One of the common frustrations I hear from automotive dealers is that they read posts from industry executives on LinkedIn which state automotive CDPs are a dumb idea, lack true data integrations, require complex technology, are really marketing engines in disguise, or the next shiny object which will end in failure.
So, they ask: Do I still advocate for CDPs?
The simple answer is Yes.
I don’t have a CDP to sell but I do believe that a proper CDP will fill many systemic gaps in automotive retail processes which have been hindering loyalty, LTV, and allowing marketing waste to continue unabated. I believe that dealers must manage their first-party data better, and that is why I am releasing a new book on this subject.
The unicorns
I have read this year many posts from automotive CDP / CDXP / CDEP / DDP / OPP vendors with words that include:
“we are the only company that…..”
which should be a red flag for any dealer shopping for a first-party data management platform. The fundamental technology of a CDP is not unique to any vendor. The critical differentiation is which platform makes it easy for a dealer to organize their data to make more revenue and increase LTV.
Dealers should be able to ingest all their data into a CDP, but that will take time and effort.
When I say “all data” I am not implying that all the dealership’s data should be in the CDP. The data in the CDP should have a business use case which warrants its inclusion in the CDP. I was talking yesterday with an industry veteran who is helping dealers with their first-party data management and he said:
Many dealer groups have “data lakes” but when you get up close they are really data swamps.
No truer statement has been made. Having a cloud-based data lake is not a CDP. Having a massive SQL database is not a CDP. The key to a CDP is the unification of customer data and activation of that data to drive new revenue and increase the customer experience to generate higher LTV.
CDPs will power real-time retailing.
Why do haters hate?
CDPs are not new but they are relatively new to the automotive industry at Tier 3. CDPs are designed to unify customer data to allow for segmentation into audiences which can be deployed in a multi-channel marketing and communication strategy.
So why would people speak against dealers organizing their data: Automotive CDP haters are often people who:
- Don’t have a CDP to sell and have FOMO
- Don’t understand what CDPs can do for a dealership
- Believe that CDPs are a threat to their business because they make millions off of marketing to dealers with dirty data which increases their direct mail “per piece” marketing model.
- Think CDPs are just about marketing and they can do marketing better than anyone
- Feel threatened that a CDP might diminish their sales revenue
- Believe dealers can’t handle the technology and training needed for a CDP
- Failed at their first attempt to launch a CDP and are bitter about the wasted time and money.
- Are critical of anyone who is trying to elevate automotive retail.
Do you have any other reasons?
Perfection is not the goal
Is there a perfect automotive CDP platform? No.
However, an automotive CDP does not have to be perfect, it just has to build value over time. There are turnkey platforms which can deliver a strong ROI within 30 days. For larger dealer groups, who decide to build a customized CDP, the time to ROI will be longer.
Large dealer groups can see millions of dollars of increased profitability from a CDP. Smaller dealer groups can see hundreds of thousands of dollars in additional profits. Single point stores can see tens of thousands of dollars of increased profits.
This is not fiction, it’s just a little sloppy right now. This is a new area of technology and dealers have never really managed their first-party data before. Another reason why CDP growth has slowed is because getting access to dealership data is hard and filled with politics.
Dealers really don’t own their own data.
Data integrations with CDPs are often delayed because of the lack of bi-directional APIs in the vendor community. The good news is more integrations are coming and faster than ever before.
Dealers who read my new book “Automotive CDPs: A Planning Guide for Dealers” will clearly see why they need a CDP and will also have a path to follow to avoid wasting time and money.
For my readers who work at dealerships, please ignore the haters and decide for yourself if dealers need a third technology platform to complement your DMS and CRM infrastructure.
