2009 was a dismal year for new car sales, but it is a new year and (knock on wood) things are starting to look better. By no means, however, does this mean that we can go back to the way we were doing business just a few years ago. In this new economy we must all pay close attention to our budgets and work to eliminate waste and increase efficiency. Marketing is one of the most expensive parts of most dealership budgets, but it is also one of the most important. So in order to help our readers learn to market their dealerships more efficiently and effectively, we spoke to some of the industry’s leading marketing experts to bring you their thoughts on how you can get more out of your marketing budget and grow your bottom line. What works for one dealership may not work for another when it comes to a marketing plan. That is why we have assembled a diverse group of marketing experts. They may not always agree, but our goal, irrespective of opinion, is to provide you with a comprehensive view so that you can determine what will best help your dealership succeed in 2010.
Q: What are the major, marketing challenges dealers face in the current economic environment and what are your solutions?
The major challenges dealers face is selling enough cars to stay in business and keeping costs in line. Dealers still need to spend money on advertising to maintain “top of mind awareness.” Dealers must weigh the option of cutting costs to the point where they miss out on advertising opportunities and therein miss sales opportunities.
More than ever, dealers understand that their marketing must be tied to actual sales. Each dollar they spend must help them reach in-market shoppers and position their store to win their business. Beyond continuing to advertise and advertising in the right places, dealers must promptly respond to every inquiry they receive and stick with customers until they’re ready to buy. We continue to see too many dealers focusing on a 72-hour push and losing deals to competitors who are willing to follow-up with prospects for 30, 60 and 90 days—and beyond. Every sale counts, especially in the current economic environment. Fewer consumers may be in the market, but the ones who remain are serious about making a purchase. If you want them to buy from you, let these shoppers know what you have available and build excitement around buying a vehicle from your store.
The major marketing challenge today is for the dealers to figure out the best way to reach the most consumers for the smallest amount of money. Historically, according to NADA, automotive dealerships have spent $500-plus per-new-vehicle-sold in advertising costs, and the lion’s share of that spend has been on traditional media like newspaper and TV. But the auto shopper has changed dramatically in the last few years, and is now first and foremost a searcher and, increasingly, a consulter of online customer reviews. Consider: roughly 9 in 10 car shoppers now turn to search engines—and three in four now turn to online dealership reviews. Our solutions (which we call total ‘Search Asset Management, or SAM) are designed to tackle these staggering consumer realities, and make sure that dealers can reach virtually all these online searchers and review readers.
In any economic downturn companies are faced with shrinking demand and the need to manage their expenses to maintain profitability. Budgets are typically cut, however, marketing is still important in a downturn to stay top-of-mind with existing customers and acquire new customers. What we recommend is that dealers focus their marketing efforts on highly efficient programs such as managing their online reputation. Consumer reviews have been shown to strongly influence customer purchase decisions. According to comScore, 78% of car buyers report that user reviews have a significant impact on their purchase decision. We encourage dealers to stay on top of their reviews and manage online reputation through the DealerRater Certified Dealer Program.
Q: If you were a dealer in today’s auto market, with a limited marketing budget, how would you spend it and why?
I would make sure I have a good mix of traditional media, combined with strong internet. I would put the majority of my money on TV. If you want to win, you need to be on TV. I would surely make sure I did not spread my dollars too thin. That is the biggest mistake dealers make, trying to be all things to all people.
There’s no question: I’d focus most, if not all, of my advertising budget online. I’d develop a robust website for my store so I could showcase all of my cars, and I’d fully merchandise my listings on the major automotive shopping sites. Why? We know that 92 percent of Americans with web access go online to shop for their next vehicle. There simply is no better medium than the Internet to reach in-market shoppers and give them the information and confidence they need to move forward with a purchase. Someone watching TV or listening to the radio might be interested in buying a car, but there’s no doubt about the same person’s intentions when he or she is checking out a dealer’s listings online.
Whether I had a very limited marketing budget – or a huge marketing budget – my answer is simple: I would first invest in great SEO, and make sure that my website is placed prominently on the first page of the Googles as many times as possible for all the relevant search phrases directly related to what I sell. I would also make sure that I had a great, user-friendly, high-converting website. Cutting corners on website creation/design is a big mistake. Dealers invest in splashy multi-million dollar brick-and-mortar buildings, but they need to realize that their website gets seen and ‘entered’ more often, by more people than their showplace building does.
Secondly, I would do everything to ensure that my ‘online reputation’ actually matched my ‘community reputation,’ by making sure that I had a high volume of positive reviews from happy customers across the web. Our service s super-affordable and helps dealers with a process that is very time-consuming and confusing—but aside from manpower, this can essentially be free.
If 9 in 10 auto shoppers are hitting the search engines first, then my money is best spent getting my website in front of them 24-7-365. And these facts are indisputable: the organic search results are the most trusted, the most used, the most clicked, and leads that originate from a dealer’s website deliver the highest closing ratios. SEO and Online Reputation Management are so unbelievably affordable, for the business they deliver, month in and month out.
I would spend my dollars online and capitalize on the efficiency of a well thought out online plan. I would make sure I take advantage of low-cost and high impact tools like third party customer review sites. Sites like DealerRater are very low cost and highly effective in spreading buzz around the customer “peer message.” I would also ensure I spent some money on other low costs tactics like direct customer emails and selective search engine marketing. Think about your customer and understand where they go online to gather information; then place your message in front of them.
