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Challenging the individual customer paradigm: Building insight in the automotive industry

Ian Welch
Lead Consultant
Experian Marketing Services

Know your customer

The key challenge that the automotive industry has always faced is a lack of customer insight. This is caused by the fragmented nature of how data is captured and who really owns the customer – the brand or the dealer.

Because of this manufacturers and dealers have had to find innovative ways to target and communicate with potential customers. More recently many have heralded social media as the answer to some of these challenges. The old adage of “knowing your customer” is still the most effective way for automotive businesses to develop propositions and products to improve sales.

Know your households

Lack of customer insight means missed opportunities to increase sales. And perhaps the most overlooked opportunity is how sales can be increased within or at a household level. Many automotive businesses focus their communication, insight and data strategy around the concept of an individual, yet this misses the fact that a purchase of a new car is a major expense for a household. And sometimes it is a joint decision.

If the focus of communications, insight and data was instead based on a household this is likely to result in improved sales opportunities. For example – try asking simple questions such as:

  • How many households on your database own more than one vehicle?
  • How many enquiries or lapsed customers do you have from the same household?

If available, this begins to provide insight into how households interact with a brand. However asking simple questions is just the start. Combining it with external data, such as Mosaic Automotive, enables accurate planning about the size of the opportunity available for manufacturers or dealers to exploit.

Working in practice

By developing insight at the household level it is possible to target new audiences for models that previously may have been dismissed. It also presents an opportunity to become more sophisticated in developing a data capture strategy. For example once you know the profile of a household that is likely to purchase 2 new cars, data can be captured on

  • When is the household likely to be replacing each vehicle
  • What sort of models do they consider as a primary, secondary car
  • How will each vehicle be used
  • How is each vehicle financed

Who is the primary driver of the vehicle?

A practical example of changing focus

A manufacturer is launching a model but it wanted to identify the potential within its existing customer base and better qualify potential conquest universe. By looking to their data at a consumer level there were a limited number of opportunities and therefore they needed to adopt an aggressive acquisition strategy. However, by combining their data at a household level and combining this with external data , such as Mosaic Automotive, they were able to effectively score the whole of their existing customer and prospect base by the likelihood to purchase more than one vehicle (in the household). Armed with this insight they are able to develop an ongoing communication programme to various segments to encourage them to purchase this new model. By adopting such a strategy it proved to be more cost effective than purchasing additional names and media aimed at recruiting new customers to the brand. In addition by targeting at the household level it also acted as a trigger to the replacement of the existing vehicle as well.

A paradigm shift?

So in summary manufacturers and dealers that are looking to sell more cars should look to amend their current strategy of focusing on individuals to targets sales messages. The purchase of new cars is a major decision which is often influenced by everybody in the household. By developing insight on households and combining this with external data it is possible to identify new audiences to target new models, develop improved data capture strategies and find more ways to engage with existing customers, providing them more reason to come a visit the dealer network, other than servicing or replacing their existing car.

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