specifically, a look towards audience segmentation and multichannel marketing will reap real benefits in this still developing environment.

One incredibly valuable way that auto marketers and automobile dealerships can adapt to the challenges ahead is by leveraging audience segmentation, a strategy that categorizes people based on demographics, location, interests and more, in order to identify and deliver targeted, relevant messaging. By understanding the unique needs and preferences of different customer segments, dealerships can tailor their marketing efforts to better meet these needs.

On the other hand, multichannel marketing involves using multiple channels to reach and engage with customers on different levels – such as social media, email, website, mobile app, TV, radio, and print media. While it may seem these two approaches are somewhat opposing (with segmentation narrowing down a field of prospects based on specific criteria; and multichannel marketing taking that messaging to audiences via a variety of channels), they definitely go hand-in-hand.  Segmentation allows you to pinpoint who your best customers and prospects are; multichannel marketing allows you to reach them in specific, ways and, hopefully multiple times, with targeted messaging.

For automobile dealerships, these methods can be helpful in several specific ways.  First, by using multiple channels, dealerships can reach a larger audience in order to expand their overall brand awareness. It’s important to remember that while a larger audience can be reached, it’s not at the sacrifice of reaching a targeted group of consumers who fit a marketers’ ideal audience. Different customers prefer different channels of communication. By using multiple channels, dealerships can tailor their communication based on all, or most, customer preferences. For example, some customers might prefer email or CCTV, while others might prefer text messages and print media. Also, with more people spending time online, there has been a significant shift towards online shopping, and the auto industry is no different. By creating engaging and personalized content online, automakers can tap into this trend and reach out to customers with targeted messages. Social media platforms, provide a great opportunity to showcase new models, offer exclusive deals and discounts, and connect with potential buyers. Taking it one step further, by investing in virtual and augmented reality experiences, dealerships can provide immersive test-drive experiences without the need for physical vehicles, which can help increase customer engagement and boost  conversion rates.

Multichannel marketing also allows dealerships to target specific customer segments based on their interests, behaviors, and preferences. By collecting and analyzing data from different channels, you gain valuable insights such as website traffic, email open rates, and social media engagement which can be used to guide future strategy and improve ROI. Segmentation also provides marketers a seamless, quick-to-market approach as there are thousands of pre-built automotive audiences already on-the-shelf and ready to activate across major digital media platforms. These pre-built audiences are based on various criteria such as vehicle ownership, browsing history, and search behavior. By using these pre-built segments, dealerships can quickly and easily target customers who are already in the market for a new vehicle or who have shown interest in specific makes and models. This not only saves time but also ensures that marketing efforts are being directed towards individuals who are more likely to convert into customers. Moreover, with the rise of digital channels, it has become easier than ever to segment and target audiences. Tools like customer relationship management (CRM) software enable dealerships to collect and analyze customer data from multiple channels in real-time. This allows them to create even more targeted and personalized marketing campaigns that speak directly to the needs and interests of individual customers. By doing so, dealerships can build stronger relationships with customers and increase brand loyalty

Applying this, let’s look again at some of the challenges facing the auto dealership industry:

1. Increasing competition and direct to purchase: The automobile industry is highly competitive, and new players such as Tesla, Rivian, and Lucid are disrupting traditional models. Rumblings continue as some manufacturers applaud the price advantages available through direct to purchase models.  Though most manufacturers do not seem reticent to move to this, more demands may be placed on dealerships going forward. Dealerships need to adapt to changing consumer preferences and provide a differentiated customer experience to remain competitive.

PRO TIP:  It may seem obvious, but it is important to analyze who your best customers are and target similar prospects, both with sales and service expectations. What are the best ways to reach your prospective customers? Do they shop based solely on price, or are location, sales relationships and/or service key factors? Do your customers prefer speedy service, simply shop on price, or expect a white glove full-service experience? Discovering the answers will help you determine the most effective channels and messaging.

2. Changing consumer behavior: The COVID-19 pandemic has accelerated the shift towards online and contactless transactions, which can impact dealership sales and service models. Dealerships need to invest in digital capabilities and offer a seamless online-to-offline experience to meet customer expectations.

PRO-TIP: By using multiple channels, dealerships can provide a consistent customer experience across different touchpoints. For example, customers can research and compare cars on a dealership’s website, receive personalized recommendations via email or text, and schedule a test drive through a mobile app.

3. Affordability: Rising interest rates are increasing auto payments, affecting the affordability amongst many potential buyers. Best prospects for both new and used vehicles should be identified to develop and offer pricing models that fit those specific audiences.

PRO-TIP: Understanding important attributes like the household income, previous purchase behaviors, etc. for your ideal audiences is important when determining which models or services to offer different segments through your multichannel marketing and messaging.

4. Electric vehicle adoption: The increasing adoption of electric vehicles (EVs) presents both opportunities and challenges for dealerships. While EVs offer lower operating costs and environmental benefits, they require different sales and service models than traditional gasoline vehicles. Key audience categories are leading the way in sales for EV models. Do you know who those are today with your current data partner? Are these your best customers? Will they be? Look at current customer trends, as well as government regulations that may affect future sales. EV manufacturers may also begin to require dealerships to provide a charging station infrastructure. Do you have the space and financial capabilities to handle those requirements?

PRO TIP: Once you have determined your dealerships interest and readiness to target the EV market, consumer segmentation can help you determine your key prospect groups as well as the best channels for reaching them based on EV-specific data that can help indicate if a consumer is more likely to purchase EV or not.

Clearly defining your audience in more practical ways provides many benefits. It allows you to build stronger relationships with your customers and to determine service strategies appropriate for your dealership. It can lead you to better product determination and appropriate pricing strategies. It allows you to create marketing content and messaging that resonates with your prospects. And it helps you to develop an overall multichannel marketing strategy to effectively engage with customers and drive sales in a competitive market.

As noted earlier, segmenting audiences does not mean you are reaching a smaller footprint. It is simply refining audiences into groups based on very specific demographics and behaviors. Claritas works with marketers across multiple industries to help better identify current customer groups, and then translate that into additional households who mirror the attributes that make up your best customers today. This allows you the benefit of scale, in addition to targeting.

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