Is Your Dealership Marketing Waaaaaay out of Balance?

Here’s a simple test: Walk into the accounting department in your dealership and say, “Can you please tell me how much money we spent last month on advertising to acquire new customers and how much money did we spend last month on retaining past customers?”

Chances are good that your budget to find new customers blows away your budget to retain old ones. Makes sense, right? You want someone to buy a new car and former customers have already bought one. Simple.

Except that it’s not right. The reality is that it is much more expensive to acquire a new customer than it is to resell an old one. In your files you have a ton of customers from three to four years ago that are in the market for a car right now. Most dealers think that those old customers will come back to buy from the dealership again. Probably not. Want to check? Run a list of your customers from five to seven years ago and check to see how many of them have recently purchased another car from you. Hardly any? That’s because you spent all your marketing dollars chasing new buyers and spent little or no money trying to keep and resell your old customers.

I am not suggesting you put all your money in retaining/reselling old customers. I am suggesting you create a balance. Budget for both. Perhaps you dedicate 75% of your budget to new customers and 25% to reselling old customers. If you want to read more, check out an article that ran in ClickZ by Ohad Hecht titled, “Retention vs. Acquisition – and the winner is…” You can read the full article here.

Run a target list of old customers from four to six years ago, ask your sales staff to call them and see where they are on their car buying cycle. Then create a chart to see how many of the old customers you can sell again. It’s a goldmine you need to tap.

Brett Stevenson


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