Data Mining vs Equity Mining:
What’s the difference?
Why Leaving Data Out of the Picture Means Leaving Money on the Table
Automotive equity mining and data mining are valuable tools for dealerships seeking to enhance their marketing strategies, improve customer experiences, and drive sales growth. While both involve extracting and analyzing information, they don’t serve the same purpose within the automotive dealership ecosystem.
Equity Mining
Equity refers to the difference between the current market value of a vehicle and the amount owed on any outstanding loans. Equity mining is a specialized data mining that focuses on existing customers within a dealership’s database. The goal of equity mining is to identify customers who have equity in their vehicles and are good candidates for upselling or cross-selling based on the equity customers have in their current vehicles.
Equity mining software analyzes loan maturity, depreciation rates, and market trends to target potential customers for offers. Dealerships can contact these customers with tailored messages, encouraging them to trade in their current vehicle for a newer model, boosting sales and satisfaction.
Data Mining
Data mining analyzes large datasets to reveal patterns and insights for decision-making and strategy. Data mining in automotive dealerships extracts information from customer databases, sales records, website interactions, and social media engagement.
The primary goal of automotive data mining is to gain a comprehensive understanding of customer behavior, preferences, and trends. By evaluating data points like purchase history, demographics, and online activity, dealerships can tailor their marketing efforts, improve customer experiences, and optimize inventory management.
For instance, data mining might reveal that a certain demographic prefers hybrid vehicles or that customers from a particular region tend to upgrade their cars more often than others. With this knowledge, dealerships can target their advertising campaigns more effectively and stock their lots with the most in-demand models.
The Difference
While both data mining and equity mining involve pulling out insights from data, the key distinction lies in their scope and objectives. Data mining encompasses a broad range of data sources and analyses aimed at understanding market trends and customer behavior, whereas equity mining hones in on existing customers to uncover opportunities for more sales and services.
By leveraging data mining techniques, dealerships can gain a competitive edge by staying ahead of market trends and understanding their customers’ needs and preferences. Equity mining, meanwhile, enables dealerships to maximize revenue opportunities by targeting customers who are most likely to engage with their offerings.
Yet, equity mining only paints a partial picture of your customers’ likelihood of upgrading. Dealerships that find this picture “good enough” miss out on daily opportunities to keep customers and conquest new ones. Data presented in a unified, analyzed, and tested manner guides your team’s actions.
Data mining allows you to go in-depth and gain a broad amount of data to understand what customers are doing, who is likely to upgrade, and what they will likely upgrade into. You can establish a strategy to recognize market trends and what the customer expects to do next.
Working Together
When combined, equity mining provides where the customer is in the life of their loan and what type of financial situation they’re currently in, which will help you upgrade them into a new vehicle and give structure to that new deal. Then, to identify which customers are best, data mining gives the best picture of what’s going on in their lives and what type of vehicle they are likely to upgrade to.
A powerful platform will gather and do the data work for you, determining the steps to engage the customer.
Let’s Look at Three Areas Where Your Dealership Can Most Benefit From a Data Platform
1. Predicting Customer Behavior
Equity mining has been a good data starting point for dealerships because it has been one of the only pieces of data intelligence. But, the best use of data today is to predict what and when consumers want to buy, saving your customers a lot of time.
Today, you can know when a customer is shopping a competitor’s lot, engaging with your marketing materials, and shopping online.
Equity position remains important, but it becomes one piece we must consider.
2. Service Lane Sales & Conquesting
The service drive is a prime opportunity for increasing vehicle sales. A good data platform will identify the right customers coming through the service drive and provide you with information that you can use to assist the customer.
With AutoAlert, you can create a “wishlist” of vehicles you’d like to acquire through the service drive. The system will alert you when a customer arrives with one of those vehicles. Even better, the system will alert you when they schedule an appointment, enabling your team to prepare ahead of time
3. Building Relationships & Loyalty
Predict what and when your customers are ready to buy with AutoAlert, allowing you to meet their needs faster than the competition – often before the customer even realizes them.
This is key to saving your busy customers time and keeping them as your customers. Why? Because the analytics are accurate. And because the dealership has useful information to share with the customer – information that aligns with the customer’s needs that the competition doesn’t have.
Then, the system provides them with the best way/ways to reach these customers, engage them, and make their entire experience seamless.
Don’t Quit Equity Mining – Do Make it one Piece of the Bigger Picture
Before, equity information was more helpful for the average customer. but today, many customers already have it and understand what it means. A quick Google search explains equity, and Kelley Blue Book gives them a close approximation of the value of their car.
To provide the most benefit to the customer, dealerships need a data platform that collects data and makes it relevant to the customer – and actionable for your team.
This gives dealerships something customers don’t have but value – the right deal at the right time. And a partner to help them through the ownership of the vehicle, their next purchase, and every interaction between them.
