CDPs Will Reward Excellence and Expose Rampant Marketing Fraud & Blunders

As dealer groups invest in robust Customer Data Platforms (CDP), the vendor community will be forced to address a major shift in their business model. How dealer data is collected, processed, managed, and utilized will shift power and create greater transparency.

CDPs will change the narrative on which marketing investments are working and who is in control of dealer data.

Dealers using a CDP with an open-architecture have the opportunity to regain control over data and marketing execution. This will be terrifying for some vendors who have known that store managers don't have the training or tools to inspect the quality of their marketing campaigns, cadence of communication, and conversion metrics.

We all know that some marketing investments use smoke and mirrors metrics. It's hard to expose the best tricksters. Dealer groups with CDPs will clear the smoke and expose blunders and outright fraud.

Here Is My Data - Dump - Pump - Repeat

For years, dealers have granted access to their DMS and CRM data to their marketing and sales process partners. Dealers trusted these companies, hoping that their data would be used properly and managed to reduce duplicates, correct bad addresses (save money on postage), or enhance the data with missing information (i.e., email addresses) to improve match rates on Google and Meta campaigns.

These valuable customer files were often dumped into a CSV file and emailed to vendors. What happened to these hundreds of files (on vendor servers) after a dealer cancelled a marketing contract? There is no audit trail to know. Trust is required in so many places, it should scare dealers facing new privacy laws.

In this one-sided partnership, dealers never had a chance to really audit their marketing performance or secure their data.

Customer Data Management Is Absent in Automotive Retail

Why am I calling it one-sided? That is because dealers never maintained a centralized database (i.e., CDP) for their customers. Vendors did not have to update a CDP showing which customer records were loaded into monthly campaigns or updated with fresher data. Each month, dealers are still paying (and repaying) for data hygiene services, which in many cases, would be significantly reduced if they had a CDP.

Dealers with robust CDPs can also produce their own campaign "match back" reports if agencies update their CDP each day with marketing outcomes. There are many trustworthy vendors in the automotive community, but there are others that prey on the gaps in our current marketing model.

Anyone can fake a match back report if they claim that they emailed or direct mailed all of the in-market shoppers in your market!

If you have any doubt that fraud is rampant in automotive marketing, read my research report on Conquest Email Marketing that I published a number of years ago.

The Existing Data Sharing Model: Too Much Trust

Let's take a look at the current data sharing model used by the majority of dealers through OEM-managed marketing providers or local agency relationships. This model applies to service marketing, equity mining, retention campaigns, as well as sales campaigns that are run each month.

The vendor ingests data files from the dealer's DMS and CRM (red arrows) into their marketing platform. Their platform (proprietary magic) may include updating the dealer's data before using it for marketing (blue arrows).

A popular example is checking postal addresses using the National Change of Address (NCOA) database. The marketing vendor could be appending phone number or emails from companies like S&P Global Mobility , TransUnion , Equifax , or Acxiom . They might also have de-duping processes, registration data comparisons, or some other unique data sources.

The problem with this model is that you can't verify which data hygiene services are actually taking place.

Once data is processed, each platform will send marketing messages to consumers and the dealer's customers through various channels, but dealers can't verify the geo-targeting they are using (purple arrows). They also have to trust the vendor's performance marketing reports and even accept vague match back reports.

Trust But Verify: Right?

Without a central customer database (i.e., CDP), it's impossible to know the cadence of communications, who was selected, and what was done to influence a sale. Dealership managers have always known that they have little ability to "really know" if their marketing dollars are being deployed in the best manner.

For example:

• Conquest email companies can claim that they emailed 100,000 local residents and your customers, but how do you know they did?
• Marketing companies can say that they use smart retargeting based on the vehicles a consumer viewed online, but how can you know if their logic is correct?
• Digital marketing vendors can claim they created an audience of existing customers that live within 15 miles of the dealership and whose lease is about to expire, but how can you tell?
• Direct mail houses can claim that they eliminate duplicate customer records imported from the DMS, but there is no way of telling. They are financially rewarded for sending more mail pieces, so it's a natural conflict of interest.
• Equity mining and conquest companies claim that they have accurate vehicle ownership data, but how many of us have received letters from local dealers based on cars we sold years ago?

A New Data Sharing Model: Control the Data & Audience

When dealers have a CDP with an open architecture, they can create audiences which they want to use for marketing and share them with their vendor partners. This allows them to control the logic of each audience based on known business rules.

Some CDPs create audiences to use for their own marketing campaigns but not to share for marketing with "competing" vendors.

Dealers with CDPs can also see if marketing campaigns resulted in engagement (and sales) because vendors will be required to send campaign updates in real-time or in a nightly batch (green arrow). This will reduce conflicts in vendor performance reports since sales attribution is part of the CDP framework.

Since robust CDP frameworks unify customer data, duplicates are practically eliminated. No technology is perfect, but having unified customer profiles eliminates much of the marketing waste and poor delivery of messages. CDP platforms can schedule regular address updates via NCOA as well as third-party vendors so the CDP's master customer record is accurate.

Also keep in mind that the dealer's CDP is updated every day from website traffic, lead forms, phone calls, and transactions in the CRM and DMS. Dealers can also have their customers update their own central record, which is, in many cases, is the most accurate way of knowing which cars they still own!

CDPs eliminate the need for dealers to pay multiple vendor partners for data hygiene services. It eliminates the need to trust that campaigns were executed. If email campaigns are run on platforms that directly connect with the CDP (a requirement in my mind), then email delivery, open rates, and click-through rates are more accurate.

The CDP model reduces integration fees that dealers pay for every vendor who needs to connect to the dealer's CRM or DMS.

CDPs will also reduce mail costs, which will be a topic I will be writing about in the coming months as I help to stand up a few CDPs for progressive dealer groups with large postal mail budgets.

Vendors Need To Rethink Their Business Model

The automotive vendors who now access DMS and CRM data will need to accelerate their knowledge of how to connect to CDPs and how to provide bi-directional updates via API. This will become a new operating model, starting with the largest dealer groups.

Vendors who wait to develop bi-directional data feeds will find that they will be losing business. Vendors who don't offer different pricing models for dealer groups who have invested in CDPs may lose more bids and contract renewals.

Vendors who are selling audiences or local conquest lists should understand that, with CDPs, dealers will be able to compare the quality of your data to their existing customer data. This will cause some data providers to think twice about selling poor quality data at the risk of damaging their reputation.

The CDP Movement Is Just Starting in Scale

While forms of CDPs in automotive have been around for years, the adoption rate has been low. Dealer education and training on first-party data management has been lacking as well.

Dealers who want to learn more about CDPs and how they can improve the Customer Experience and reduce costs should join me at the Modern Retailing Conference (MRC) in November. Leaders in automotive CDP technology will be present as well as panels with dealer groups sharing their CDP journey.

Don't miss the educational experiences that MRC offers including a focus on dealership operations (sales and service) that are creating differentiated customer experiences and increasing customer loyalty.

Register early because the conference and hotel rooms will sell out months before the show. Detail can be found here: MRC Official Website