So much of the conversation in automotive marketing today is focused on how to leverage technology and data to precisely target consumers. While this is important, it’s just as important to remember that creative still matters.                 

After all, you can serve up the exact right message to the right person at the right time, but without a compelling image or copy, the consumer will simply ignore it, or scroll right by it on their phone.

When it comes to creative marketing, I find that most dealers fall into one of two categories: (1) the dealer who is content to ride on the manufacturer’s creative coattails, and puts very little time and effort into creative campaigns for their own brand, and (2) the dealer who loves to be creative and comes up with cute or funny campaigns that, unfortunately, may stray quite a bit from the manufacturer’s intended brand image.

Striking a balance between these two extremes is the key to successful marketing at the dealership level.

So, what’s the best way to achieve this balance and how can you differentiate your brand to capture consumers’ attention? Here are some tips.

Less is More

No matter where your marketing message is seen today, you have a very limited amount of time to get your message across. Don’t cram two messages into one ad, or overly use adjectives. Don’t tell the consumer what you want them to feel. Your ad should make them feel it.

The same rule applies to photos, videos and other images. If you are displaying a photo of a vehicle, there’s no need to add starbursts or other special effects. The vehicle is enough. Keep your images and messages simple and clean.

Maintain Brand Integrity

There’s a reason why auto manufacturers spend hundreds of thousands of dollars on focus groups and research, and hire really expensive ad agencies to help them create their brand images. They are the experts, so trust their expertise.

If you’re a Porsche dealer, you’re not going to send out Christmas cards with puppies on them, right? While nobody can debate the cuteness of puppies, they just don’t fit with Porsche’s image.

So, before you decide to shoot that TV commercial wearing a giant Stetson cowboy hat, consider if the image you are presenting is an appropriate representation of your manufacturer’s brand, and whether it would appeal to your intended audience.

Stand Out

As a dealer, you definitely want to emphasize what you can offer that differentiates your store from others. Whether it’s free loaner cars, experienced staff or a smooth process, give local customers a reason to buy or service with you.

Just make sure that what you’re advertising is genuine to the experience that customers will have when they visit your store. There’s nothing consumers hate worse than a bait and switch.

Stay Local

If you want to get creative with your campaigns, try incorporating local nuances to engage consumer attention. Local imagery can evoke feelings of pride and loyalty.

If you’re in Brooklyn, a picture of a vehicle parked with the Brooklyn Bridge in the background may be the right choice. If you’re in southern California or Florida, sun and palm trees may be the perfect backdrop. If you live in Hawaii, wouldn’t it be odd to see an ad featuring a vehicle on a snowy mountain road?

Tailor Your Message to the Medium

Let’s say you want to promote a seasonal sale event. Because you’re a savvy marketer, you leverage your data and you decide to create an marketing campaign that includes radio, direct mail, email, display ads and social media.

Your creative message should be cohesive across all channels, so your intended audience knows exactly what you’re promoting. Yet, how you deliver that message is going to be quite different depending on the channel.

Facebook has canvas ad that allow for multiple images. Videos also play well on Facebook. For social, your images have to be thumb-stopping stunning. With ads, a simple image or a few words may be the best approach. On a postcard, you may want to incorporate spot gloss to help your piece stand out.

When it comes to building your store’s unique brand, do not underestimate the importance of creative in marketing. Remember that the quality of creative in a campaign is far more effective than strategy alone at raising brand awareness and driving sales.

Recently Facebook announced that it will stop using data from third-party data aggregators to supplement its own data that it uses for ad targeting. What does this mean for car dealers?

Until this announcement, Facebook collected data from three sources which it used to accurately target its users with ads. These sources were:

• Facebook’s own data, which it collects from user activity and profiles. For example, Facebook can track which users visit or “Like” certain auto manufacturers’ pages. So, if a Facebook user visits a competing dealerships’ page more than once, you may want to target them with an ad to raise awareness for your dealership brand.
•  Your dealership’s data, such as customer emails in your database and loyalty programs. For example, you have a list of all your customers coming off-lease in the next three to six months. Facebook can match customers on this list with its users, allowing you to target them with ads promoting lease renewal options and specials.
• Data from third-party services. For example, Facebook had access to vehicle registration data so it could identify all owners of Toyota Scions. This was helpful to dealers who might want to target all Toyota Scion owners in a defined radius so they could serve up ads and special offers for service and repairs.

