Why Make Dealership Data the Highest Priority

First, there is the most apparent reason why dealers should make their data the highest priority now. That is the revolving regulation around safeguarding customer “Private Information” (PI). California has unleashed the CCPA – California Consumer Privacy Act. New York is working on the SHIELD – Stop Hacks and Improve Electronic Data Security (SHIELD) Act. Congress is reviewing The Online Privacy Act putting online users in the driver seat of how companies can utilize and monetize personal information. Many of the points suggested by US regulators look similar to what the EU has anchored in the European General Data Protection Regulation (GDPR). However, while Europe’s rule book already went through an iteration of tweaking, the US data safeguard legislation is still vague, leaving dealers with more questions than answers.

Dealership Data under Attack

That regulators have a point in demanding stronger ethics and procedures around data processing is without question. Just recently, Automotive News and other news outlets reported about a ransomware attack at a five-store dealership group in West Palm Beach, FL. Dealer Jim Arrigo was brave for not paying the ransom and making the attack public. He decided to replace all dealership PCs and involve the FBI. Many of these attacks go unheard, but the risk and consequences of failing to safeguard dealership data are real and substantial. Jim’s all-in costs may reach $500,000. Naturally, before dealing with the tragedy of data attacks and soon to conform with regulation, dealers should employ preventive measures for data safeguarding. In my latest webinar with Will from Sigmawifi, we introduced dealers to “11 Steps to Safeguard Dealership Data in 2020”.

Dealerships in a New Mobility Economy

The second and more significant driver for making dealership data the highest priority in 2020, is cultivating its strategic value. The challenge is not to respond to short-term economic uncertainty. But to redefine the dealership business model amid the creation of a new transportation economy. While it will take time for this new mobility industry to unfold, market players are fighting for the best start position. What formerly had clear boundaries in the scope of work between Suppliers, OEMs, Dealers, and Dealer Service Providers (DSP) has become a new co-opetition environment where market participants cooperate and compete for the end-consumer relationship.

Some Original Equipment Manufacturers (OEM) are challenging dealership franchise laws with a direct sales approach. And also some Dealer Service Providers (DSP) are infiltrating the dealer-end consumer relationship through some of their own direct-to-consumer services. I wrote a separate article about “Who Should Reinvent the Dealership Business Model” with more details on this. You can read more here.

Evolution of Dealership Value Propositions:

In any case, the traditional dealership value chain is in a transformation, and so is the dealership value proposition. As any business tries to cater to a new generation of consumers, dealerships should do so as well. Silents and Baby boomers are on their way out. Future buying power will transition to the younger generations with their unique features. For example, studies have shown that Millenials have lower general brand loyalty, or they value experiences over material items. Although still smaller in total numbers in comparison to the others, Millenials and Gen Z buying power is not to underestimate.

Source: Epsilon

To accommodate the new experience-heavy breed of customers, one can argue that a new dealership business model will have to focus on #CreateExperience rather than #MoveMetal. It requires a stronger engine to process data and digital assets. The operational focus is shifting from managing inventory in a vertical sales funnel to managing data in a closed customer experience loop with omnichannel touchpoints. Not gasoline, but data will power this new dealership business model.

Dealership Chief Data Officer:

Alongside the regulatory pressure to rewrite data safeguarding, voices are calling for dealership Chief Data Compliance Officers (CDCO). However, keeping in mind the real value of dealership data for the future, a CDCO would have a narrow scope. Data safeguarding should go hand-in-hand with data cultivating. What I mean by the latter is to structure the organization around elevating the dealership data value. That starts with having a designated dealership executive that can be held accountable.

Dealership Data Plan

That should also touch on how data can drive the transformation of the dealership value proposition. Again, data will presumably become the key resource in the future dealership business model. A dealership data plan must include mapping the dealership data. Categorizing it, and understanding its flow from the point of data entry through the dealership technology vendor’s ecosystem. The same concept should also consider data quality. The new generation of dealership software applications, e.g. engagement tools, requires many data points to be most effective. And it needs clean data too.

Increase Dealership Relevance

Do you have clean data in your Dealership Management System (DMS)? Do your Sales Managers always enter all the relevant information into the dealership’s Customer Relationship Management system (CRM)? Are your Service Advisors capturing all clues given by your customers? For example, if your customers are dog lovers, or planning for a birthday getaway road trip, or expecting a second child? Did you know that the probabilities of a customer jumping into a new vehicle after having an accident are much higher than the same customer buying a new car at the end of the finance/lease term?

Knowing your customers and their position in the customer experience loop can make a big difference. Dealers should pay attention to it and need a plan on how data can be cultivated. Considering the coming regulation, dealers may want to review data management holistically to not miss out on significant opportunities in the near and far future.

I am looking forward to your feedback!