7 Steps to bring Artificial Intelligence Power to Auto Dealerships

Everything, from what we watch on our favorite streaming service to how we shop online these days, is driven by artificial intelligence algorithms. It is completely changing how customers are engaged, retained and acquired. This blog details the AI-driven game-changing opportunities waiting to be exploited by Auto dealers and how to get there.

Over the last few years, you must have heard a lot of different buzzwords. For example, artificial intelligence, big data, data science, machine learning, deep learning, and more. You may have also heard examples of how these are transforming different businesses. In reality, these are not buzzwords, but instead real opportunities that must be taken advantage of.

“35 percent of what consumers purchase on Amazon and 75 percent of what they watch on Netflix come from product recommendations based on such algorithms.”

Technological buzzwords defined in the context of an auto dealership    

Big Data

Big data is a dataset so big and complex that traditional data-processing software is not able to handle it. Typical dealership data may not be big data. However, it becomes big data if dealership data for the last 30 years is combined with external data such as demographics or behavioral data for every customer.

Artificial Intelligence (AI)

AI is a computer system that can perform tasks which typically require human intelligence (i.e., decision-making). Dealerships may ask: How does it apply to my dealership? Will robots be taking over my dealership? Hold onto that question for a bit.

Machine and Deep Learning

Machine Learning is the science of computers acting without being explicitly programmed. Machine learning approaches are used to create your artificial intelligence-driven recommendations, predictions, and more. Instead of telling the program what to do, these approaches learn from the data and continuously refine to become more intelligent. Deep Learning is a sub-area of machine learning that is inspired by how human brains work.

Data Science

Put simply, Data Science is the art and science of drawing intelligent, actionable information from your data. Some dealers have been doing it in the basic form, called equity mining. In this very basic form, it lets you know when your customer’s lease or warranty is expiring and more.


In the auto dealership’s context, here are some opportunities and benefits you will start realizing by using these technologies:

Targeted Conquest Marketing

Want to find the 1000 best customers for a make and model you want to push instead of blindly sending blast mailers to hundreds of thousands? Machine and Deep Learning along with Data Science can help you get that list with a high degree of accuracy. It completely changes how you spend your marketing budget and exponentially increases your ROI.

Customer Engagement and Loyalty

Want to convert your service advisor into a customer engagement expert? Using these technologies and with the right external data, you can provide your service advisor with a real-time 360-degree view of the customer and vehicle. Enable your service advisors to personalize interactions, build trust, and increase transparency.

Personalized Marketing

Personalized marketing is much more than addressing the customer by their name in your marketing communication. It is being able to deliver one-to-one offers and messages to your customers. These technologies enable your dealership to truly personalize your marketing for service, warranty, and sales so that every customer gets an offer based on their needs, preferences, and wants. 

Predict and Prescribe

Do you love your Netflix and Spotify movie or music recommendations? These are nothing but their prediction machines in action. Prediction machines are a critical component of artificial intelligence revolution that is powering businesses worldwide. It has wide applicability in the dealership world. For example, you may predict when a customer is ready to buy, what the three cars are from your inventory that would get their interest, and what offer or price would close the deal. Additionally, you may predict the next service based on customer usage, maintenance needs, or problems associated with a similar model car proactively.


Remember the “You may also like” or “Customers who bought this item also bought” during your online shopping? You can bring similar capabilities to your dealership to intelligently cross-sell/upsell. As an example, find a sales lead from service. Simple analytics on service appointments can help. Want to turn your salespeople into super salespeople? You need more than the basic mining of the service data. You must also understand who is a good target, who is actively looking out for a vehicle, what their spend potential is, and what offer will close the deal.

Operational Optimization

Simple use of analytics can help optimize your service shop or sales, but do you want to take it to the next level by adding external elements? As an example, how is the upcoming weather pattern going to affect your sales or service? What are the marketing efforts needed to minimize or maximize the effect?


How do you get there?

Sounds promising? How can dealerships take advantage of these opportunities and how do you reach this stage? A simple, seven-step approach can help you get there:  

  1. Digitize all your customer engagement touch points: Everything starts with the customer. The power of using these technologies comes when all your customer engagement touch points are digitized. Digitized customer engagement enables you to make automated, real-time, direct communication with the customer.  
  2. Start with the business problem: When you are bringing in intelligent machines, you are not just trying to replicate the smartest person’s thinking and approach, though it can be a good starting point. What these machines enable you to do is put that person on steroids and provide them with unparalleled decision-making support and intelligence.   
  3. Bring-in external data: With the digitization of customer touch points, you will have your internal data available and ready. However, the real potential of these technologies comes in when you bring in external data. For each business problem, think through and identify what type of external data you need.
  4. Stitch the data together: The next essential step is to stitch together relevant data for demographic, lifestyle, behavioral, manufacturer, valuations, industry, weather, economic data, along with your dealership data, to create a complete view that the machine can use for its predictions and recommendations.
  5. Test and tune: The good part about machine learning and deep learning algorithms is that it is not a one size fits all solution. There are many algorithms – You can pick and choose the algorithm that best works for your problem. Where do you have extensive data, where do you not, what are you predicting, do you want a recommendation or ranking?
  6. Automate and make it real time: The real power of these technologies comes in when it drives real-time business decisions. Imagine if Amazon analyzed and reviewed the data at the end of the week or month. What if they then decided on what recommendations they should offer the customer? Amazon would be out of business by now.  
  7. Learn and improve: The learning and improving capabilities of these technologies is a key strength. If you feel that Amazon and Google recommendations are becoming better and smarter, that is because they are continuously learning. In simplest terms, here is how it works: Let’s say you show the AI robot its conquest marketing report card, that consists of which customers it predicted and which customers bought from the dealership. For every wrong prediction, the machine gives a rap on its hand, and for every right prediction, it rewards itself. The goal is that the AI robot learns from the results and continuously improves. Therefore, this process assures that its next prediction and recommendation cycle is better than the last one.

Augmented Intelligence for auto dealers

What is very exciting with these technologies is that you get instant Nirvana – you can realize an immediate, measurable return on investment.

Let’s take the example of a dealership-customer interaction. Assume your service advisor has a virtual assistant. Their job is to tell the service advisor who the customer is, their needs and preferences, what is recommended, and what can you upsell/cross-sell to the customer. All of this is in real-time! This virtual assistant can represent the artificial intelligence or, as we call it, Augmented Intelligence you are providing to your dealership personnel.

So, no, I don’t see robots invading your dealership. With these technologies, it is like combining your best sales person’s intuitiveness with the geek who gives you perfect analysis at the end of the month. You can picture that combination working as assistants for all your dealership employees, making everybody a super sales or service person.

Welcome to the world of augmented intelligence virtual assistant for every dealership employee!

Don’t you wish your dealership had a superpower like that?


One Reply to “7 Steps to bring Artificial Intelligence Power to Auto Dealerships”

Leave a Reply

Your email address will not be published. Required fields are marked *