Playing the Long Game: Revitalize Your Digital Marketing by Spending on the Right Customers

1. Playing the Long Game: Revitalize Your Digital Marketing by Spending on the Right Customers

2. 1. My name is Kristen Judd 2. I'm the CEO and Co- founder of 3 Birds Marketing. 3. I'm addicted to data.

3. A DIFFERENT WAY TO LOOK AT YOUR DATA A new way to think about and communicate with your customers and prospects A better way to spend your marketing dollars

4. Your customers are not a vehicle.

5. Your customers are not a repair order.

6. Your customers are not an accessory. Your customers are not an accessory.

7. Your customers are not an extended warranty. Your customers are not an extended warranty.

8. Not all customers are the same.

9. Your customers are people with different interests,

10. Too many dealers look at their customers as their most recent transaction or treat them like they’re all the same. Why?

11. Historically dealership data has been structured transactionally… …making it difficult to think in terms of customer lifetime value.

12. Dealers have financial and non-financial data, but difficulty joining it all together to make decisions

13. Dealers know surprisingly little about their customers

14. Emphasis on short term revenue goals This Month

15. Emphasis on short term revenue goals This Week

16. Emphasis on short term revenue goals This Weekend z z z

17. Emphasis on short term revenue goals TODAY !!!! z z

18. Makes it hard to get off the hamster wheel.

19. Are you left to trust your gut about whether you're investing in the right things ? How do you know if you're tripping over dollars to get to dimes?

20. Understand how much customers contribute to my bottom line Playing the Long Game with Digital Marketing 3 Primary Learnings 1

21. Identify unique behavior patterns of high value customers Playing the Long Game with Digital Marketing 3 Primary Learnings 2

22. Create, acquire and retain more high value customers with engaging communications and digital marketing Playing the Long Game with Digital Marketing 3 Primary Learnings 3

23. 20%of your customers 2/3of your dealership revenue

24. The top 20%of customers Have an annual spend of $2,090

25. 66%of your dealership revenue Have an annual spend of only $258 The other 80%of customers

26. Taking it even further Study Overview: Representative set of import and domestic dealerships All customers included had at least one vehicle purchase Merged various data sources to create full profile of each customer Evaluated purchase and digital activity over 5-year period

27. Study Overview MARKETING CAMPAIGNS DMSCRM SOCIAL 3RD PARTY DATA

28. Understanding LTV

29. Lifetime Value (Typical Dealer Customer) Average Gross $3,023 Typical Customer 3.1 years 2.8 service visits 1.2 vehicle purchases Sales 73% Service 27%

30. LTV (Low Value and High Value Customers) Low Value Customers 3.1 years 1.1 service visits 1 vehicle purchase High Value Customers 3.1 years 5.1 service visits 1.6 vehicle purchase Average Gross $1,586 Average Gross $5,599 VS

31. Lifetime Value is normally distributed Lifetime Value Relative to Mean -2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000-2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000-2000 -1750 -1500 -1250 -1000 -750 -500 -250 0 250 500 750 1000 1250 1500 1750 2000

32. Above Average vs. Below Average Customers Average ValueBelow Average Above Average

33. Above Average vs. Below Average Customers Above Average Customers Average ValueBelow Average Above Average

34. Highest Value vs. Lowest Value Customers Average ValueBelow Average Above Average Lowest Value Customers Highest Value Customers

35. Sales and Service Traits Customers have propensities based on sales, service characteristics Average Value

36. Sales and Service Traits Customers have propensities based on sales, service characteristics Average Value Lease (89%) Finance (114%)

37. Sales and Service Traits Customers have propensities based on sales, service characteristics Average Value New Vehicle (84%) Used Vehicle (115%) Lease (89%) Finance (114%)

38. Sales and Service Traits Customers have propensities based on sales, service characteristics Average Value New Vehicle (84%) Used Vehicle (115%) 0-15 Miles (105%) 21-50 Miles (86%) Lease (89%) Finance (114%)

39. Sales and Service Traits Customers have propensities based on sales, service characteristics Average Value No Svc Visits (83%) 6 Svc Visits over lifetime (122%) New Vehicle (84%) Used Vehicle (115%) 0-15 Miles (105%) 21-50 Miles (86%) Lease (89%) Finance (114%)

40. Highest Value vs. Lowest Value Customers Average ValueBelow Average Above Average Lowest Value Customers Highest Value Customers Buy vehicles with cash No service visits Make up only 10% of total revenue generated More than 5 service visits per year 34% higher email penetration and engagement Live within 0-5 miles of the store

41. How Behavior Patterns Translate into Activity

42. 2.13 3.81 Below Avg Above Avg. +79% Above Average Customers Have 79% More Service Visits

