Leveraging Data-Driven Insights for Inventory Optimization
Oct 26, 2023
Over the next few years, the US used car market is expected to grow at a compound annual growth rate (CAGR) of 7.51%. As a result, it’ll be worth $302.47 billion by 2027, up from 195.84 billion in 2021.
While such growth indicates a positive outlook for the sector, Dealers know that they can expect ebbs and flows in demand along the way.
This is why inventory optimization is crucial for your dealership to capitalize on market growth. However, to get ahead of the competition, relying on historical data alone for inventory management won’t cut it.
Instead, find out how you can leverage tools that will help you know what to stock, when, and why, improving your customer experience, loyalty, and sales.
Understanding the value of data in inventory management
As most dealers know, over the course of the year vehicle supply and demand will fluctuate.
For instance, if you have plenty of cars in your inventory during periods of low demand, you may be left with vehicles that are not in high demand once the market shifts. On the other hand, insufficient inventory during peak demand will lead to lost opportunities.
To consistently operate profitably, inventory optimization is key. While traditional car inventory management may help with this, it leaves you blind in one key area: knowing what to stock and when.
This is where data-driven inventory management comes into play. It looks beyond historical data and accounts for current market conditions and customer preferences. Some of the real-time data you can use to gain a more accurate picture of the market include:
Patterns in purchasing and searches
Such data will give you invaluable insights, enabling you to predict which vehicle models will be in high demand. With this information, you’ll know which vehicles to stock and when, enabling your car dealership to maximize profits and stay ahead of competition.
How to leverage data-driven insights to optimize inventory
As you prepare to leverage data-driven inventory optimization, the goal is not just to collect data. It’s about using the data to advance business objectives and strategies . Here are a few ways to get started:
Implement a customer relationship management (CRM) system – This will help you track and analyze customer interactions, preferences, and buying patterns, giving you valuable insights into which car models and features are in high demand.
Utilize social media listening tools – Doing so allows you to monitor online conversations and sentiment around specific car brands or models. This can help you identify emerging trends and adjust your inventory accordingly.
Collaborate with industry partners – Collaborate with industry stakeholders, such as manufacturers or dealerships, to tap into their data on current market trends and consumer preferences.
Utilize data analytics – Analyzing data is the key to drawing meaningful insights from sales data, customer feedback, and market trends. It helps you to identify patterns, forecast future trends, and make data-driven decisions, ensuring you have the right cars available to meet customer demand.
Stay updated on industry news and developments – Keeping up with the latest news and trends in the automotive industry on sites like the Cox Automotive Newsroom can provide valuable insights into changing consumer preferences and market dynamics.
Leverage data driven tools to get ahead of the competition
As car buyers browse online, they leave a digital trail of data. Newly enhanced Kelley Blue Book® Instant Cash Offer Buying Signals Plus aggregates and analyzes that data for you, then serves up actionable insights. Allowing you to see how likely a consumer is to dispose of their vehicle and/or purchase a new one, and even gain insight into their shopping preferences for a replacement vehicle. With these insights, you can take a more targeted approach to your lead follow-up and win more vehicles.
And the proof is in the results. Instant Cash Offer leads with Buying Signals Plus had a transaction completion rate 25% better than leads without Buying Signals Plus, whether the vehicle was sold through ICO or elsewhere* (source: Kelley Blue Book Instant Cash Offer data: Oct. 2022-March 2023). Plus, Instant Cash Offer is now making it even easier for subscribing dealers to understand where consumers are in their shopping journeys by including Buying Signals Plus badges in the Service Drive Acquisition dashboard. This valuable enhancement will help dealers quickly understand which customers should get the most attention based on their service appointment.
When you know where customers are in their car buying journey, you can provide a better end-to-end experience to win a vehicle – and gain a customer.
Additionally, products like vAuto’s ProfitTime GPS helps dealers build strategies that prepare dealers to focus on buying the right vehicles at the right time. Variable Management with ProfitTime GPS gives you the power to appraise and price every vehicle according to its unique profit potential.
Pioneering data-driven inventory management for the long run
By analyzing customer data and trends, businesses can make informed decisions about their inventory all year round. This can help optimize stock levels, reduce waste, and increase overall profitability.
When it comes to scaling a car dealership, you’ll need the right partner. That’s where Kelley Blue Book Instant Cash Offer comes into play. We offer various solutions to help car dealerships scale, including Kelley Blue Book Instant Cash Offer Buying Signals Plus.