Just as the business of mining revolves around digging through large amounts of material, so too does the business of vehicle sales. The most effective companies can efficiently sort through the material to find hidden gems.
For dealers, data is the material and hot leads are the hidden gems. Having the ability to quickly identify opportunities buried in the overwhelming piles of data is what separates the best-performing dealers from the average ones.
One key area of focus for top dealers is strategic inventory management, and its downstream result: profitability. A strong data-mining platform that sifts through the data for actionable knowledge provides a good start.
Identify Core Vehicles
The key to maintaining front-end gross is to evaluate historic and market data at the point of appraisal. Your priority should be identifying “core” vehicles: the models that sell fastest, most consistently, and most profitably at your dealership. These vehicles are prime remarketing opportunities, ensuring quick and profitable sales and reducing the overall risk of wholesale losses.
A top-performing dealership’s inventory is composed of 40 percent to 50 percent “core” vehicles. An average dealership’s inventory, however, hovers around 29 percent and drops lower when accepting non-core trade-ins in exchange for closing new car sales.
Sellers too often commit to a gut-driven, one-size-fits-all approach and stock only their store’s brand or change their focus to vehicles that have done well in the past in the hope that past sales equal future profitability.
A fully integrated inventory management platform will help to counteract these gut feelings and allow you to easily identify core vehicles based on data already contained in your CRM or DMS. A fact-based approach analyzes purchase behaviors not only at your store, but also across brands, group partners, and geographic regions.
Build Your Core
Once core vehicles are identified, a top dealer will turn attention to vehicle acquisition strategies. One overlooked opportunity for acquiring inventory is, in effect, an internal auction lane. Rather than going to auctions, consider using current customers as a means of identifying prime vehicles for remarketing opportunities.
Using our data-mining technology, Revenue Radar, dealerships are able to identify customers who own or lease a vehicle that matches core inventory needs. Revenue Radar provides salespeople with the means to let customers know that their current vehicles are desirable and would be excellent candidates for a trade-in on a new vehicle.
We have found that this method of inventory identification and acquisition is a win-win-win: the dealership proactively gets to its customers before the competition, the customer gets an opportunity to trade in and trade up, and the dealer acquires a core vehicle for less than at auction. Revenue Radar’s data-mining capabilities present the opportunity to put high-demand used vehicles back on the pre-owned lot.
Technology = Profitability
To acquire a large supply of core vehicles to meet consumer demand, successful dealerships employ a mix of technologies to aid in inventory prediction and acquisition.
Revenue Radar identifies acquisition opportunities through both sales and service, with 11 radars to help dig through all of the available data. These automated pings bring information about new revenue opportunities to the attention of dealership personnel, who can then take appropriate action to notify customers.
Increasing the percent of core vehicles available in your inventory results in faster turns, higher front-end gross, and higher close ratios. Revenue Radar’s ability to increase sales, expand pre-owned inventory, and improve customer retention in both the sales and service departments is a key driver to profitability. It makes the acquisition of those vehicles easier and more affordable.
Instead of exerting tremendous effort digging through mountains of data, use tools make it easy while identifying significant revenue opportunities. Those gems may be buried, but they don’t have to remain hidden if you take advantage of Revenue Radar.
To see how Revenue Radar can help your dealership, visit us at http://dealersocket.com/boost-your-bottom-line.
Data mining uses statistical techniques and advanced analytic tools to reveal trends, patterns, and relationships within a DMS.EQUITY MINING
First Pencil: 4 Keys to Selling Millennial Car Buyers
DealerSocket's User Summit featured one of the leading minds in generational research, and he provided the goods on what millennial buyers want when they visit your dealership.
Mitigate Credit Compliance Risk Without Adding Staff
SocketCredit helps navigate the treacherous waters of credit compliance.
Tracking the Digital Retailing Debate
Carvana's debut on Automotive News' Top 100 used-car sales list squashed a major dealer objection to digital retailing. The question is, where do we go from here?
Connecting The Dots, Part 1: Linking the Digital Experience to Real Life
Linking the Digital Experience to Real Life
Learn More About DealerSocket's Suite of Dealership Software
DealerSocket offers a suite of products that can help you get the most out of your dealership.