Playing the Long Game: Revitalize Your Digital Marketing by Spending on the Right Customers

Playing the Long Game: Revitalize Your Digital Marketing by Spending on the Right Customers

1. My name is Kristen Judd2. I'm the CEO and Co-founder of 3 Birds Marketing.3. I'm addicted to data.

A DIFFERENT WAY TO LOOK AT YOUR DATA

A new way to think about and communicate with your

customers and prospects

A better way to spend your marketing dollars

Your customers are not a vehicle.

Your customers are not a repair order.

Your customers are not an accessory.

Your customers are not an accessory.

Your customers are not an extended warranty.

Your customers are not an extended warranty.

Not all customers are the same.

Your customers are people with different interests,

attributes, likes and dislikes.

Too many dealers look at their customersas their most recent transaction or treat

themlike they’re all the same.

Why?

Historically dealership data has

been structured transactionally…

…making it difficult to think in terms of customer lifetime

value.

Dealers have financial and non-financial data, but difficulty joining it all together

to make decisions

Dealers know surprisingly littleabout their customers

Emphasis on short term revenue goals

This Month

Emphasis on short term revenue goals

This Week

Emphasis on short term revenue goals

This Weekend

zz

z

Emphasis on short term revenue goals

TODAY !!!!

zz

Makes it hard to get off the hamster wheel.

Are you left to trust your gut about whether you're investing in the right

things ?How do you know if you're tripping over

dollars to get to dimes?

Understand how much customers contribute to my bottom line

Playing the Long Game with Digital Marketing

3 Primary Learnings

1

Identify unique behavior patterns of high value customers

Playing the Long Game with Digital Marketing

3 Primary Learnings

2

Create, acquire and retain more high value customers with engaging communications and digital marketing

Playing the Long Game with Digital Marketing

3 Primary Learnings

3

20%of your customers

2/3of your dealership revenue

The top

20%of customers

Have an annual spend of

$2,090

66%of your dealership revenue

Have an annual spend of only

$258The other

80%of customers

Taking it even further

Study Overview:

Representative set of import and domestic dealerships

All customers included had at least one vehicle purchase

Merged various data sources to create full profile of each customer

Evaluated purchase and digital activity over 5-year period

Study Overview

MARKETINGCAMPAIGNS

DMSCRM

SOCIAL

3RD PARTYDATA

Understanding LTV

Lifetime Value (Typical Dealer Customer)

Average Gross$3,023

Typical Customer

3.1 years2.8 service visits1.2 vehicle purchases

Sales73%

Service27%

LTV (Low Value and High Value Customers)

Low Value Customers

3.1 years1.1 service visits1 vehicle purchase

High Value Customers

3.1 years5.1 service visits1.6 vehicle purchase

Average Gross

$1,586Average Gross

$5,599

VS

Lifetime Value is normally distributed

Lifetime Value Relative to Mean-2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000-2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000-2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000

Above Average vs. Below Average Customers

Average ValueBelow Average Above Average

Above Average vs. Below Average Customers

Above Average Customers

Average ValueBelow Average Above Average

Highest Value vs. Lowest Value Customers

Average ValueBelow Average Above Average

Lowest ValueCustomers

Highest ValueCustomers

Sales and Service TraitsCustomers have propensities based on sales, service

characteristics

Average Value

Sales and Service TraitsCustomers have propensities based on sales, service

characteristics

Average Value

Lease (89%)

Finance (114%)

Sales and Service TraitsCustomers have propensities based on sales, service

characteristics

Average Value

New Vehicle (84%)

Used Vehicle (115%)Lease (89%)

Finance (114%)

Sales and Service TraitsCustomers have propensities based on sales, service

characteristics

Average Value

New Vehicle (84%)

Used Vehicle (115%)

0-15 Miles (105%)

21-50 Miles (86%) Lease (89%)

Finance (114%)

Sales and Service TraitsCustomers have propensities based on sales, service

characteristics

Average Value

No Svc Visits (83%)

6 Svc Visits over lifetime (122%)

New Vehicle (84%)

Used Vehicle (115%)

0-15 Miles (105%)

21-50 Miles (86%) Lease (89%)

Finance (114%)

Highest Value vs. Lowest Value Customers

Average ValueBelow Average Above Average

Lowest ValueCustomers

Highest ValueCustomers

Buy vehicles with cash

No service visits

Make up only 10% of total

revenue generated

More than 5 service visits per

year

34% higher email

penetration and engagement

Live within 0-5 miles of the

store

How Behavior Patterns Translate into Activity

Below Avg Above Avg.

