Wednesday, June 9, 2010

POS Data Management – Has Anybody Cracked the Code?

No, but they are trying. Two primary observations became apparent during the POS Data Management and Utility roundtable at Indy. First, hardly any OEMs knew what the others were doing. Second, almost all OEMs were trying to do at least something with POS data. The majority of the session was spent listening to “status updates” about their basic efforts with POS data. For the most part, we learned about fairly advanced initiatives, but there were laggards – especially within the heavy truck industry.

By the time the session was over, the profile of a typical “active” user of POS data started to emerge. Active OEMs pull dealer inventory nightly or weekly for D2D programs. But this was old news – it does not carry a wow-factor anymore. At the parts counter and service lane, some OEMs use the services of a 3rd party to pull weekly invoice or transaction level data. In addition to knowing transaction details like date, part number, and price, they can also monitor retail and wholesale separately. All OEMs at this level of sophistication used the data for something; but this is where the similarities ended, and the different paths started to emerge.

Faced with this breadth and depth of data, OEMs have developed a number of unique initiatives guided almost entirely by POS data. A few interesting programs include:
  • One OEM uses the data to track individual dealer loyalty and service retention.
  • Another OEM checks dealer inventory before major marketing pushes to make sure they can handle the expected surge in demand.
  • For one OEM, 90% of loyalty and incentive programs are based on dealer sales and not dealer purchases. In other words, they are leaving push promotions behind to focus on pull promotions.
The “Holy Grail” of POS data, as one attendee put it, is being sought by one of the Asian OEMs. They want to track VINs through time to create a one-stop shop for everything about the history of a particular vehicle: manufacture, initial sale, service records, ownership history, until eventual scrap. The big issue is emerging - integrating the huge number of differently formatted data streams.

Some OEMs found themselves in a similar situation - their multitude of programs were creating so many dealer metrics that their dealers were overwhelmed and couldn’t absorb more information.

But what about heavy truck? The best-in-class performers track inventory and tie some incentive payments to parts sales. The runner-up just started using collision estimate data to learn about what was happening in the marketplace. While HT may be behind the eight ball in using POS data, they have the advantage of being able to model their efforts after one of many successful auto OEMs.

Bottom Line: What can be learned? First, an observation: the enormous breadth and stunning depth of POS data has set OEMs adrift in a sea of invoices. A few have charted rudimentary courses, but the traditional tools that OEMs have to analyze, act upon, and communicate data are simply insufficient. To remedy this, several OEMs have developed their own web-based data analysis and reporting tools to communicate with the field and their dealers. No OEMs touted the effectiveness of any system they were using. This means there is an enormous opportunity for collaboration between OEMs – or even a 3rd party – to develop effective tools to analyze and communicate the intelligence buried in this data. IT departments should not be the gatekeepers of POS data knowledge – an effective web-based reporting tool will quickly return a few actionable and timely industry standard KPIs for dealers, while the field can run simple queries on up-to-date data quickly and easily. To anyone who doubts that this could ever happen, one attendee reminded the group of a recent AAIA announcement that said 9 out of the top 10 independent aftermarket companies share POS data from 18,000 retail outlets.

Brief Glimpse at Vision of What The Potential Is:

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