Q: What is the best way to measure the return on investment from your marketing and which media are easiest to track?
Best way to track results is to count your phone calls and count your ups. If you are getting a lot of phone calls or web hits from one media versus another, that is where you need to be spending. If you are getting people into your showroom with a newspaper ad in hand, you know that ad is pulling. If people are talking about your TV or radio, you know it is getting the attention of the car buyer. Common sense will tell you what is working.
The best – and most objective – way for dealers to determine their return on investment is to measure their advertising exposure. In fact, internet media is the easiest to track because it allows dealers to know exactly how many times their listings appeared in search results on an automotive shopping site and how many times their listings were viewed by car buyers.
We also recommend dealers look beyond emails and phone calls to evaluate the effectiveness of their online strategy. To understand the effect of third-party sites on walk-in traffic, we recently conducted an in-depth survey of actual car buyers in real dealerships. We found that one-third of the shoppers who used Cars.com or a partner site came into the store without first contacting the dealership.
Tracking and measuring ROI on traditional advertising is, of course, notoriously hard—but implementing a unique and track-able toll-free number on each campaign, at least gives some ballpark idea of how the marketing worked. One of the massive benefits of internet campaigns are they are far more track-able and measuring incoming call data (also by setting up unique numbers), unique website traffic data, and data on leads submitted at the website are totally key. If a dealer has a firm grasp on all of the above they can establish the true ROI for each campaign.
Effectively measuring marketing ROI comes down to whether you can tie a particular marketing program to a change from normal sales volume. Some ways of doing this are to use your staff to ask customers what brought them to your location and if a promotion is enticing them to purchase—be sure to diligently catalog this data. Depending on the marketing tactic, you may also be able to have customers use a promo code in order to get a deal thus making tracking easier. Additionally, dealers should ask for as much data as they can from any media outlet they use as the media outlet usually has tools to gather data. Typically online media is easiest to track as there are quick metrics to see how many people looked at an ad, how many explored it further (clicked on it) and how many were ultimately converted into customers (assuming you are measuring what it drives to the showroom). Use the ease of tracking online to your advantage by driving customers to the web through simple website links in any traditional media you might run.
Q: What is the biggest mistake dealers make when it comes to their advertising?
Handling it without professional guidance. Dealers all think they are smarter than everyone else. However, it is amazing how many mistakes they make when they handle their own advertising. They have a tendency to buy the shows they watch, or the radio stations they listen. They don’t understand how to read a rating book, so they don’t know anything about cost per point, or cost per thousand. They think they know how to develop a compelling message, but dealers usually don’t. Dealers need to step aside and find a professional to guide them.
The biggest opportunity we see for dealers with their Internet advertising is consistently following their process. While many dealers market their listings with video and multiple, high-quality pictures, descriptive sell copy and competitive pricing, a significant percentage fall short with implementation.
We recently conducted an in-depth analysis of approximately 230,000 new and used cars advertised on Cars.com. The results illustrated the correlation between good marketing and the contacts and traffic dealers receive. They also revealed some surprising and needless gaps: seven percent of the listings did not include a price, and 13 percent did not feature pictures. If you’re a dealer investing hard-earned dollars to advertise your listings, why drop the ball at this critical point? While some shoppers may contact the dealer for the missing details, most will simply move on to the next listing. Remember, online, your closest competitor is just a click away.
We encourage dealers to be similarly mindful of their sales process, especially in the current climate where shoppers require more time to make a purchase decision. As I said earlier, dealers must be prepared to work with car buyers for three months or more if they want to win the deal. In fact, a recent analysis we conducted with Experian Automotive found that 63 percent of Cars.com customers who contact a dealer by email or phone do buy a car. Of those, 58 percent do so within 90 days.
No question: advertising without tracking the ROI. When dealerships first started being affected by the nasty economy a couple years back, in too many cases the call-tracking companies were the first to get axed. Unfortunately, this meant dealers had pretty much no understanding of where their web and phone traffic was actually originating, so they couldn’t make the most informed decisions precisely when they needed to most. Say, one month, a dealer spends $1,000 on one campaign, and $20,000 on another. It’s conceivable, that the $1,000 spend brought in 95% of the business, and the big spend only generated 5%. Without relentless tracking and measuring the ROI, they have no idea they could cancel 20k from their monthly budget and focus more on the initiative that brought in the most customers. Tracking is the weapon that lets you continually refine your marketing plan, so it delivers, the most cost-effectively.
Customers have become very savvy at understanding and avoiding advertising, as such they know when dealers are tooting their own horn. The more dealers can direct prospects to third party reviews and testimonials that show the dealer’s strengths, the better this message will be received. Dealers should push prospects to online reviews of their dealership so potential customers can read what actual customers are saying about their dealership experiences.
is the president of Letizia Ad Team-Automotive marketing division, a full-service advertising agency specializing in automotive. He can be reached at 702-870-2362 or email [email protected]
is the president of Cars.com. He is responsible for the daily operations that have transformed the company into a leading online automotive destination. Golub’s primary focus continues to be on the development of Cars.com’s strategic direction.
is vice president of eXteresAUTO, a provider of advanced SEO and online reputation management. She has twelve years experience in the auto industry, and has been with eXteresAUTO since their inception in 2007.
is the president of DealerRater. He founded the company in 2002 to help customers share their car dealer sales and service experiences online. He may be contacted at 800-266-9455.