equity mining

Equity Mine Older Vehicles in Your Service Lane

older cars

Americans Are Keeping Their Cars Longer and Longer

Americans’ concern about the state of the U.S. economy is at its lowest level on record, according to a new survey that’s been tracking the issue for decades. Gallup research this month found just 12 percent of Americans said an issue related to the economy is the most important problem facing the country. In August, the figure was 17 percent.

Despite a robust economy, increased consumer spending, and three consecutive years in which annual auto sales topped 17 million, Americans are continuing to keep decade-old vehicles running–and they’re only getting older.

What does this mean at your dealership?

Equity Mine Older Service Lane Vehicles

The age of light-duty vehicles in the United States rose 13 percent to an average of 10.5 years, according to a 2017 survey by the U.S. Department of Transportation. While this number is off the average of 11.6 years cited by research firm IHS in 2016, all signs point to America’s fleet – and its population of more than 223 million licensed drivers – growing older.

Pickup trucks, in particular, are staying on for longer. The average pickup was 13.6 years old in 2017 as compared to 11.2 in 2009. Vans jumped to 10.9 years (up 24 percent), SUVs rose to 8.5 years (up 20 percent), and cars’ average age increased to 10.3 years (up 8 percent).

Overall, the aging of the vehicle fleet suggests many households have delayed purchasing a new vehicle or have instead purchased a used vehicle. Lower-income households were most likely to hold on to older cars. On average, those reporting annual incomes of less than $25,000 drove 13-year-old cars, while those with incomes above $100,000 had nine-year-old cars.

Older vehicles, especially those bought new and driven by the Baby Boomer generation, are usually better-taken care of, have fewer miles and are more prone to visit your service department over local repair shops.

The great thing about older vehicles as equity targets is that the owner knows it’s not going to run forever. Plus, with the massive industry shift to SUV’s, you now have an opportunity to offer customers a real change from their current vehicle.

If a customer has chosen to hang on to their current vehicle, then they probably do it for cost saving, or they really like the vehicle.  Either way, getting them physically into a new vehicle with all its features and benefits is the first step to a sale.

Leasing may be an option for these customers. Leasing avoids the sticker shock, and the vehicle trade-in could cover all of the upfront transactional costs.

How PV Mines Older Vehicles

Prospect Vision has the capability to search back 15 years.  This can help the dealer source pre-owned vehicles. Plus, even if the person owned the car for 10 years, we can still show the old loan payment. This historical data can be used to show estimate trade and estimate terms for a newer vehicle based on the previous payment range. Most people are comfortable in a certain payment range.

So, there you go. Yes, customers are keeping their cars longer, but the good news is that they’re keeping the cars they bought from you longer. Sooner than later, they are going to need a new vehicle, and by maintaining diligence in the service lane you’ll be there when they do.

Higher Customer Retention Means Higher Profits!

Customer retention diagram

We’ve all heard it a hundred times: “Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer.” And yet, we still can’t seem to find a few dollars each month to spend on customer relationship marketing.

Customer Retention Figures

Let’s set the stage for the cost of customer acquisition versus customer retention.

  • The cost of customer acquisition versus customer retention could reach as high as 700 percent*
  • Over a 5-year period, customer natural attrition rates could reach as high as 50 percent
  • Businesses which boosted customer retention rates by as little as 5 percent saw increases in their profits ranging from 5 percent to a whopping 95 percent

Benefits of Marketing to Current Customers

Now I think we can all agree there’s some opportunity here to refocus more on our existing customers, rather than chasing down new ones. By simply automating the process of service lane marketing, content marketing, email marketing and social media marketing, you’ll have huge success:

  • Staying in touch with your current customer base
  • Reminding your customers of upcoming events and seasonal tips
  • Maintaining a professional appearance all the way to the inbox
  • Taking advantage of opportunities to reach out to clients you have not talked to in years; you have new makes and new models to offer them
  • Get a few more referrals sent your way

You might also like4 Unique Skills Your Employees Possess that Can Help You Sell More Cars

Making Equity Mining Seamless

This is why service lane marketing is vital. Think about your regular service customers. They are more profitable, more loyal and of greater lifetime value to the dealership. Service lane marketing attracts the richest mix of loyal customers. Many dealers are wasting marketing dollars on disloyal customers who will never stick around long enough to pay back their acquisition investment.

Many dealers have been turned off to equity mining because they may have had inadequate training, didn’t use it or had improper processes in place at the dealership. Others have invested in poor software where the numbers didn’t add up and lost confidence with their staff. Either way, having an easy-to-use software solution installed is essential. Partner up with a vendor that is committed to your success. Being able to serve up customer information that is accessible at a moment’s notice is crucial. Your staff needs to have a seamless process that encourages them to use the software. Once they have bought in, it becomes part of their daily routine.

 

*Source: Frederick Reichheld of Bain & Company.

Trucks and SUVs – An Equity Mining Opportunity

equity mining trucks

There are two kinds of vehicle owners in this country, those that drive a truck (SUVs included) and those that want a truck. In the latest 2018 May sales recap, trucks commanded 62 percent of new vehicle sales. This paradigm change in the market is so complete that Ford will quit producing cars in 2020.

This presents a tremendous opportunity for equity mining. Every “car” in the service lane presents an opportunity. It’s not that people just want trucks – they need trucks.

American culture, both young and old, is increasingly focusing on wellness. Trucks and SUV’s are now crucial for hauling gear. Paddleboards, kayaks, biking, hiking – you name it – are all facilitated by owning a truck. Previously, those who owned a pickup truck also had a car in the driveway. But now, that second vehicle is an SUV.

Equity mining

The desire for trucks and SUVs is an opportunity to create incremental sales, shorten the customer trading cycle, and to establish a significant profit center for a dealership. These opportunities turn into success when equity mining their database and equity mining the service lane are married to the right process and the right tools. Dealerships that set up a full-time department/team and have them focus on equity mining for service lane sales can convert from 2 percent to 4 percent of their total customer pay and warranty repair orders into new vehicle sales. Additionally, they can convert 3–5 percent of the eligible database equity mining contacts into sales monthly.

A little push

Make no mistake about it, a new vehicle purchase is still an impulse item. Very rarely does anyone have to have a new vehicle. A truck or SUV is an impulse buy for very rational reasons: “It’s so handy for chores around the house.” “It provides greater visibility and safety.” “It allows us to haul paddleboards and kayaks.” And so on.

Place an SUV or Crossover equipped with a bike rack, paddleboards, or kayak in the service drive next to the customer lounge entrance. Have artwork on the customer lounge walls featuring trucks, SUV, and crossovers in lifestyle settings. We have always said that two of the most influential factors in sales are social acceptability and a compelling reason to buy. Trucks and SUVs give you both.

Another tactic is to incentivize buying with YETI giveaways. Try displaying these coolers near the truck, and advertise that they come free with vehicle purchase. These coolers are known for their high quality and cool factor – pardon the pun. Leveraging the outdoor and adventure lifestyle associated with the YETI brand will help you connect this image with the purchase of a truck.

You might also like4 Unique Skills Your Employees Possess that Can Help You Sell More Cars

Prepare to win

Create an atmosphere for equity mining to be successful. We have all heard the quote, “The key is not the will to win… everybody has that. It is the will to prepare to win that is important.”

Taking time to stage the service lane can give an extra push to your equity mining and provide a leg up for your salespeople.