This week's guest post is the second in a series from Joe Kyriakoza, VP/GM Automotive, Oracle Data Cloud (read the previous blog in this series, here).
Let’s talk reality for a minute: Car sales have been exploding over the past few years. Growth rates are strong and the average price of a sold vehicle is at an all-time high.
But sustaining this growth won’t be possible for long, according to all of the major industry analysts. The story goes that sales will remain healthy (around 17 million new cars sold per year), but growth will flatten.
What does that mean? If you’re an auto company looking to grow market share, it will need to come from customers who currently drive your competitors’ vehicles. Industry momentum will no longer carry the day.
Swaying loyal consumers is no easy task since, according to our partners at IHS Automotive, customer loyalty reached a 10-year high in the first quarter of 2015 at 52.8 percent. This means more than half of consumers will choose to remain with the brand they currently own the next time they buy a car.
So what is an auto marketer to do? We recommend Rule No. 2 of our series on New Rules of the Road for Automotive Upfronts: Focus on the right questions in the planning process.
Everything starts with your vehicle sales target. Knowing the number of vehicles your brand is targeted to sell is an important data point for your plan, as it provides your starting point to understand your potential buyer sources. Ex: Last year’s sales total was 113,000 units, and this year’s growth target is 8%, or 122,040 units.
There are three sources of potential buyers for your aforementioned sales target – Loyalists (current owners of your brand), New to Market (first-time buyers), and Conquest (owners of competitive vehicles). When you are able to apply your brands’ most recent loyalty and conquest rates, you create a clearer picture of your potential to retain customers and how to appropriately weight your targeting efforts toward the competition to achieve your sales goals.
If market-share growth is your goal (whose isn’t?), then getting your hands on the most accurate competitive data is vital. Ex: Top trade-ins are Fusion, Civic, Sentra, and top defector vehicles are Camry, Accord, Altima.
When you’re looking to expand your targeting strategy beyond in-market or ownership tactics, it pays to take a closer look at the personas of your car buyers. Gaining a tighter understanding of the types of buyers your brand – and your competitors’ brands – attract, can help extend your message to more consumers with the right characteristics. Ex: If current owners of your brand skew to dog-owners with a net worth of $500k+, you may want to get your message in front of more consumers with those traits.
Your audience plan was built with precision, pinpointed at the competition and extended to your awareness efforts. But how can you tell it was the right plan? Examining your campaign’s buy-through rate (BTR) – consumers reached in the campaign divided by the number of vehicles sold to those consumers – will help validate the audiences you developed and encourage you to refresh the models regularly. BTR rates will also clarify which audiences should be optimized. Ex: Conquest 1 audience BTR was 1.3%, Conquest 2 BTR was 0.8%, and Conquest 3 BTR was 0.5%. Increase investment in Conquest 1, and decrease investment in Conquest 3.
Given the reality check that analysts are predicting for the industry, more effective upfront planning by answering the questions that matter most will yield the result you are looking for – achieving your sales target.
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