November, 2015 – This article from Media Post provides an excellent analysis and observations applicable to the marketing of various products to the affluent. (http://www.mediapost.com/publications/article/262297/expanding-the-pie-by-exploring-new-qualifiers-in-a.html)
By Lena Bourgeois
If you ask auto marketers who they’d like their ads to reach, they’ll likely say consumers who are in the market and ready to purchase. Each marketer may have different financial thresholds for their potential customers depending on the car model they’re marketing, but for the most part, auto marketing is unique in that it focuses exclusively on in-market consumers who have declared that they intend to buy a car.
This means that marketers are focusing on consumers who have previously bought a car of the same brand or family, been to their show rooms, or visited either their brand website or one of a third party. This kind of declaration is a great qualifier, but it may not be enough to grow a brand and increase revenue. Looking at the numbers alone, it seems obvious that there simply aren’t enough in-market consumers for every brand to attain maximum ROI. Auto brands need to develop marketing strategies that reach a much wider audience, especially when it comes to reaching affluent consumers.
A high proportion of driving-age Americans already own a car, and owning a car is an indicator that a consumer is likely to purchase another at some point in the future. Unfortunately, that time might be 12 to 14 years from the original purchase. And, after all that time, the consumer is likely to make their purchase within a few weeks of first declaring they are actively shopping. That’s why declared in-market consumers are so precious, and it’s why there is so much competition for the middle of the funnel. In fact, lots of money is wasted trying to reach consumers who have already made a purchase decision and left the funnel – marketers simply keep chasing a lead, even if it’s old.
The goal of marketing to more specific segments, such as affluent auto buyers, shouldn’t be to chase those consumers already in-market, but to create more in-market buyers. After all, a successful retailer doesn’t advertise only to consumers who have set foot in their store – it would be crazy to adopt that strategy! Instead, they market to consumers with the potential of shopping in one of their stores, a strategy followed by nearly all retail brands.
If a brand can entice a consumer who hasn’t already declared that they are shopping for a car in one way or another, then they may have a lead that none of their competitors has. In some cases, automakers may even be able to make a sale before any of their competitors even know about the lead.
So how does this translate to a major purchase like a car? Brands can use data to detect consumers who haven’t started to contemplate buying, but exhibit certain activities and capacities that put them in a position to buy. This requires stepping outside of the usual traditional efforts such as online cookies, lead-gen forms and post-dealership-visit email blasts or calls. Rather, it makes sense to identify additional qualifiers that are likely precursors to a consumer declaring they are in-market.
One example is finding consumers who likely have recently paid off their auto loans. If a consumer is no longer paying for a car, there’s a chance that they could soon look to replace their current car, or perhaps buy a second. By identifying that consumer early, a brand can market to them before they’ve even raised their hand.
Certain kinds of credit activity can also indicate a potential likelihood to purchase a car. A new line of credit or a new balance can often indicate a major life event, such as a marriage or the purchase of a house. Those consumers are also very likely to purchase a new car as well.
Financial capacity plays a major role here as well. Some automakers already look at estimated income to help narrow existing in-market segments, but they typically don’t do so on a granular level. For example, many simply use $150,000 in estimated household income as a cutoff for a luxury vehicle. We know that a household making $150,000 annually behaves differently from one who makes $300,000 or $500,000. Sometimes a consumer already making $150,000 may get a raise and decide to buy a new car early. The opportunity to turn that consumer into a lead is lost if marketers simply look at all high-income earners as one segment.
Automakers already run some of the best branding campaigns in the world, delivering aspirational messaging to a broad audience. But what we’re describing here is far different. It’s about going into the upper funnel and applying various qualifiers to identify new consumers who have yet to advance toward purchase. Branding will remain an important component of any auto campaign, but it lacks the ability to increase the size of the potential audience pie as dramatically.
Auto marketers have an opportunity to create affluent leads that they may develop from the very start by identifying logical, predictable and very granular qualifiers in the upper funnel. Doing so doesn’t mean that auto marketers lose any targeting ability or that they are reaching a less-qualified audience. It simply means they are identifying a consumer set that has not indicated its in-market intentions yet. Marketers who choose to look at other attributes potentially stand to waste far less time competing and more time selling.