2.13

3.81 +79%

Above Average CustomersHave 79% More Service Visits

Highest Value CustomersHave 803% More Service Visits

803%Increase

0.91

8.22

Highest ValueLowest Value

Above Average CustomersHave 26% More Vehicle Purchases

Below Avg Above Avg.

1.07 1.35 +26%

116%Increase

1.01

2.18

Highest ValueLowest Value

Highest Value CustomersHave 116% More Vehicle Purchases

Below Avg Above Avg.

17.1%

18.4%

Above Average CustomersEngage With Your Email Communications

More+8%

27%Increase8%

35%

Highest ValueLowest Value

Highest Value CustomersEngage With Your Email Communications

WAY More

How to Invest Marketing Dollars

to Create, Engage and Retain High Value

Customers

Ensure segments have meaningful differences in value potential

$ $$ $$$ $$$$

Step 1 Differentiate on Value

Focus on how customers act after you segment them not before!

Zip CodeVehicle TypeModel Year

IncomeGender

STATIC

Time Since Last VisitFrequency of VisitsAvg. Transaction AmountAppointments

HISTORICAL

Likely to Get an Oil ChangeLikely to Engage via EmailLikely to Buy a VehicleLikely to Visit WebsiteLikes and dislikes

PREDICTIVE/ DEMONSTRATED

INTEREST

Step 2 Look Forward

Step 3 Incorporate Digital Perspective

What Segmentation Could Look Like

Data is from representation sample of over 100K customers

Segmentation DriversLikely to purchase

Likely to engage

Sample Approach

Elite

PotentialAverageAt Risk

Disaffected

Highest Value Customers

Lowest Value Customers

Data is from representation sample of over 100K customers

92xservice purchase rate

Post Segmentation Results

Disaffected

At Risk

Average

Potential

Elite

1%

8%

14%

27%

56%

6-Month Service Rate

Predictive Power

Data is from representation sample of over 100K customers

Disaffected

At Risk

Average

Potential

Elite

0.1%

0.2%

11.2%

18.6%

23.9%

Digital Engagement Rate

290xengagement rate

Digitally Relevant

Post Segmentation Results

Data is from representation sample of over 100K customers

Post Segmentation Results

Disaffected

At Risk

Average

Potential

Elite

$45

$57

$219

$326

$771

6-Month Revenue

Value DrivenData is from representation sample of over 100K customers

16xHigher revenue

Post Segmentation Results

Disaffected

At Risk

Average

Potential

Elite

2%

6%

28%

35%

29%

Expected Revenue Contribution

92% of Future Value Potential

INVEST MORE

Strategy Shift Your Dollars

Predicted Revenue in Next 6 Months

Taking Action

Tailor messaging to current automotive needs

and demonstrated interest to createbetter consumer experiences

Current Automotive Need Path

61

Higher value customers identified as likely having a current automotive need

New Incentives Follow-Up Trade Tool

62

Current automotive need

New Incentives Follow-Up Trade Tool

63

Higher value customers identified as likely having a current automotive need

New Incentives Follow-Up Trade Tool

64

Current automotive need

New Incentives Follow-Up Trade Tool

65

Higher value customers identified as likely having a current automotive need

New Incentives Follow-Up Trade Tool

66

Current automotive need

New Incentives Follow-Up Trade Tool

67

Move through the stages providing relevance and friction-free experiences

$40,851 $64,372

Tailor Messaging to Demonstrated Interests

Strategy Customize the Experience to Demonstrated Interests

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Strategy Customize the Experience to Demonstrated Interests

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Strategy 3 Customize the Experience

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Strategy Customize the Experience to Demonstrated Interests

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Strategy Customize the Experience to Demonstrated Interests

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Needs a service loaner

Enjoys the latest tech

Worried about safety

Obsessed with saving

time

Repurchase prior to end of finance

term

Strategy 3 Customize the Experience

Enrich their online experience

Understand a customer’s preferences and demonstrated interest

Benefits Engage, Engage, Engage

Benefits of Non-Promotional Content

+63% Clicks+61% Service Visits

+28% Vehicle Purchases

Based on approximately 500K contacts from sample of campaigns from dealers

New ModelsStore EventsVehicle EducationLifestyle

Examples ofNon-Promotional Content

Segment your customers into value segments

Getting Started with a Simple Approach

1

Invest more in your high value and high potential segments

Getting Started with a Simple Approach

2

Use LTV segmentation and predictive modeling totailor highly relevant messaging

Getting Started with a Simple Approach

3

Leverage high return digital channels to track customer intent,

fuel predictive models and develop additional data

Getting Started with a Simple Approach

4

THANK YOU!Kristen Juddwww.3birdsmarketing.comKristen@3birdsmarketing.com

415-235-3902 | @kwjudd

Booth #332