How Bad (and Costly) Is Your DMS Data?

One of the many observations made when you start managing your dealership's first-party data is this: your data is worse than you thought! A second observation is that your marketing vendors have known it for years. Most marketing vendors have done little to urge your dealership to fix your core data hygiene problem.

In some cases, vendor make more money when your data stays dirty which can require monthly data processing costs or generate higher postal mail volumes.

I'm not pointing fingers. I am just stating automotive vendor practices, broken technology, and limited bi-directional APIs have perpetuated dirty data, waste, and broken customer communications.

Let's go through a few examples:

• You send a direct mail offer to lapsed service customers. Your mail vendor pulls data from your DMS and will run the customer addresses through the National Change of Address (NCOA) database. Any customers that have moved, will be updated in the mailer's database but in most cases, the dealer's DMS is never updated with the new address.
• You send email campaigns to customers each month. Your email vendor pulls data from your DMS for specific promotions. Good email marketers will pre-score the email addresses exported from the DMS. Scores can be based on threat categories: delivery, reputation, fraud, and conversion. The DMS list may be reduced by 20%, so actually only 80% of the customers are sent an email. Many email companies (or agencies) have no process to get these emails fixed or encourage the dealer to call their customers to get better email addresses.
• You spend money each month on equity mining campaigns which include email, direct mail, and phone calls to past customers. After 3 years, 25%-40% of the ownership data in your DMS can be incorrect yet the data. Marketing is invested but the DMS is not updated, nor do you know who owns the vehicle you sold, which would be helpful for recall campaigns.
• You run customer match campaigns on Google and Facebook but you only get 60% match rates based on email and phone data. So you send your list out for appending. Additional email addresses and phone numbers are added to your list and now match rates go up to 85%. However, you never updated the master records with the additional email addresses and phone, so you pay for these appends multiple times instead of once.

Now what happens when vendors just take the DMS data and omit valuable pre-processing steps?

Can you trust every vendor to do the right thing, or should you be providing the cleanest, most accurate data yourself?

Dealers Need New Tools - They Are Now In Market

I could continue providing more examples, but let's get to the point. When dealers start to value each previous customer, they will look for partners who will send signals when data is bad which can then feed a process to correct the data. If data appending is needed, the master records are appended so that the new data can be used by all parties. If phone calls need to be made, call campaigns are created and data access privileges given to trusted callers.

The DMS and CRM were never meant to be a first-party data management platform that can take data signals from multiple collaboration partners.

Every week the data in the DMS ages. Outdated data limits retention efforts because a DMS a transactional data lake and not a living customer profile. Since the DMS is an accounting system, data updates are limited or in some cases prevented by management. The costs are hard to calculate but the negative impact to the business is clear.

Dealer groups are investing in Customer Data Platforms (CDP) because they realize just how much money is wasted and how much revenue is being held back from dirty data. CDPs are not commonplace in automotive retail today but they will be the third leg in the retail operations stool: DMS, CRM, and CDP.

Who Can You Trust for Accurate Data?

One of the biggest challenges that I see is how dealers will evaluate the QUALITY of data being offered on the market. From credit bureaus to specialty automotive data companies, dealers have many choices. However, dealers have little experience in testing data append services or evaluating shopper audiences that can now be ingested into a CDP.

I'm working on an update to my CDP Research Report which will go deeper into the challenges dealers face when making a commitment to managing their first-party data. I believe dealers will need to partner with multiple companies to get the optimum data mix which can give them a competitive edge.

First-Party Data Management Resources

Dealership managers who would like to get a head start on first-party data management strategies are invited to join me at the Modern Retailing Conference (MRC) in November. A number of the leading CDP companies and data enhancement services will be present to provide additional insights on how to move forward with first-party (and zero-party) data management.