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Business Management

List Sense

The Power of Clean Data

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After spending 15-plus years in the motorcycle business, I’m continually amazed by the impact that clean data can have on a dealer’s ability to maximize profitability. Certainly having timely, accurate financial data such as profit and loss statements and balance sheets are critical ingredients required for a dealer principal’s success. That’s non-negotiable.

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However, there’s an entirely different category of data that’s becoming more and more valuable to dealers as the non-forgiving market continues to exploit all weaknesses. It’s your customer database, and just like your financial statements, it takes time, attention and analysis to optimize the value it’s capable of providing.  

In fact, if you were to list all of your dealership’s assets in order of cash value one at a time including facility, inventory, equipment, cash on hand, etc., most would overlook the customer list, which is likely your single most valuable asset.

On more than one occasion during 20 group meetings, I’ve been through the exercise of adding up fixed expenses, plus payroll and floor plan and then dividing that total by the number of door swings or traffic log entries to determine the true cost to get a customer in the door. It’s a staggering figure, usually in excess of $150 per customer!

With only 3 percent of households owning a motorcycle, targeting your marketing efforts to reach that small of a niche without wasting a boatload of money is no easy task. Once you’ve cut through the clutter to identify those 3 percenters, you must capture their information and drop them into your marketing funnel. Furthermore, if you look at the average lifetime customer value (LCV) for your dealership, you’ll see that each customer you have is worth a sizeable amount over the total time period in which they do business with you. This is largely in part to the sizeable average transaction amount for powersports dealers.

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This all feeds into why it’s so important to keep quality, accurate customer records. It’s no secret how customer data is captured. In many cases, it’s done by a staff member with mediocre typing skills who manually enters the data with zero understanding of its importance. Misspellings and typos are easily made and rarely, if ever, corrected.  

Not only is bogus information entered into your DMS, but there are other complexities with keeping accurate customer records:  Customers move out of your market area; customers  purchase a new unit and the F&I manager enters their official driver’s license name, which differs from the name provided at the parts counter last year, which is already in the system, resulting in the customer receiving duplicate correspondence from the dealer. In the event of direct mail, this is an excessive and unnecessary expense to the dealer.

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To further complicate matters, you have multiple systems capturing data in addition to your DMS, including but not limited to your website and CRM, that all need to be de-duped and put into your marketing funnel. Dizzy yet?

Like all dealership best practices, implementing customer data hygiene systems at a high level is no easy task, yet the benefits can be extremely lucrative. With a clean database, you can segment your list to identify specific types of customers and target those customers with extremely relevant offers.

For example, customers who purchased 18 to 24 months ago likely have equity in their vehicles and will be most receptive to a trade event or vehicle upgrade campaign. Your top 250 parts and accessories customers by gross margin could receive a special P&A savings voucher. Warranty expiration campaigns and service reminder campaigns are both possible with advanced list segmentation and can have a very high ROI due to the extremely targeted nature of the message.

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In addition to de-duplication, other customer data hygiene best practices include completing incomplete data and running your list through NCOA (national change of address). In most cases, we’ve found that dealers will have well over 20 percent minimal improvement in their data from the initial extraction after performing a thorough data cleansing. Unfortunately, because the larger the volume of mailer the larger the profit of the printing house, many printers don’t educate their customers on how and why data cleansing is well worth the investment prior to doing a direct mail campaign.

Whether it’s managing your marketing or your P&L, the use of timely accurate data allows you to make proactive logical informed decisions, which lead to more profits, rather than reactive emotional decisions, which lead to more heartaches.

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