AutoNation solves customer information gridlock |
 |
By John Gaffney
21 Oct 2004 | Peppers & Rogers Group, special to SearchCRM.com |
|
|
This year only one automotive dealership cracked the Fortune 100. AutoNation, parked at the number 97 spot, owns and operates 287 dealerships, representing 373 new vehicle franchises across 18 states. With revenues of $19 billion, it outsells all other automotive retailers in the U.S. With customer data at a premium, the chain has a supercharged customer database on its hands.
But where there's data there's a challenge. Like many other companies, AutoNation found itself working hard to consolidate the customer lists of its dealerships. And when that was done, Scott Zientarski, director of database and direct marketing, knew the firm needed to do something to identify and differentiate the best customers within that mass of names, and then make sure they stayed with AutoNation for the long term.
Zientarski had been around the track a few times when it comes to data. After a career at Capital One and other major financial services firms, he was familiar with the twists and turns of customer acquisition and retention. The size and opportunity inherent in the automotive business set the stage for a focus on customer intelligence at AutoNation.
"For the automotive business some people would say the customer is any carbon-based life form aged 18 to 75," he says. "Some would say there's not much opportunity to differentiate customers. However, I believe the exact opposite to be true."
In fact Zientarski goes so far as to say that creating customer portfolios is the "silver bullet" for strategy in the automotive business. The company used its own data analytics capability to start the process earlier this year. It also contracted with DME, a marketing firm that specializes in direct mail developed with one-to-one marketing principles. DME has invested heavily in digital printing technology developed by Xerox. Xerox's iGen printer is designed to allow a company to separate its customers into portfolios and then kick out direct mail pieces that address specific portfolios' needs and value.
AutoNation used to send out the same direct mail reminder to every opt-in customer regardless of where that customer was in the purchase or service cycle. So the customer who needed new tires received the same message as the customer who needed an oil change.
Change to focus on needs, not products
The new strategy and technology changed things across AutoNation's sales and service efforts. Instead of mass-marketing to everyone with the same offer, AutoNation now separates its customers into 62 separate groups, and prints only the messages that are relevant to each one. Zientarski says customers who receive relevant communications feel connected, and therefore aren't just looking for the best price.
"If you can circumvent the sales cycle and get people into the market sooner, they are more profitable customers," he said.
The company has also found that a commitment to individual customers in the service sector has paid dividends. Even though sales are down, service revenue chain-wide is up 4.3%, a metric that can be attributed to return customers. Zientarski says that the service department is able to learn how people care for their car, therefore offering the best service opportunities for each customer.
At AutoNation measurement capabilities focus on building long-term customers. Retention, in this case, translates into a customer that continues to return for service or a customer who returns for a new vehicle lease or purchase. So far this year the retention rate has gone from 10.3%in early 2004 to 16.7%.
AutoNation is just scratching the surface of its "silver bullet" customer-based strategy. Future plans include gaining deeper customer insight that may help shape the way it interacts with customers. The ultimate goal for AutoNation is to provide the right types of products and services for its customers, instead of just mining its database for customers to fit its products, Zientarski notes.
Copyright © 2004 Carlson Marketing Group, Inc. All rights reserved.
Peppers & Rogers Group is a Carlson Marketing Group Company.
|
