General Motors is helping its dealers try equity mining by paying roughly half the cost of the software for a year. Equity mining helps identify prospects who can trade into a new vehicle for about the same monthly payment.
Dealers who participate in the program are eligible for a $5,000 credit through an annual enrollment in GM’s Standards for Excellence (SFE) program, which compensates dealers on a quarterly bases for reaching sales and customer service objectives, or adopting new initiatives such as technology.
GM is subsidizing dealer equity mining solutions with four vendors: AutoAlert, Dominion Dealer Solutions, DealerSocket and Pearl Technology Holdings’ VehicleXchange. The $5,000 subsidized by GM pays for roughly half of a year’s subscription to the RevenueRadar equity mining software provided by DealerSocket. The move represents the first time that the automaker has subsidized its retail partners to use equity mining solutions.
Equity mining works by calculating which customers have equity in their vehicles, allowing dealers to pitch a new vehicle at roughly the same (or sometimes even lower) monthly payment as a customer’s existing one. The offers are generally made by email, phone, direct mail, or in person while the customer’s vehicle is worked on in service.
“Our dealers are seeing a heavy flow of service business”, Chevrolet U.S. Vice President Brian Sweeney told Automotive News. “Some of those folks potentially are in equity, but haven’t been back in a long time to see the new showroom and all the great new product. They’re open to a potential test drive or sales.”
To participate in the SFE-based equity mining program, GM dealers needed to have signed up with one of the approved vendors by December 31st, 2014. Those dealers that were using one of the vendors before the program officially began were still eligible for the $5,000 credit.
GM declined to tell AN how many dealers have enrolled in the program.
The GM Authority Take
It’s great to see GM embrace equity mining from “the top down”, as it’s a great way to showcase its new, highly-competitive vehicle lineup to those customers who might not be familiar with it and reach customers who might not have started shopping for a different vehicle.
All in all, the program should lead to incremental gains in customer retention (by ensuring that existing owners don’t switch to a competitor’s vehicle when they are in an equitable position) and, ultimately, gain incremental sales. And that’s truly what it’s all about.