The process of selling a car can be as daunting for the auto industry as is the buying process for customers. The sales process is complex and optimizing decisions along the different steps from demand-creation to deal negotiation is both a challenge and an opportunity for all stakeholders involved.
US auto companies invest billions of dollars each year creating demand for vehicles and influencing purchase decisions. Manufacturers, dealers and finance companies collectively invest an estimated $8,000 to 9,000 per vehicle sold on advertising, discounts and rebates and discounted finance charges alone.
With an average investment of $8,500 per vehicle and approximately 17 million vehicles sold in the US annually, the auto industry’s total investment in demand creation could be approaching $150 billion each year.
Considering that the average sticker price of a new automobile is $33,500, the investment in sales support alone accounts for over one-quarter of the potential selling price –not including other sales costs such as dealer margins or sales commissions.
While the auto industry leverages analytics to help improve marketing effectiveness, these efforts are still highly fragmented and largely focused on marketing variables rather than maximizing profits for stakeholders.
An integrated analytics framework can provide automotive manufacturers, dealers and finance companies with significant economic benefits and improve the customer experience. In an industry with high sales volume, narrow profit margins and numerous opportunities to adjust the selling price or the price of the loan for each transaction, an integrated customer analytics framework enables them to target more relevant purchase and incentive offers to each consumer.
The reward for improved integration of customer analytics is great. Auto companies could maintain the same volume, while shaving up to $1,000 per vehicle off their investments in sales support. For a major US auto and finance company, improved integration of analytics could increase yield by as much as $2 billion annually.