43. Highest Value Customers Have 803% More Service Visits 803% Increase 0.91 8.22 Highest ValueLowest Value

44. Above Average Customers Have 26% More Vehicle Purchases 1.07 1.35 Below Avg Above Avg. +26%

45. 116% Increase 1.01 2.18 Highest ValueLowest Value Highest Value Customers Have 116% More Vehicle Purchases

46. 17.1% 18.4% Below Avg Above Avg. Above Average Customers Engage With Your Email Communications More +8%

47. 27% Increase8% 35% Highest ValueLowest Value Highest Value Customers Engage With Your Email Communications WAY More

48. How to Invest Marketing Dollars to Create, Engage and Retain High Value Customers

49. Ensure segments have meaningful differences in value potential $ $$ $$$ $$$$ Step 1 Differentiate on Value

50. Focus on how customers act after you segment them not before! Zip Code Vehicle Type Model Year Income Gender STATIC Time Since Last Visit Frequency of Visits Avg. Transaction Amount Appointments HISTORICAL Likely to Get an Oil Change Likely to Engage via Email Likely to Buy a Vehicle Likely to Visit Website Likes and dislikes PREDICTIVE/ DEMONSTRATED INTEREST Step 2 Look Forward

51. Step 3 Incorporate Digital Perspective

52. What Segmentation Could Look Like

53. Data is from representation sample of over 100K customers Segmentation Drivers Likely to purchase Likely to engage Sample Approach Elite Potential Average At Risk Disaffected Highest Value Customers Lowest Value Customers

54. Data is from representation sample of over 100K customers 92x service purchase rate Post Segmentation Results 0.6% 8% 14% 27% 56% Disaffected At Risk Average Potential Elite 6-Month Service Rate Predictive Power

55. Data is from representation sample of over 100K customers 0.1% 0.2% 11.2% 18.6% 23.9% Disaffected At Risk Average Potential Elite Digital Engagement Rate 290x engagement rate Digitally Relevant Post Segmentation Results

56. Data is from representation sample of over 100K customers Post Segmentation Results $45 $57 $219 $326 $771 Disaffected At Risk Average Potential Elite 6-Month Revenue Value Driven Data is from representation sample of over 100K customers 16x Higher revenue Post Segmentation Results

57. 2% 6% 28% 35% 29% Disaffected At Risk Average Potential Elite Expected Revenue Contribution 92% of Future Value Potential INVEST MORE Strategy Shift Your Dollars Predicted Revenue in Next 6 Months

58. Taking Action

59. Tailor messaging to current automotive needs and demonstrated interest to create better consumer experiences

60. Current Automotive Need Path

61. 61 Higher value customers identified as likely having a current automotive need New Incentives Follow-Up Trade Tool

62. 62 Current automotive need New Incentives Follow-Up Trade Tool

67. 67 Move through the stages providing relevance and friction-free experiences $40,851 $64,372

68. Tailor Messaging to Demonstrated Interests

69. Strategy Customize the Experience to Demonstrated Interests Enrich their online experience Understand a customer’s preferences and demonstrated interest Needs a service loaner Enjoys the latest tech Worried about safety Obsessed with saving time Repurchase prior to end of finance term

70. Needs a service loaner Enjoys the latest tech Worried about safety Obsessed with saving time Repurchase prior to end of finance term Strategy Customize the Experience to Demonstrated Interests Enrich their online experience Understand a customer’s preferences and demonstrated interest

71. Needs a service loaner Enjoys the latest tech Worried about safety Obsessed with saving time Repurchase prior to end of finance term Strategy 3 Customize the Experience Enrich their online experience Understand a customer’s preferences and demonstrated interest

74. Needs a service loaner Enjoys the latest tech Worried about safety Obsessed with saving time Repurchase prior to end of finance term Strategy 3 Customize the Experience Enrich their online experience Understand a customer’s preferences and demonstrated interest

75. Benefits Engage, Engage, Engage Benefits of Non-Promotional Content +63% Clicks +61% Service Visits +28% Vehicle Purchases Based on approximately 500K contacts from sample of campaigns from dealers New Models Store Events Vehicle Education Lifestyle Examples of Non-Promotional Content

76. Segment your customers into value segments Getting Started with a Simple Approach 1

77. Invest more in your high value and high potential segments Getting Started with a Simple Approach 2

78. Use LTV segmentation and predictive modeling to tailor highly relevant messaging Getting Started with a Simple Approach 3

79. Leverage high return digital channels to track customer intent, fuel predictive models and develop additional data Getting Started with a Simple Approach 4

80. THANK YOU! Kristen Judd www.3birdsmarketing.com Kristen@3birdsmarketing.com 415-235-3902 | @kwjudd Booth #332

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Playing the Long Game: Revitalize Your Digital Marketing by Spending on the Right Customers

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