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Guest opinion: why is car manufacturer data so inconsistent?

Terry Hogan, managing director, Motoring.co.uk

The recent Data Hygiene Report research which revealed that car manufacturers are the fifth worst sector at keeping its customer data up to date, is probably no surprise to the industry. 

Clean and accurate customer data remains a problem for manufacturers and dealers, despite major investment in DMS and CRM platforms.  So why is the automotive sector falling behind retailers, charities, financial services and travel and leisure companies?

One major issue is that customer data is often held in non-integrated systems by manufacturers and dealers.

According to a report by management consultancy Arthur D. Little (ADL)* manufacturers and dealers need to align their marketing and CRM processes to speak with ‘one voice’, and invest in ‘connected after sales’ to generate revenue beyond the initial car purchase.  (*Source: Spinning the Wheel Online” study, 2014: https://www.am-online.com/news/2014/1/29/manufacturers-and-dealers-urged-to-align-their-marketing-and-crm/34314/)

Our research* reveals many manufacturers hold only a small amount of current data on customers with vehicles aged more than three years old and they are losing customers when a vehicle changes hands from new.  (*Source: Motoring.co.uk Manufacturer study 2015).

The 12 month study in conjunction with selected manufacturers, involved them de-duping Motoring.co.uk’s data versus their own data. 

The results showed that typically manufacturers match between 19%-21% of the customer data records held by Motoring.co.uk, which currently consists of two million opted in motorists. 

The vast majority of manufacturer data is on the first vehicle owner. 

When the vehicle changes hands, or comes out of the manufacturer warranty, it often becomes an ‘orphan car’. 

This is a major problem for manufacturers in their efforts to bring consumers back into their showrooms and drive up aftersales revenue for franchised dealers.

Today, many cars disappear off the manufacturer and dealer radar once they get to three years old and more.

Consumers part exchange them at another dealer or increasingly sell them directly to car buying sites, such as webuyanycar.com, removing the link between the part exchange and the purchase of a new car. 

According to Trend Tracker, the aftersales heartland for franchised dealers has declined by 20% in the past decade. 

The data shows the 0-4-year car parc was at 10 million units in 2003, but it had declined to eight million by 2014.

This is combined with the increased reliability of modern cars, longer service intervals, and the fact that cars’ annual average mileage has dropped to about 8,000 miles from almost 10,000 miles in 15 years.

This has led to pressure on franchised dealers’ aftersales revenue and profits. The defection to the independent sector over the last 10 years is partly because of the age of cars, but also a lack of focus on the retention process.

Could this erosion of franchised dealers’ aftersales revenue have been halted if clean and accurate customer data was available? 

Anyone looking for evidence to prove the business case for cleaning up their marketing data need look no further than a study by Demand Metric, a global marketing research and advisory firm*, which claims firms experiencing revenue growth are three times more likely to have clean data than those who are struggling.

Although the study stops short in claiming excellent data hygiene results in higher revenues, it maintains that ‘clean data’ contributes to revenue growth while dirty data inhibits growth.

Large dealer groups and OEMs are beginning to put data as a more central pillar in their strategies, but the share of data with OEM partners is disjointed.

Jerry Rackley, chief analyst said most organisations endure the pain associated with dirty data, but few do anything to alleviate the pain; many simply accept it as a fact.

The report revealed that the majority of the business leaders do not appear to treat data quality as a matter of strategic importance; at least not yet. 

Although 63% of survey respondents describe their sales and marketing data as dirty, more than half of them (55%) indicate that their companies have no formal data-cleaning process in place.

Asked to identify why their company lacks a formal data-cleansing process, 49% said data hygiene is not a priority, 37% cited a lack of data-cleansing skills and 21% bemoaned a lack of knowledge about data-cleansing options.  Only 11% of respondents indicated that their companies viewed data-cleansing as being too expensive. (*Source: Demand Metric, a global marketing research and advisory firm, study 2013. http://www.decisionmarketing.co.uk/news/dirty-data-holding-back-growth)

For manufacturers, the ability to engage with consumers over a long period is important when it comes to retention and loyalty. 

Pushing out key messages to consumers, via display advertising and social alerts, keeps manufacturer brands at the forefront of their minds.

It is clear that data matters and if it is old and out dated, it can make building customer loyalty much tougher. 

Our research earlier in the year found that that the aftersales experience has a direct impact on the proportion of customers who return to the same brand again.

If dealers win the service business, they are much more likely to win the loyalty of the consumer.

To do this, dealers need  up-to-date customer data, so they can prompt customers to return to the dealership.  Without this data, much of dealers’ efforts to build customer loyalty are wasted.

An opportunity to respond to the data challenge within the market led to the creation of MyMotoring.co.uk, where consumers can manage their whole motoring lifecycle in one place, including setting reminders for things like service and MOT. This sits above the brand and is indeed agnostic of it.

Consumers often have multiple cars in their household and need help with the day-to-day management of them all.

In today’s world, it’s all about offering value, convenience and transparency. A recent report* found that that technology-driven convenience is ‘fundamental’ for UK shoppers and can significantly improve loyalty.

Customers can easily become frustrated by poor functionality and commerce experiences that don’t work, especially when it comes to access and availability. (*Source: http://internetretailing.net/2015/05/what-customers-want-two-studies-reveal-priorities-from-convenience-to-wi-fi)

MyMotoring.co.uk’s current manufacturer and dealer partners are actively informed when consumers need to service or MOT their car and can tailor messaging accordingly. Its all-new finance and settlement calculator will be launched in July, enhancing our valuation services and giving greater transparency.

This tool will help consumers predict when they can change vehicle, allow partners to then engage with in-market consumers and provide a shopping-like basket of cars accordingly through the intelligence provided.  Dealers are also alerted when consumers are looking to sell a car that matches their stock profile. 

Data is simply the fuel that allows this relationship to happen. If you put bad fuel in a car, it will misfire. The same can happen to any business if their data is not cleansed regularly.

Databases naturally degrade by about 22.5% every year*, so data cleansing is imperative to maintaining customer loyalty, retention and ultimately sales. (*Source: http://www.hubspot.com/database-decay

Author: Terry Hogan (pictured), managing director Motoring.co.uk

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