Woodworth Chrysler Dodge Jeep Ram Ltd.
Your Marketing Allocation is Backwards
Something to ponder….
You’re a dealer and 85% of your advertising budget is geared towards attracting new clients, and 15% towards retaining your clientele. Yet your new clients make up 30% of your business. So you're spending 85% of your budget on the 30% and only 15% on the 70%. To top it off, of that 85%, you allocate 85% of your budget to traditional marketing and 15% to digital marketing.
Confused yet?
I can’t honestly say that this is how the majority of dealers operate, but I can say with confidence that there are dealers who are still investing in this ineffective approach to marketing.
4 Marketing Questions that you must ask yourself;
- How much of your advertising budget is targeted towards drawing in new clients?
- How much of your advertising budget is targeted towards retaining clients?
- Which client is more financially valuable to the company?
- Would you agree that you could lower your advertising budget and maintain your sales volume by targeting repeat/referral clients?
Traditionally, we focus our advertising on the price of our vehicles which influences buyers to think price first when they contact us. Then, our Managers and Sales Trainers tell us to stay off the price as much as possible. Not all dealers market this way anymore, but some do, and it’s part of the reason why we have a lack of trust between consumers and dealers. Price still has to be a part of advertising but we must incorporate our unique value proposition. Why should they choose you?
Author - ReThink Selling: Why You Only Know 20% of Sales (coming summer of 2018) Owner - Woodworth Chrysler Dodge Jeep Ram Ltd. Founder - ReThink Selling www.rethinksellingu.com Founder - BidzAuto... disrupting the automotive industry starting September 2018 Top 40 Under 40 Automotive Professional in North America
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4 Comments
Sherri Riggs
DrivingSales
Brandin I love this! I think sometimes we get stuck in routine and get scared to try new things. But seeing the numbers laid out like this really paints a strong picture.
C L
Automotive Group
You’re spot on.
I always say that Acquiring new customers is expensive, acquiring conquest customer even more expensive, retaining a customer is least expensive and makes for better experience.
Derrick Woolfson
Beltway Companies
@Brandin, excellent article! Spot on. What really fascinates me, too is that it seems to be a no-brainer to spend more to *retain* previous clients as they often *spend* more money!! Offering a much better ROI than a new customer who will most likely expect a larger discount, which is why it costs as much as $600+ to acquire a new customer.
Pierre Legault
H Gregoire Group
I think you have to balance this somehow. You cannot live off of your current customer base. You need to spread the word out and aim for conquest customers. It is expected to cost a lot more to find a new customer, but you have to spend that money to keep that 70%-30% balance. Once you stop spending that money, your ratio will end up being 80-20 and then 90-10 and then you'll close shop. A good in-house strategy combined with great tools and staff on boarding in your plan will have a great success at retention. I agree that 85-15 spending on current versus conquest is a bit high, but a 60-40 spending will do wonders. as for Digital, you are right, spend 85% on digital and 15% on traditional... or 100% digital...