So, what happens now that access to the third-party data has been eliminated?

First, initial reports suggest Facebook third-party audiences won’t be removed until September 30th. This gives dealers time to refine their strategies (and time to enjoy results from targeted summer service campaigns).

The good news is that you can still use the data collected from both Facebook and your own database to build new audiences and increase engagement with the best audience that you have—your own customers. Collectively these are referred to as first-party audiences, because your data and Facebook’s first-party data is used to target them. 

First Party Audiences on Facebook
This is your most captive audience and one worth paying special attention to. If you effectively take advantage of its value, you won’t bypass countless opportunities to connect with, retain and even win back customers. There’s a reason that more than 65 percent of marketers believe that first-party data provides the best path to understanding customers. This data is a gold mine, and that advantage can not only make an impact to the success of your marketing efforts, but to your bottom line.

The data to target these audiences is collected from actual interactions that customers have with your dealership across a vast array of touchpoints, both historical and in real time. This data can also be used to predict consumer behavior with a high degree of accuracy; for example, as customer interaction wanes, the likeliness of defection increases. Campaigns targeting these customers based on specific behaviors can help increase customer retention rates.

Not only that, but you own this data, so it doesn’t cost you anything. This makes advertising more cost-effective than advertising with third-party data. Finally, and most importantly, due to privacy debates currently taking place and the questionable future of third-party data, your first-party data is safe.

This data can be used to target several categories within first-party audiences, including:

Custom Audiences
A custom audience created from a customer list is an audience made up of your existing customers. You can target ads to this audience via Facebook, Instagram and Facebook’s Audience Network, a display ad network that allows you to extend reach by displaying mobile ads through a number of apps and websites.   

Communicating with this group, which could include people who are in your database or who have visited your website, helps you stay top of mind as well as build trust and customer loyalty.

Lookalike Audiences
By focusing on this powerful segment, you are able to build audiences based on people similar to your customers. This is particularly helpful when your strategy focuses on building brand awareness and introducing new prospects to your business and capabilities. If your goal is a conquest strategy identifying target consumers across Facebook and Instagram, this is the way to go.

Unique insights are gained from other marketing efforts across Facebook, greatly increasing the chance of your message resonating with the right people who are most likely to take action.

Core Audiences
No one knows your customer better than you, but by segmenting your audiences based on distinguishing factors, you’ll discover those most likely to be responsive to your messaging.

Core audiences are created using the following data types:

• Demographics – age, gender, relationship status, education, workplace, job titles and more
• Location – target key local areas or set a radius around your store
• Interests – drill down into hobbies, preferences or favorite activities
• Behaviors – purchase behaviors, device usage, etc.

The ability to identify core audiences allows you to further refine your custom and lookalike audiences, as well as a strategy to target them. This greatly increases your ad campaign engagement and results.

So, be wary of marketers that downplay the importance of Facebook. The good news is, there are still ample opportunities to use Facebook to be heard by your most important audiences and drive key, responsive customers to your door. Best of all, Facebook provides you with detailed metrics for all of your ad campaigns, so you can measure ROI and determine how well it’s working for you.

Lately I’ve heard the terms omni-channel and multi-channel marketing used interchangeably. Yet there’s a distinct difference between the two terms, and several reasons why I believe omni-channel marketing is a more effective approach for auto dealers.

Years ago, we realized that not all customers can be reached by a single channel such as mail, email, television, radio or social media. Multi-channel marketing pushes messages out across all these channels in order to increase audience reach.

However, this fragmentation of channels presents a challenge. Reach is only one part of the marketing equation. When you factor in frequency, the cost of increasing frequency across all these channels becomes prohibitively expensive.

One way to address this challenge is to ask customers what their preferred method of communications is, and to market to them exclusively on that channel. The problem with this approach is that the channel the customer gives you may not be where they actually spend their time.

