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Access to data is changing the way companies do business The Auto industry is no exception!

The use of “big data” (the massive amount of customer information available to companies today) will become an even stronger advantage for the automotive industry. From the standpoint of competitiveness and operational effectiveness, all companies need to take big data seriously. In most industries today, a well-leveraged, data-driven strategy is used to create a competitive advantage and increase our operations’ effectiveness. This allows our industry to do many things better and more profitably. This will continue to be critical as we see more stress on the automotive margins. Big data will help companies with product innovation, the introduction of new services, the ability to compete more aggressively, the more effective use of marketing dollars and the ability to capture value from multiple data sources in real-time.

There are many areas that data can help you run your dealership more effectively.


First, big data can unlock significant value by making information transparent and usable faster and at a much higher frequency. Managers and salespeople with good tool sets and the know-how to use the analysis of big data to make fast effective decisions will see a huge advantage. Please understand: One of the requirements of this tool is that the data needs to be real-time to be the most effective. This is why so many of the current providers in automotive fall short. The data is great, but if the opportunity has passed, the data can only be analyzed to understand how to effectively change the next campaign — not affect the current one. To get the most out of your data, it must be real-time to allow you to react in real-time. 


Second, as the automotive industry creates and stores more actionable data in usable forms, they can collect more accurate and detailed performance information on everything from lead providers and inventory selections to retention and marketing strategies, exposing opportunities and that allow them to boost their performance. Leading companies today are using real-time data collection and analysis to conduct controlled experiments. This type of “A/B testing,” or “split testing,” allows dealers to make better management decisions about their business, and not be limited to just using the industry averages. Think how this will change marketing, when you can see in real-time what's happening or not happening. It also gives you the ability to adjust business decisions on the fly. You no longer have to wait for the campaign to run it is course to see the results.


Third, big data allows ever-narrower segmentation of customers and, therefore, much more precisely tailored products or services. This alone has changed automotive marketing forever. Don't tell the mass marketing companies, but mass marketing is dead because the masses have left. Without data segmentation, their goals and our goals no longer align. How does a mass marketer make more money? Lick, stick and mail more. You want just the opposite: You want to lick, stick, and mail less with better results. This can easily be achieved with better management and data segmentation.


Fourth, sophisticated analytics can substantially improve decision-making. For the first time, you will be able to see what your prospects and customers are doing today, right now. You will see and be notified of trends you should focus on. Do you know how your customer really found you? Do you really know what campaign drove that prospect to your showroom floor, and what it cost you?


Finally, big data can be used to improve the development of the next generation of products and services. For instance, manufacturers are using data obtained from the dealers and lead providers to determine what types of cars their customers really want — what to build, how to price them, colors options, vehicle configurations, etc. Based on inventory availability, interest, leads, profit, location and other items, this level of real-time data should help determine what color the next Ford Focus will be painted, and it could literally be decided at the moment the unit hits the paint area on the assembly line.


Big data can help dealers with basics such as “How do my customers what to be communicated with?” “What advertising has the highest ROI?” “What cars, both new and used, should I buy?” “How long will they sit on my lot?” “How much will I sell them for?” “What are my customers really looking for? “What features do they require?” “What F&I products should they be offered and when?” This list is almost endless.


The use of big data will increase productivity, growth and consumer and prospect opportunities. For example, we know for a fact that retailers using big data to its fullest have the potential to increase operating margins by wasting less and selling more to the right person at the right time.

While the use of big data in many other industries has been a requirement for years, I believe the auto industry will be see some of the largest gains simply by wasting less advertising and reducing incentives. Just think if dealers, service providers and OEMs could reduce the incentives, understand the product configurations better, build fewer undesirable units and increase their efficiencies. The potential is mind blowing. 

Please, keep in mind this new frontier will not come without several new challenges and questions that will need to be addressed. Policies related to data ownership, privacy, security, intellectual property and even liability need to be addressed in a big data-driven world. The automotive industry not only needs to put the right talent and technology in place, but also structure workflows and incentives to optimize the use of big data. The real challenge will be driving productivity from mountains of data and using it correctly and timely. There are many automotive companies that see this opportunity and are quickly building around this to help their customers.

The access to data is critical — companies will increasingly need to integrate information from multiple data sources, OEMs and third parties, and the data has to be in real-time to see the most actionable results. Data and product integration is the key. Look for vendors that offer a full spectrum of services. The old days of buying from 15 different vendors that don't communicate in real-time is dead. They is simply is no advantage to this approach, and can no longer be considered industry standard. 

The major takeaway here is big data and analytics create competitive advantage. I don't see this trend slowing down anytime soon; I see just the opposite.

The advantages of understanding your data from a completive and actionable standpoint are no longer debatable. The only question left is how soon will you take advantage of this trend and use it to your advantage? 

Sean Stapleton is the executive vice president of VinSolutions. He can be contacted at 866.587.7629, or by e-mail at

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Comment by Alexander Lau on March 22, 2013 at 5:49am

"Big Data" is all the rage these days. You're right, this nothing new to a load of industries, but it's the ever growing need for smaller companies to do more their data (potential and current customer base). It's the sheer amount of data, so MASSIVE, it requires specialized software and processes to crunch it. Oracle and IBM are all over it and have been, spending many billions on investment.

I completely agree on A/B, Split and Multivariate testing techniques. It should be done on all inventory landing pages, E-mail blasts, conversion points, service and parts pages and any interface that is worth a damn to your company and to give better understand of ROI. Goes full scale across every industry and market, not just automotive. With that being said, you need the right UI/UX (Information Architect) in place to make sure testing is being done correctly or you had better have a very good 3rd party (that understands your business model and needs) on contract. This is all very important to developing nations and economies as well, which to me is the best part of "Big Data."

Which features do all the best landing pages share?

However, it's not just A/B testing, it also includes: 

Association rule learning, classification, cluster analysis, crowdsourcing, data fusion and integration, ensemble learning, genetic algorithms, machine learning, natural language processing, neural networks, pattern recognition, anomaly detection, predictive modelling, regression, sentiment analysis, signal processing, supervised and unsupervised learning, simulation, time series analysis and vizualisation.


An interesting take: Data is not always a substitute for strategy from Steven Sinofsky of Harvard Business School.

Data is not strategy

Ultimately, data contributes to product development but does not replace the very unscientific notion of what to build and why. That’s the art of product development and how it intersects with business strategy. This follows from the fact that products are developed today for use in the future. The future is uncertain for your own product’s evolution, but all around you is uncertainty. Data is an input to help you define a strategy or modify it, but cannot replace what is inherently the uncertain side of innovation.

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