Luther Automotive Targets HLV Customers

A new campaign targeting high lifetime value customers paid off with more sales, higher profits, and improved service retention for Luther Automotive Group.

February 2018, Auto Dealer Today - WebXclusive

by Michael Murphey

Minneapolis-based Luther Automotive Group uses targeted digital marketing to drive sales and service revenue at its 14 dealerships. Photo by Doug Kerr via Flickr
Minneapolis-based Luther Automotive Group uses targeted digital marketing to drive sales and service revenue at its 14 dealerships. Photo by Doug Kerr via Flickr

Luther Automotive Group is a Minnesota-based dealer group that started in 1952 and includes 34 dealerships operating in five states. The family-owned and operated company is the 12th largest dealer group in the U.S. by sales volume.

Core to Luther Automotive Group’s values is their “Drive to Serve” mission, which is brought to life by community involvement to help those in the area who have hit a rough patch meeting their basic needs, and to assist with addiction recovery and job readiness.

Mike Gallagher
Mike Gallagher

Not only does Luther place a high importance on serving its community, it also provides the “Luther Advantage” with every new car, used car or lease that is sold from their dealerships. The Luther Advantage includes gas and car wash discounts at Holiday Station stores, a Mall of America discount card, five-day or 500-mile return or exchange policy on used cars, 24/7 service scheduling online, free Carfax reports and more.

With the ongoing challenge of margin compression, Luther’s directors understand that simply selling cars is not enough anymore. Dealers must tap into their recurring revenue stream: the service department. Customers who service their vehicles with the selling dealership until they are ready to buy another new car are “high lifetime value” customers, and Luther Automotive Group is attracting them in spades.

Depth of Data

Since Luther Automotive provides such high-value services to their customers, COO Mike Gallagher said they grew tired of marketing to the masses to sell cars to anyone. The marketing team understood that identifying and focusing on reaching HLV customers would generate higher return on ad spend.

“It was time that our company learn from marketing tactics that have proven successful in other industries and shift our efforts to targeting to the right consumers,” Gallagher says. “As a dealer group with more than 60 years of history, we have a depth of first-party data available at our fingertips. We needed a partner who could help us improve how we were utilizing it for our marketing and targeting efforts.”

Luther Automotive Group partnered with Semcasting to implement SmartTarget Conquest, a product that helps identify and reach potential HLV consumers with a marketing campaign. They use it to feed customer data into a predictive model that identifies and scores households in their markets that have the appropriate affluence and lifestyle characteristics to meet the HLV criteria — and excludes households with a previous transaction at the dealership.

Once Luther Automotive Group determined this highly-targeted list of prospective customers who meet the model of a HLV customer for a particular dealership, they deployed a digital advertising campaign to reach them.

Proving Effectiveness

Gallagher wanted to be certain that the prospective HLV customers who were identified and targeted by his digital ad campaign were not customers who would have visited and transacted with the dealership of their own volition.

“It was important that we challenge Semcasting to prove the incremental effectiveness of the campaign. We are constantly executing various marketing efforts across print, television and radio, and also have a strong reputation in the area already,” he says. “The company exceeded my expectations with the level of attribution they were able to provide to prove the success of a particular campaign we ran for one of our dealerships.”

Luther Automotive hit its audience’s associated devices with an average frequency of three impressions per day, per household, for a 60-day period. Evaluating the resulting car sales from both the campaign and control audience for this campaign showed a conversion rate three times better than the control audience with a 17% higher average profit.

Of those who purchased cars from the campaign audience, a higher percentage returned to the Luther Automotive Group dealership within six months of the sale to service their car than Luther’s average customer.

“We pride ourselves on the lifetime value that we deliver to our customers with the Luther Advantage, and have been pleased to see how our focus on HLV prospects has already paid off,” Gallagher says. “Our ability to innovate has helped our group remain a high sales performer for more than 60 years, and we’ll continue to do what it takes to drive sales with today’s consumers.”

Michael Murphey is general manager of automotive solutions with Semcasting.

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