For example, a customer might give you an email address but only check that email a couple times per week. Or, they may tell you to put them on your mailing list knowing full well they throw most of their “junk mail” right into the trash.

When it comes to communicating, we are all omnivores. We consume different messages on different channels at different times. Your marketing communications should match the way that people personally communicate.

I know I can get hold of employees through the week via their work email address; but I have less confidence I can reach them that way on the weekend, so a text or phone call is the better approach. A lot of people spend time on Facebook at night or on weekends, but (hopefully) not while they are at work during the day.

An omni-channel strategy focuses on how your customers communicate with your brand at various stages of the car-buying journey. This is a more effective approach for several reasons.

Omni-Channel is Omnipresent

Omnipresent means to be in all places at once. Multi-channel marketing can fall short because you are pushing messages out at your convenience, and not necessarily when it’s convenient for the customer to receive it.

Not all consumers follow the buyer’s journey in the same way at the same pace. We’re all different, so the key is to be able to reach your customers with the right message over the right channel at the right time.

Instead of pushing out your messages across all channels at random times, you are pushing them out strategically on one channel or another, so the message is waiting for your customers when they show up.

This approach increases both reach and frequency without the prohibitive cost.

Omni-channel is Omniscient

Omniscient means “all knowing” and an omni-channel strategy requires knowing how to leverage your data with predictive analytics. The data is used to create a seamless, consistent experience with your brand, regardless of the device the customer is using or where they see your message.

How does this work? Most dealers have used retargeting ads. A car shopper views a vehicle on your website and that same vehicle is displayed to them later as they surf the Internet. Retargeting is a strategy that integrates your website and search marketing channels.

With omni-channel marketing, you can take this strategy a step further by delivering an email to that same car shopper that advertises a sale price or leasing special for the exact vehicle they were viewing. Later on, that same person may receive a text with a link to a video test drive for that same vehicle.

What happens when a service customer ignores your service reminder email? With multi-channel marketing, you send another email. With an omni-channel strategy, you can drop an ad for an overdue service reminder right into their Facebook news feed so the next time they are on Facebook they will see it.

Because it leverages predictive analytics, omni-channel messages are typically automated, requiring less time commitment from dealership staff.

Omni-channel is Omnipotent

Omnipotent means having unlimited power. Omni-channel marketing provides deeper insights into both your marketing spend and your customers’ journey, giving you the power to better service them.

An omni-channel strategy collects data from online and offline touchpoints and evaluates consumer patterns of behavior at a granular data. It measures everything.

Every time a customer interacts with your dealership, regardless of what device they’re using or the channel they are on, that interaction is noted and affects future messages going out on other channels. In other words, it shows the customer that you’re listening to them, improving their experience with your brand.

It also allows you to identify wasteful marketing spend. Did you know that Apple does not have a presence on Twitter (other than for support)? Twitter doesn’t help them reach their customers at critical points on the buying journey.

That doesn’t mean Twitter isn’t right for you, but wouldn’t it be helpful if you could identify one or more channels that you’re wasting marketing spend on?

Multi-channel marketing is far more effective than single-channel marketing. An omni-channel strategy takes your marketing to another level because it provides insights that improve your results and your customer relationships.

A ‘tentpole’ event at your dealership is one of those big-deal events that you really want to be successful. It could be a sale, holiday event, new product promotion or a community event that you’re sponsoring.

Tentpole marketing is a strategy that generates social buzz around your event that drives traffic to your dealership or to the event you’re promoting.

The most effective way to promote tentpole events is with an omnichannel strategy that includes digital channels such as email marketing and display ads; and may or may not include traditional media such as television, radio and direct mail. 

Social media is of course, is one of the best ways to generate social buzz. Facebook has a number of tools that are ideally suited for event promotion, including:

Facebook Live
Facebook Live is a highly successful way to drive excitement around a live event such as a new model reveal or promotion. Or, you can try creating a live event where your sales or service managers answer customer FAQs.

These videos are live streaming and best suited for events where the audience wants to interact and ask questions. For that reason, don’t plan your Facebook live video with a rigid editorial format. Keep it fluid and respond to customer comments and questions. 

