Do you enjoy movie recommendations from streaming services or requesting a ride from a ride-hailing service?
Do you control your home’s temperature through an app on your phone? If so, then you've experienced the power of artificial intelligence (AI) - providing accurate and personalized, real-time service. AI is quickly being deployed across all industries and transforming how marketing, sales, operations and service create deeper customer relationships and higher revenues.
Automotive manufacturers use AI on the assembly line to automate tasks and to help predict machine failure. In the vehicles themselves, AI-powered advanced driver-assistance systems increase safety for drivers with features such as automatic braking, driver drowsiness detection, and lane departure warnings. Advances in AI may make it possible for complete autonomous driving not that far in the future.
Scientists and mathematicians have understood the concept of AI for decades. But what makes AI more powerful today are the advances in computer software, data storage, and algorithms. Today’s AI-embedded software programs can rapidly process massive amounts of data to identify patterns, develop insights, and give businesses the confidence to take actions.
The best way to understand AI is to think of it as a set of technologies that can perform cognitive functions more associated with human intelligence, such as reasoning, learning, and problem-solving. Because of AI’s immense potential, its impact has been compared to the invention of electricity, creating in essence the Fourth Industrial Revolution.
MODELING THE FUTURE FOR BETTER DECISIONS
Like most businesses, your dealership probably collects extensive data from multiple sources. It's likely you use some form of business intelligence to help understand what happened in the past and how these patterns will play out in the future. AI is different in that it can go deeper with the data, telling you why things happened and giving you models to predict the impact of future actions.
“The predictive and prescriptive nature of AI can make any organization’s data much more insightful and useful,” says Sumeet Bhatia, Head of Innovation for Zurich North America. “AI has truly revolutionized the process of identifying, analyzing, and leveraging all forms of data to make quicker and better decisions,” he explained.
For Zurich, AI has improved the speed at which underwriters can collect the data necessary for an application, eliminated the manual input of data, and reduced the amount of work for customers and brokers in providing information. “AI gives us the insights and predictive analysis we need to provide each customer with the best insurance solution for their specific risk,” Bhatia said. “I think the same benefits that AI provides to Zurich apply to all businesses—the opportunity to provide more personalized offerings and a higher level of customer service.”
THINK AI IS ONLY FOR BIG BUSINESSES?
In a 2018 survey of Vistage members, CEOs of small and medium-sized businesses said they expect AI to have the greatest impact on their business of all new technologies.¹
Those already using AI indicated the two top uses:
51% - Business Operations
45% - Customer Engagement
AI CREATES A COMPETITIVE ADVANTAGE IN MARKETING AND SALES
In a comprehensive research study of AI, global consultancy McKinsey discovered that the adoption rate of AI is lowest in the automotive sector compared to all other major industries, particularly adoption of AI in the marketing and sales functions. McKinsey’s report suggested that automotive retailers “can capture massive value if they can translate AI’s potential into concrete change.”
AI can be deployed in all areas of your marketing and sales to increase customer acquisition and decrease costs:
- Targeted messaging: Instead of trying multiple ads across different channels, AI can target your high-potential customers with the right messages at the right time. This can help cut through the noise of your competition and achieve a better return on marketing investments.
- Increased personalization: Consumers have come to expect a personalized experience, and want to be recognized as individuals through the purchase journey. AI-driven marketing platforms can provide specific and relevant information to your customers, whether they are in the buying process or in vehicle ownership. Personalized messaging creates a stronger brand loyalty with your dealership.
- Maximized lead generation: AI is now being infused into customer-relationship management (CRM) systems, and can automate communication activities such as email and social media. You can generate more high-quality leads with the same level of marketing spend, improving ROI and the customer acquisition process.
- Predicting a buyer’s needs: AI can identify every consumer in a geographic marketplace by analyzing both public information and your dealership's data. Software programs can use this data to anticipate a buyer’s needs, help the sales staff predict questions and determine opportunities to upsell and cross-sell.
- Building stronger relationships: Adopting all AI-enabled approaches mentioned above gives your salespeople more time to do what they do best — create stronger personal relationships with potential customers and better serve existing clients.
INTRODUCING AI TO YOUR DEALERSHIP
Although it may feel daunting to begin the AI transformation journey, the first thing to realize is that you shouldn’t feel the pressure to hire additional data or marketing experts in-house. There are experienced AI providers that have created use cases for dealerships of your size, and can bring their collective knowledge to your organization.
“Before worrying about underlying technology, it’s important to have a clear picture of your sales and marketing strategy,” said Bhatia. “Then determine a test pilot that will support your strategy and measure how AI adds value.”
Think of the AI transformation in three phases: data identification, test pilot of a use case, and organizational rollout.
The first phase requires identifying all the data sets within your dealership that can be combined to provide a holistic view of your customer base. For example, this could be historical purchase data from the sales department and website analytics and campaign response rates from marketing. In addition, you should identify the other data you may need such as publicly available demographics. These data sets can then be combined with your CRM platform to provide a robust view of all your potential customers.
The second phase is selecting a use case to develop as an AI test pilot. Some examples of a use case:
- Personalized marketing messages
- Lead management automation
- Upselling and cross-selling through marketing channels
- Programmatic advertising to automatically target audiences
- Dynamic pricing offers
Once you’ve tested one or more use cases and have measured a positive impact, your dealership is ready for a full rollout across all marketing and sales activities. According to the McKinsey report, companies that make the best use of AI in their sales process typically see revenue growth of 5% to 10% with the same or improved margins.
AI AS A FUTURE-PROOFING STRATEGY
No one can predict what the future will bring with regard to new products, innovative digital channels, or customer trends. But one thing remains clear: Companies looking to expand market share, grow their revenue, and reduce costs need to leverage their data to identify market opportunities and stay relevant with customers. Data is the lifeblood of every organization today, and leveraging AI is a way to analyze all sources of data and generate the insights to seize future opportunities.
AI’S TRANSFORMATIVE ROLE IN MARKETING
McKinsey’s report on the role of AI in the automotive industry highlighted three areas where it is transforming marketing capabilities:
Automation: Providing direct product, pricing, and promotional information to a car buyer based on their preferences and behaviors
Forecasting: Predicting customer behavior by learning and adapting to new and ongoing data
Personalization: Using a wide range of customer data to carefully target products, promotions, and price offers
This article was originally published in Zurich NA's "Dealer Principle", Volume 2, Winter 2020.