• September 8, 2005
  • By Colin Beasty, (former) Associate Editor, CRM Magazine

Auto Dealers and Makers Need to Collaborate

Auto manufacturers are failing to capitalize on collaborative relationships with dealerships and vice versa, according to Gartner's report, "The Automotive Industry Can Learn CRM Lessons From Other Industries." Manufacturing, high-tech, and financial service organizations do an excellent job sharing data with other companies and suppliers within their respected industries, but the auto industry has yet to adopt these new strategies and technologies--which are mature and ready for adoption. According to Dale Hagemeyer, Gartner analyst and the report's author, the lag can be attributed to the industry's solidified dealership-manufacturer model, where neither sector of the industry shares customer data with the other. "A dealership wants to sell [customers] their favorite car, usually something expensive like a Mercedes. The manufacturer clearly wants you to buy their car. The only way to get over that is for the two to collaborate," Hagemeyer says. Manufacturers want to sell a consumer a car from their branded assortment, but dealers prefer to sell from their dealership's selection, regardless of the manufacturer or brand. The two still share similar goals, including upselling, retention, servicing, and lifetime customer value, Hagemeyer says, but "everybody isn't going to buy a Mercedes--some people are looking for just a Toyota." Dealerships and manufacturers can use customer demographics, such as the ages of family members, to determine when another family member would be looking to buy a car, and create targeted marketing and individualized promotions and specials as a result of such information, according to Hagemeyer. "You could see when somebody's child is ready to get their driver's license. Also, what percentage of people in this country would you say finance their cars? I'd say it's about 75 percent. There's a lot of consumer data available right there. It's about establishing a customer lifetime cycle." As for the technology, it can be as simple as a Web portal to allow a manufacturer or dealership the ability to access the other's customer database. By doing so, each party can analyze the other's business and work jointly to improve results. It creates real-time inventory information that can be used to determine strategic incentives that reduce costly inventory buildup. "They [the dealerships and manufacturers] need to have a matrix approach when it comes to sharing customer information. It's all about the collaboration, sharing data, and getting over the fact that everybody isn't going to buy a Toyota or Ford the rest of their lives. They need to work together and share data with each other so that every time they do a get a chance to sell a Toyota or Ford, it happens." Related articles: Manufacturing Builds On Customer Relationships
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