How did the car business become so concerned with cost per sale that it mises total available profit?
There used to be some wisdom n the age old axiom of measuring the cost of advertising per vehicle sold. However do we keep the same scorecard on our newspaper, print or electronic media (TV/Radio)? Today, with some of the tools that track phone numbers , it is possible to narrow down some of this, but how often does a dealership base their numbers on the sales force reporting back the answer to the question; “How did you hear about us?”
Until recently this would have accepted this as “normal practice”, however after recent discussions internally and with a few dealers have led to an adjustment of the paradigm.
Observation I: Putting all of the available advertising eggs into the Internet may not be the best move. According to the Cobalt Study of Dealerships for 2007, while 83% of car shoppers used the Internet to research vehicles and 79% used search engines to research dealerships, just over half (55%) of the leads a dealership receives convert into sales. The study went on to say that 90% of these customers made a deal at a dealership other than the one it was originally sent to, and 30% of the leads went unanswered!
Action Step: Have you ever “Googled” your dealership? Does the dealership name appear on consumer websites like the Ripoff Report? If a dealership is depending on the internet to fill the showroom with customers who intend to purchase a vehicle from that dealership, this may be leading to a false sense of reality.
Observation II: Is the information from the sales force is accurate regarding the marketing questions they ask? For example, unless the only marketing done is newspaper or the customer carries the paper in the door, is it possible to know if they came as a result of the newspaper? Salespeople are interested in selling cars and cashing checks, so maybe next month’s ad budget shouldn’t be based on their responses?
Action Step: Review the dealership’s advertising and see how to can add accountability to the marketing efforts being undertaken through separate 800#’s, the use of live operator call centers etc. Get verifiable email addresses from potential purchasers and customers and survey them regularly about the dealership’s ads and offerings. Consider using blind advertising as a method to increase special finance efforts.
Observation III: “Car Think” math does not always produce the right answer. Take a look at a dealership that utilized two types of lead sources with, what appear to be, widely varying results:
There used to be some wisdom n the age old axiom of measuring the cost of advertising per vehicle sold. However do we keep the same scorecard on our newspaper, print or electronic media (TV/Radio)? Today, with some of the tools that track phone numbers , it is possible to narrow down some of this, but how often does a dealership base their numbers on the sales force reporting back the answer to the question; “How did you hear about us?”
Until recently this would have accepted this as “normal practice”, however after recent discussions internally and with a few dealers have led to an adjustment of the paradigm.
Observation I: Putting all of the available advertising eggs into the Internet may not be the best move. According to the Cobalt Study of Dealerships for 2007, while 83% of car shoppers used the Internet to research vehicles and 79% used search engines to research dealerships, just over half (55%) of the leads a dealership receives convert into sales. The study went on to say that 90% of these customers made a deal at a dealership other than the one it was originally sent to, and 30% of the leads went unanswered!
Action Step: Have you ever “Googled” your dealership? Does the dealership name appear on consumer websites like the Ripoff Report? If a dealership is depending on the internet to fill the showroom with customers who intend to purchase a vehicle from that dealership, this may be leading to a false sense of reality.
Observation II: Is the information from the sales force is accurate regarding the marketing questions they ask? For example, unless the only marketing done is newspaper or the customer carries the paper in the door, is it possible to know if they came as a result of the newspaper? Salespeople are interested in selling cars and cashing checks, so maybe next month’s ad budget shouldn’t be based on their responses?
Action Step: Review the dealership’s advertising and see how to can add accountability to the marketing efforts being undertaken through separate 800#’s, the use of live operator call centers etc. Get verifiable email addresses from potential purchasers and customers and survey them regularly about the dealership’s ads and offerings. Consider using blind advertising as a method to increase special finance efforts.
Observation III: “Car Think” math does not always produce the right answer. Take a look at a dealership that utilized two types of lead sources with, what appear to be, widely varying results:
Traditional “Car Think” math would seem to indicate that $428 vs. $1400 cost per vehicle is a no-brainer. However if one source produces 58% higher gross profit per unit, despite the higher initial cost, maybe the math is flawed. An additional $23,500 more net profit would seem to be a more desirable result, especially if this result is consistent, month after month. The question that comes to mind is whether the goal here is to increase gross profit or produced a perceived reduction of costs? Is this a quick fix or long term plans?
Is it the cost or price of a marketing effort that a dealer should have concerns with? Price is the fee per lead; cost is something that takes into consideration time, effort, results etc. So, in order to effective measure the results of any marketing effort a dealership undertakes, measure the overall cost as well as the price of every vendor and provider you deal with. If each month in the automobile business stands on its own, then it makes sense to capitalize on money spent in previous months. Make the results of any marketing effort carry over from month to month, and the dealership can enjoy sales generated by marketing dollars that were spent in previous months.
Dealerships that succeed and thrive in this turbulent time look a little deeper to find all the information necessary to make smart marketing decisions. At the end of the day, the business of selling automobiles is much more complex than it seems to those people outside of our business. Don’t get caught relying too quickly on facts and responses that are not complete or accurate
Is it the cost or price of a marketing effort that a dealer should have concerns with? Price is the fee per lead; cost is something that takes into consideration time, effort, results etc. So, in order to effective measure the results of any marketing effort a dealership undertakes, measure the overall cost as well as the price of every vendor and provider you deal with. If each month in the automobile business stands on its own, then it makes sense to capitalize on money spent in previous months. Make the results of any marketing effort carry over from month to month, and the dealership can enjoy sales generated by marketing dollars that were spent in previous months.
Dealerships that succeed and thrive in this turbulent time look a little deeper to find all the information necessary to make smart marketing decisions. At the end of the day, the business of selling automobiles is much more complex than it seems to those people outside of our business. Don’t get caught relying too quickly on facts and responses that are not complete or accurate
