Inception is an odd topic. We don’t think about it because we are so focused on the shopper who is already in the market to buy a car. Little effort is put into enticing our customers to become shoppers again. It ain’t an easy chore! Traditionally, it has been a manual approach fully dependent on a salesperson’s willingness to partake in talking to service customers or cold-calling past customers, chased by months of follow-up to continue nurturing the thought.
Fortunately, FRIKINtech automates the inception of the idea that a customer can buy a car when they are not already in the market.
How do we measure the power of inception? We compare deals attributed to FRIKINtech’s EQUITYiQ & SERVICEiQ product influence against all other deals based on leads generated. Simple. Separately, we look at the straight acquisitions or “street buys” that also come from these two products.
72-month loans and 36-month lease terms were the preferred financing lengths for all dealers and FRIKINtech-attributed deals in 2023. From here, things change. When a customer is in-market for a car, they have done more research. They may have talked to their credit union or saved the cash to write a check for the car they’re after.
FRIKINtech-attributed deals were 4 times more likely to finance through the dealership than all other deals.
For every 9.8 loans the dealership helped setup there was 1 cash deal from FRIKINtech-attributed leads. Compare that to 3.7 loans setup there was 1 cash deal for all other deals dealers did in 2023.
FRIKINtech leads had an 11% lease penetration rate vs. all other deals, hitting 6% nationwide on average. 85% of FRIKINtech leads bought with a dealer-assisted loan through the F&I department. 73.8% of all other deals were loans in 2023.
The average front-end profits for FRIKINtech-attributed deals was $1,691. That is $524 more than the average per copy of $1,167. The back-end profit for FRIKINtech-attributed deals was $2,063, or $440 better than the average of $1,623. Overall, FRIKINtech-attributed deals brought $964 more profit per deal in 2023.
We believe this gigantic difference is due to informing the customer they have equity they didn’t know about. And their excitement overcomes their desire to perform copious amounts of research.
Acquiring cars “street buys”
Some customers do not need to continue servicing or paying for one of the cars in their driveway. The equity they have is inspiration enough to sell their car outright.
There is no status in the F&I section of the DMS to show a vehicle was acquired from the street. We have to watch for the resale of these vehicles later. As I type this, there are still “street buys” that were not accounted for in 2023 but will be sold in 2024. These numbers may be lower than reality.
21% of total gross attributed back to FRIKINtech leads were the resale of vehicles acquired from people who purchased their car from that dealership or serviced their car there.
29.3% of these street buys came from the service drive. 11.4% came from previously sold customers.
Within the FRIKINtech products, dealers can target which Make, Model, Model Year(s), and mileage they want. Within SERVICEiQ, the Repair Order amount can also be refined just in case there is a hefty repair bill that indicates a vehicle the dealership does not want. Of course, dealers can also target customers based on their estimated equity and/or time from purchase to make sure people who are not in a good position to trade or sell their car are not receiving offers.
Does car-buying inception work?
If we were not emotional about our cars, we’d all be driving the same thing. The roads would be quite boring.
We’re also very curious people! So, if you received a text, email, or piece of mail from one of your trusted retailers telling you the product you have could be worth some money, wouldn’t you want to know what you could be sitting on?
Curiosity and emotion are powerful psychological tools. How long can someone sit on the idea they could have thousands of dollars toward something nicer before they take some sort of action?