Equity mining is a great concept, and there is definitely a time and place forit. Some dealers love it, and nearly all dealers have utilized an equity miningtool or company at some point.Equity mining, however, has a fundamental flaw that isn’t often discussed: most people with equity don’t buy cars often.My ideal customer often has a little negative equity. Not so much that they cannot be financed, of course, but they have a small amount. Why? Because it shows that they tend to buy vehicles regularly. A lot of people who would be open to buying a car may not necessarily have much equity. People with paid off cars often don’t buy cars as regularly as those who are still financing. No equity can often be a sign that they tend to trade their vehicles in regularly. The equity mining message has always been something akin to this:“Would you like to buy a newer car for the same payments or lower?”For those who are still financing their vehicle, this makes sense. It’s a great way to stir interest in trading in their vehicle for a newer model. However, for those who aren’t in this position, this line falls flat. It isn’t relevant to them. To me, equity mining has always felt like there are a lot of deals beingleft on the table. As such, it isn’t something that I’ve ever really entertained or implemented at my store.Nine times out of ten, you have a better chance of selling someone who has a little negative equity than someone with a paid off car. Convincing someone who currently doesn’t have a car payment to take on a car payment is a difficult task. Chances are, if they’ve paid their vehicle off, they’re not going to want another vehicle until theirs eventually breaks down. Really, we can’t expect them to. We can sell on value and on our various warranties, but this is still a difficult sell for someone who is effectively saving hundreds of dollars a month by not having to finance the vehicle that they’re driving. Displaying value for a person to spend over $400 a month when they’ve been pocketing that money for the last year or so is a difficult feat to accomplish, and this is the fault that often lies within equity mining. This type of customer is not the ideal customer for this tool, and the unfortunate reality is that this type of customer is becoming increasingly prevalent given the economic situation of today. At the time of this writing, cars on the road are older now than ever before. How will equity mining successful target the specific customer needed when this poolis drying up more and more every day? Why are we spending time and money attempting to attract what is now an increasingly less common type
of buyer, when we could focus our attention on a much wider, often more profitable audience?Instead of relying on an equity mining vendor, we have the ability to go into our own database, utilize automations to text the people in it, and go from there?You already have the ability to hit your customer database through direct mail and automations. And, by going the automation route, it is easy, cost effective, and works fairly well. Rather than limiting ourselves with a miningtool, I’d rather just go wide and ensure that all of my customers, regardless of where they may be at as far as equity is concerned, have been reached out to with a relevant message that they can understand and easily see the value in. We often discuss how technology within the automotive space is far away from that of similar industries, but it really doesn’t have to be. All it takes is an open mind and a willingness to do things differently than we have in the past.Change is scary, and this is why dealers are often fearful of taking that first step.I get it.My advice, however, is not to fall back on what we’ve relied on for so long. Instead, save your money, push your store towards innovation, and I believe that everyone from your customer to your desk manager will be grateful that you did.Automation, A.I, all of these terms have been thrown around quite a lot within the last two years, but don’t think that they’re all just a fad.My stores are proof that they’re here to stay, and can quite literally change our industry for the better.