The insight journey

Providing dealers with the key to improving sales, profitability and efficiency.

"Are you using data to make smarter decisions that drive your bottom line?"

There is a lot of talk about the value of data, data-driven decision-making and big data – but what does it mean and where do you start?

At Cox Automotive Data Solutions, we think about data-driven decision-making as a journey.

The Insight Journey

The insight journey

Step 1 Instinct

Speaks to the thousands of decisions you make based on your personal experience. For example: what coffee to order in the morning or what socks to wear – a lot of these decisions are so automatic you may not even realise you are making them. In the automotive industry, just one example is the years of experience that enable a dealer to know that a particular car is a good car. If we take the question: “It’s November, what car should I buy?” the answer might be: “I will buy this type of car because it always sells well for me.” In other words, instinct is your gut.

Step 2 Intuition

Is the next step along the Insight journey, where that experience is combined with data held in reports, and/or aggregated into key performance indicators (KPIs). It’s the count of how-many-vehicles-sold-for-how-much-money last month. Decisions are driven by data about past performance, coupled with instinct. For the question: “It’s November, what car should I buy?” the answer might be: “I will buy this type of car because I sold more of them in October than any other type of car.”

Step 3 Intelligence

Where the data no longer strictly counts or provides averages of what happened in the past, but where it is analysed for trends, patterns, and correlations. For the question: “It’s November, what car should I buy?” the answer might be: “I will buy this car because while they didn’t sell for me as well as in October, I know that the market for this type of car gets stronger every November.”

Step 4 Prediction

This is where historical data is used to predict the future, whether it is how long it will take a particular vehicle to sell or for which price. The maths get more complicated and the data requirements increase. For the question: “It’s November, what car should I buy?” the answer might be: “I will buy this car because the model predicts it will sell quicker than any other car, which aligns with my experience.” Experience remains important, as it helps inform which data should be inputted into the model, and can help validate the results of the outputs.

Step 5 Optimisation

The final stage, where historical data is used to determine the best decision, given a particular objective and set of constraints. For the question: “It’s November, what car should I buy?” the answer might be: “I will buy this car because doing so will maximise my annual profit.” Using historical data, the model would be configured to maximise a particular goal (in this case, maximise my annual profit) and a set of constraints (for example, you are a Peugeot dealer near Birmingham with 80 spaces on your forecourt, eight of which need to be filled with new stock).

Dealers who use data effectively gain advantage over the competition, selling more cars, more quickly, and for more profit.
Cox Automotive Data Solutions

Why is this important?

We find that businesses further along the Insight journey tend to sell more cars faster and for more profit. These more sophisticated organisations typically have access to and use better market insight about pricing, supply and demand, which enables them to make better decisions to outperform competitors.

And where do you start?

The first step is to understand the business process or decision that needs to be improved. Once that is determined, three things are required for success:

1 // Operational Capabilities 

Form the foundation of the pyramid. This includes the appropriately skilled resources, with the right tools and technologies to bring data together. Legal and compliance requirements also fall under this category.

2 // Communication and Education 

The middle layer of the pyramid. As data is introduced into operational workflows, it is important that the users have the right understanding and training to make sure that the full value of data is being realised. This may involve hands-on training sessions, online courses or webinars.

3 // Actionable Insight

The top of the pyramid. These are the meaningful results of analysis, where data is transformed into important attributes used to drive decision-making. It is essential to not race to the top of the pyramid, because without the operational capabilities and communication and education in place, it will be extremely difficult to benefit from any insight produced.

It is important that this is a pyramid; it isn’t a linear process. As data capabilities expand within an organisation, we find that the size of the pyramid grows.

Cox Automotive Data Solutions helps clients progress along the Insight Journey, working with customers to develop their analytics capabilities while providing data at the right point in time and in the right format to be used operationally for decision-making.

Get in touch today to find out how we can help you progress your own insight journey.

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