||How Dealers Speed Up Customers' Buying Cycle
As the leasing business strengthens, more dealers are contacting customers with offers to get out of leases and loans early -- before the customers have begun shopping for their next vehicles.
New vehicles with attractive payment options -- often no more and sometimes less than the customers are paying -- are being offered to retail customers with equity in their vehicles and to lease customers with good payment histories.
Dealers who use factory and third-party programs to more efficiently identify and reach out to these customers are increasing sales and acquiring better used-vehicle inventory.
Curry Honda of Yorktown Heights, N.Y., sold about 200 vehicles last year to customers it courted through a system from Prospect Vision of Hickory, N.C. The system identifies dealership customers with equity in their vehicles and generates letters inviting them to explore getting a new vehicle at a lower payment or with money back. The dealership, which sold 2,700 new and used vehicles in 2010, started using the system nearly two years ago.
Inviting customers back before they're ready to shop for their next vehicle is a plus, says Mark Finch, Curry Honda's general sales manager. "It reconnects them with you. If you wait, they look at everything."
Fewer than half of customers who bought or leased vehicles last year chose their previous brand and of the more than 4.5 million new-vehicle buyers who returned to the market in 2009, just 30 percent were loyal to a dealer, according to R.L. Polk & Co.
Service customers, too
Curry Honda also uses the system to contact service customers, a huge potential sales market because there are about nine Honda dealers within 20 miles of the store, Finch says.
Prospect Vision systems are in about 200 dealerships nationwide, says Allen Levenson, vice president of sales and marketing. The system costs $500 to $800 a month depending on the size of a store and sales volume, plus less than $1 for each piece of customized mail generated.
Lehigh Valley Acura and Lehigh Valley Honda, part of the Vinart family of dealerships near Allentown, Pa., have used Xtream Service software since June 2010 to identify lease and finance customers eligible to trade up into similar new vehicles while keeping their payments the same or less with no money down.
"It's an apples-to-apples comparison,' says Andy Wright, vice president at the Vinart dealerships. He attributes an average 15 percent of the stores' new-car sales to Xtream, from HCD Software of Charlotte, N.C. Vinart's business development center sends marketing pieces created using Xtream templates.
Other products that dealers use to identify customers eligible to exit their leases or loans early include DealActivator from Intelligent Marketing Systems of Tampa, Fla. More than 400 dealers subscribe to DealActivator, which creates data lists and conducts first-class mail, e-mail and phone campaigns. The average amount of time that lease and retail customers have their vehicles before buying a new vehicle through DealActivator is just 31 months, says Alan Andreu, Intelligent Marketing Systems founder and general manager. Most dealers also see DealActivator as a way to boost used-vehicle inventory, he adds.
GoldDigger 2.0 software from eLEAD CRM of Valdosta, Ga., has about 3,000 dealer users, and 90 percent of them choose to have eLEAD's call center contact customers, says eLEAD owner Hugh Hathcock.
Equity Calculator, an add-on to Reynolds & Reynolds' ERA dealership management system, also helps dealers identify customers with enough equity to buy again. It has led to an overall 5 to 6 percent increase in vehicles sold, and those who purchase the product tend to stick with it, the company says.
In the early 2000s, Fletcher Jones Motorcars, a Newport Beach, Calif., Mercedes-Benz store, was so impressed by a tool a sales consultant was developing to identify customers who could exit leases early that it prepaid monthly fees for a few years to help launch the business, says store general manager Garth Blumenthal. The store now uses an expanded version of the tool, AutoAlert, with retail customers, too. Blumenthal says AutoAlert, whose service and mileage alert functions also identify potential buyers, helps his store sell 30 to 50 more cars a month.
Newport Lexus of Newport Beach, Calif., has used AutoAlert for about a year to identify customers with equity in their vehicles. "It's extremely effective," says Allen Moznett, the store's general manager.
Not on the screen
"Ten to twelve percent of existing clients are not on salespeople's radar but are in a position to drive off in new vehicles and keep the payments the same," says Boyd Warner, CEO of AutoAlert Inc. of Laguna Hills, Calif. AutoAlert costs $2,500 a month, with discounts for multiple rooftops. AutoAlert is used by nearly 600 dealerships, says Jeff Cotton, the company's sales director and the former Fletcher Jones Motorcars sales consultant who developed the product.
Autobahn BMW in Fort Worth, Texas, participates in BMW's Loan Loyalty program, which rolled out to U.S. BMW stores in September and targets customers with equity in their vehicles. Loan Loyalty notifies BMW dealers about their customers who are in good standing and whose vehicles' market value is more than what is owed. Dealers let those customers know which BMW vehicles they can buy for nearly the same monthly payment or in a range chosen by the dealer.
Autobahn BMW has captured an extra 4 percent in sales through this lead program, says General Manager Aaron Windes. He says he hopes to use the program with used-vehicle customers by the end of the quarter.
Shaun Bugbee, vice president of sales and marketing for BMW Group Financial Services, says that over the past four months the Loan Loyalty program has converted more than 1,700 new-car sales for retail customers. About 70 percent of converted sales are occurring between months 22 and 34 (versus a normal trade cycle of 30 to 36 months) thanks to the program, follow-up, and the fact that current used-vehicle values are at a high point, he says.
Windes says the program has provided Autobahn BMW with some good leads. The store recently got a 325i owner nearing the end of her warranty into a newer model with more equipment for virtually the same price -- and in the process sold a new vehicle to her fiance, who was also an existing customer.
Says Windes: "We try to make customers aware of the opportunities available to them."
(Source: Automotive News, 06/01/11)
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