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It’s safe to say that, every day, some of your hard-won customers log on to the Internet and begin shopping for new or pre-owned vehicles. Believe it or not, a staggering 85% of consumers start the car buying process online.
What does that mean to you? It means that your dealership is fighting to keep its customers before they even walk in the door. In fact, if a customer likes what they find on a competitor’s site, you may never get the opportunity to hold on to them.
Why you don’t want customers to shop the Internet
When one of your customers sits down at the computer, enters “car dealers” and hits “search”, they immediately take the power of the sales process out of your hands. They are then, quite literally, driving the car buying experience.
Not only does the customer shop out the price of a vehicle with your competitors, they may even pit you against yourself. For instance, a customer could get one price from your Internet manager and another when they use a national auto program such as Costco’s.
Even if a customer stays with you, you’ll get less profit on a vehicle because they can counter your offer with that of other dealerships’ quotes. Plus, they probably know the exact cost of the automobile, which gives them another advantage when negotiating.
Why your dealership needs a strategy
At this point, it’s clear you definitely want to connect with your customers before they go online. The truth is, you should make contact prior to them even thinking about purchasing a vehicle.
There are a number of reasons for this. One, if you can intercept them before they reach the Internet, you’ll get more profit per deal because they haven’t shopped you out. There’s also a good chance they’ll purchase more frequently, because you’re jump-starting the buying process.
It’s not difficult to see just how much of a difference these two simple facts can make:
Let’s say you’ve sold 10,000 vehicles and retained 2,000 customers. These customers purchase an automobile every 5 years, for an average of 400 cars per year.
If you use those same numbers but communicate with customers earlier and get them to purchase a vehicle every 4.5 years, the total is 445 cars per year. That’s 11.25% more sales every 12 months.
Add to the mathematical equation above an additional $200 profit per vehicle because the customer didn’t make it to the Internet and you’re talking serious money. A profit increase of $89,000, to be exact.
This doesn’t even take in to account that – when you maintain relationships with customers by reaching out to them before they’re ready to buy – you build your customer base. That’s because more of them purchase from you and remain loyal to your dealership, so your defection rate actually decreases.
What you gain by not losing
By keeping your customers and getting to them sooner so they buy more frequently, there’s a good chance your dealership will profit a number of other ways as well.
For one, you’ll have the first opportunity to acquire quality used vehicles for your lot, which means less time, money and hassle than purchasing autos at auction. Plus, the profits on those trade-ins will be higher because there have been fewer changes of hands.
There’s also the fact that, when you retain a satisfied customer, they tell the people in their life about the quality sales and service they experienced at your dealership, which provides great leads for new customers. This is critical, especially when you consider that up to 50% of purchasing decisions are based primarily on the advice of friends and family.
Why just doing something isn’t doing enough
Dealers already know they can’t afford to wait for customers to come to them. So when there’s a little down time, they may send a postcard, make some calls, sponsor an event. It’s sporadic. Even worse, it’s not systematic or strategic. And the return on investment often doesn’t justify the expense.
Communicating with customers doesn’t just need to be consistent; it needs to be consistently smart. Targeting customers whose leases are about to expire doesn’t constitute a strategy. You need to look at your customer base carefully and determine which ones are potentially the most profitable. Then market to those customers in a way that is sure to reach – and motivate – them.
How to get a strategic start: service-in-to-sales
The average new car dealership, according to NADA, spends over $600 in advertising per new vehicle retailed. But what about the customers who are already in your dealership? The ones with a couple of hours to kill while they wait for service to be completed on their vehicles. At that point, marketing to them is free.
The service department can offer a customer a loaner to run errands, a vehicle that is an upgrade from their current car. Then they, or a member of the sales team, can ask the customer how they liked the ride and start working a potential deal.
How you can put the Internet to good use
Keep in mind that there is a time when you want consumers to shop the Internet for new and pre-owned vehicles. And that’s when they’re NOT your customers.
The Internet is ideal for conquest sales, because it gives your dealership the opportunity to compete against other dealerships for their customers.
If you don’t currently have a strategy in place for connecting with your customers before they hit the Internet, give it some serious thought. Because there’s a high probability one of them logged on to start looking for their next vehicle in the time it took you to read this article.