Relevance Revs Up Auto Buyers

Oct 04, 2004

By John Hennessy

Customer retention, a critical metric for automotive dealership AutoNation, has gone from 10.3 percent in early 2004 to 16.7 percent. Inside 1to1 Executive Editor John
Gaffney writes that Scott Zientarski, director of database and direct marketing for AutoNation, attributes this improvement to relevant communications.

According to Zientarski, customers who receive communications that address their specific needs feel connected, and therefore aren’t just looking for the best price. “If you
can circumvent the sales cycle and get people into the market sooner, they are more profitable customers.”

To get there, AutoNation consolidated customer lists from its 287 dealerships in 18 states. It then separated its customers into 62 separate groups — or portfolios — and used
digital printing technology to customize direct mail pieces for each customer.

This segmentation approach compares to prior marketing initiatives that sent the same communication regardless of where that customer was in the purchase or service cycle. The
customer who needed new tires received the same message as the customer who needed an oil change.

The ultimate goal of AutoNation’s program is not to just mine databases for customers to fit its products, they want to use the information to determine the right types of products
and services for its customers.

Moderator’s Comment: How would personalized, relevant messages need to differ in other retail businesses to be successful?

A long sales cycle, limited data points and data integration challenges didn’t prevent AutoNation from embarking on a marketing program that uses purchase
data to improve the relevance of its customer communications. Their efforts are being rewarded with improved customer retention.

Many other retailers have much more detailed and frequent purchase information, yet few are using the information to issue relevant messages. Based on this
example, anyone with customer data should be exploring how that data can be used to improve the relevance and, consequently, the impact of customer communications.

John Hennessy – Moderator

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