By Grant Dunning

Last year, the media and the industry focused on the impact that dealer consolidation has had on the retail side of the car business. There is no question that Republic, CarMax, and others like them have caused quite a stir and no one is quite sure what the final outcome will be. But dealer consolidation is only one issue among many that impacts the car business today and is shaping the future.

Technology and the impact on the auto industry is another significant issue. In addition to the emergence of new media such as the internet, recent evidence suggests that numerous successful dealerships are using technology assisted database marketing to grow their business. The advancements in technology have made it possible for any business to implement an effective database and relationship marketing system. The speed of change in technology that we are currently experiencing is being categorized as a technology revolution.

In addition to the rapid changes in technology we have all witnessed the changes in consumer behavior. Customers are armed with information that enables them to be more critical and demanding. In order to remain competitive you need the right knowledge and tools to react quickly and efficiently to changing customer needs. The winners are going to be the companies that can incorporate technology to help them market effectively to a targeted audience with a personalized approach.

Many retailers are integrating database marketing with relationship management. We can define “database marketing” simply as the technology involved in creating a database, or file, with information about your customers or prospects. “Relationship management” is the process of using the database information to communicate and market to customers on a personal and customized approach.

Gathering the information can be a relatively straightforward process. Over the years our business has evolved into a relationship marketing company. Many of our clients use our customer retention systems for gathering information, or data, about their customers from which reports are created to help them with marketing decisions. Clients can survey 100% of their customers for their level of satisfaction, identify the media source that drew them to the dealership, and secure referrals of other prospects. The clients can also maintain regular contact with customers to encourage service retention and repeat business loyalty.

Most dealers recognize the lifetime value of their most important customers. These key customers are measured by the retention rate in terms of service and re-purchase loyalty, and by their spending rate in terms of how much they spend in the service and parts department.

The challenge is to proactively identify your most valuable customers and foster a healthy lasting relationship. It makes sense to develop products and services that keep your customers coming back to you instead of the Jiffy Lube down the street or buying their next car form your competitor across town. Developing a targeted marketing effort at these VIP customers becomes a rather simple process once you know who they are, how they buy, and what they like.

Database marketing has its application in mass marketing as well. Knowing where your customers come from and what brought them to you will help you determine how to spend your ad dollars most effectively. And that should bring you even more customers from your prime audience.

I encourage everyone to capitalize on the advancements in technology with “database marketing” and “relationship management”. Effectively applied to your business, they will help you increase your knowledge about your customers, make your marketing effort measurable, improve your planning, increase profitability, give you a competitive edge, and help you survive and succeed during the technology revolution of the future.

Grant Dunning is President of the OCT Group, a marketing company that has been helping dealerships in all 50 states and Canada build relationships One Customer at a Time since 1986.