We discussed the auto industry’s ongoing pain points in a previous blog post and offered suggestions to combat them. We’re continuing the conversation today with expert guidance from the ReVo team.
You’ll hear from both Head of Client Services Natalia Escallon and lead Data Analyst Nicole Cannizzaro. They’ll offer guidance on how your business can move forward in our current market and beyond.
Our core message is this: rough waters don’t mean you can’t succeed, but neither should we be complacent when we have fair winds. Always be ready to adapt your strategy — there’s no accounting for the future, even if we can use the past as a guidepost.
Working Around Roadblocks
The pandemic — and everything that followed — probably counts as one of the largest roadblocks to success any industry has ever seen. Supply chains, production times, product availability, pricing. You name it, and COVID got in the way.
For Natalia, finding success in such an environment came down to one word. “Over the last year and a half, one of the most important words for our industry was ‘pivot.’ When production shut down in the spring of 2020, our industry sought a new direction to find success when selling picked up again. ReVo did the same, developing a product offering specific to the uncertain market.”
All the efforts to pivot and adapt bore fruit: today, automotive sales are at record highs. However, the opposite is true for supply. Thanks to the ongoing microchip shortage, that’s likely to be the case for at least another year. We’re coming out from one crisis only to face a new one.
Our situation continues to shift, so continue to pivot. “Look to buy cars within your current customer base. We’re in a pre-owned-focused market right now, and supply is tight. One way to tackle our current high-price, low-stock environment is to leverage your service drive. Take time to dig into your portfolio to pull customers out of the garage and onto the sales floor early.”
Remember that you don’t have to make a sale when you take in a pre-owned vehicle. Refreshing your stock and putting cars on your lot might be a better strategy right now than ensuring every customer leaves with something new. It ultimately depends on where your business sits.
“Pivot to your current need and guide sales staff to expand their horizons,” says Natalia. “Ask yourself and your team: Where are you right now? What’s your position? What can you leverage? Has your business developed new strengths in the past eighteen months you can put to use now? Your answers will help signpost where you go tomorrow while defining how you work today.”
If you’re unsure of how to proceed, try digging deeper into your DMS. Here’s Nicole Cannizzaro on the matter. “Your DMS is more valuable than any conquest list you can buy. The data you have comes from customers who know you and your business. A conquest list can be helpful, certainly, but it shouldn’t be the first resource you seek out.
“By closely examining your existing data, you can create a competitive advantage through targeted marketing campaigns, whether direct mail, email, or otherwise. How often or how deeply you drill into that data depends on many factors but primarily its size. Overtaxing your DMS will do more harm than good. Don’t be afraid to ease off the gas and let it replenish from time to time.”
Nicole also notes that a customer’s mindset can drastically change from month to month. Maybe their car broke down; maybe they had an accident that forced them to push more toward a purchase than a trade. Alternatively, there could have been an emergency in the family that demanded they not get the new car they wanted.
No one can predict the future, but you should still use the past as a learning tool.
It might be tempting to try and think ahead to the next year or two and alter strategy to be ready for whatever comes next. “Instead,” says Natalia, “prioritize tools and solutions that supplement your core strategy. Don’t focus on any one scenario — find ways to bolster sales across the board. Dig into your toolbox and see if it’s missing anything, like previous conquest customers who’ve fallen out of the list or an over-reliance on a CRM.
You can use our industry’s rapid recovery as a guidepost because those efforts led to something no one expected: an automotive market paralyzed by the pandemic came roaring back.”
That same recovery bears out in the data, as well. Nicole says ReVo event success rates are back at pre-pandemic levels for dealerships with the inventory to run events with us. Cox Automotive research shows the wider industry is in a similar position, with Q2 2021 sales up a full 50% over last year. Cox’s analysis also notes the market has all but fully recovered from the slump of 2020.
Natalia does have one word of caution for the future, though don’t take it as a reason to temper your plans in the present. “By Q1 or Q2 of 2022, we might see some normalization as OEMs catch up to our current outsized demand. Expect things to be more difficult once that happens, as the strong business we’re seeing now isn’t likely to repeat itself.”
Be aware that the semiconductor shortage could last until 2023, meaning a full return to normalcy is probably some time away. In that time, we can continue to build on our new normal, pivoting and adjusting to changes in the market as necessary. If we find a groove between now and putting the pandemic’s effects entirely behind us, the data we’ve gained over the past years will still come in handy. Nicole says, “Barring any major upheavals like COVID, your marketing’s success rates are relatively predictable if you base it on data aggregated over time. Even slow months can see a boost to sales if you follow the numbers intelligently.”
Natalia is of a similar mind. “Spend your dollars wisely and invest into solutions that help you dive deep into your current portfolio and service drive lists. All the tools we need are right in front of us. All we have to do is put them to use.”