According to a study by Newswhip, 98 out of the top 100 performing posts by brand pages on Facebook in January 2018 were native videos. Facebook live videos are an ideal way to gain a lot of exposure for your event on the big day, and also in the days after the event.

360 Photos and Videos
Did you know the Facebook app can be used to take panoramic photos and/or videos, then upload them to Facebook? This is a very captivating way to share immersive stories, places and experiences with your fans. Users must swivel their phones to view the entire photo or video.

Facebook’s 360 photos and videos create an experience that’s similar to virtual reality, except that it doesn’t require any special equipment or third-party apps.

What better way to showcase the interior of a vehicle? Or you could share videos of your showroom, service department or a community event that you’re sponsoring.

Canvas
Canvas ads are designed to provide mobile users with a full-screen ad experience that brings your brand or products to life. According to Facebook, a remarkable 53 percent of users that open a Canvas ad view at least half of it, and the average view time per ad is 31 seconds. That’s a lot of exposure!

Canvas ads are easy to create and versatile. Use videos, photos, image sliders, text and call to action buttons to generate excitement around your event.

Local Awareness (geo-targeting)
The ‘reach’ objective on Facebook gives you the chance to connect with local audiences and drive foot traffic to your dealership’s event. Facebook allows for narrow targeting and is very effective at connecting you with in-market shoppers within a specified geographical radius.

Upload your current customer list in your DMS database and use Facebook to target them with specific messages. Create lookalike audiences to expand your reach even further.

T-Minus Countdown
Start building momentum for your event several weeks, if not months beforehand. First, create the event on your dealership’s Facebook page. Then create the content. The more content you can create—especially videos—the more successful your campaign will be.

Start with a canvas ad featuring photos or a video to tease the event. If you are partnering with another organization, create co-branded content that can be shared on both of your brand pages. 

One to two weeks before the event is the time to really ramp up your content and targeting efforts. Use at least five of the following Facebook tools to maximize reach and frequency, and to ensure that your content is being seen by your intended audience:

·        360 photo/video

·        Regular photo/video ad

·        Canvas ad

·        Carousel ad

·        Co-branded content

·        Lead ads

On the big day, stream a video of the event on your Facebook page with Facebook live. Continue to use local awareness ads to build brand awareness through the event. Also use lead ads to encourage people who missed the event to come in at a later date and take advantage of the offer.

Not all Events Have to be Sales
One of the most successful tentpole events for a dealership I know of was hosted by Fort Bend Kia in Rosenberg, TX. Owner Virgil Skinner partnered with a local organization called Pets Alive to promote a pet adoption event at his dealership.

Skinner made a simple 30-second video that was posted on the dealership’s Facebook page. You can view the Pets Alive video here.  

The video went viral in Rosenberg and nearby towns, generating over 11,000 views. On the day of the event, hundreds of people visited the dealership. Fort Bend Kia covered pet adoption fees for everyone who adopted a pet. So many pets were adopted out that two of the shelters ran out of animals and had to go back to their shelters to pick up more pets.

It was a special event and a cause near and dear to Skinner’s heart. Of course, they also sold cars as a result of the event, but that wasn’t the purpose. The amount of goodwill they generated from this event cannot be bought at any price.

The next time your dealership plans a big event, don’t overlook Facebook as a marketing tool. Effective tentpole marketing requires a lot more than just posting event information on your Facebook page. It requires a strategy, content and knowing how to take advantage of the incredible tools that Facebook offers.

When a person wants to buy a vehicle, a dealership is the first place they think of. When a person needs to get their vehicle serviced, a dealership is not necessarily the first place they think of. For service, there’s plenty of choices and competition for dealers.

That’s why service marketing is more important than ever. Historically in dealerships, service marketing has taken a back seat to sales marketing. According to NADA, fixed ops is responsible for 47 percent of a dealer’s gross profits. Yet service marketing is less than 10 percent of the average marketing budget for many dealers.

However, I do see this changing. Service marketing is currently going through a transition that reminds me of what was happening on the sales side back in 2005 and 2006. If you recall, it was during that time frame that many dealers adopted digital sales marketing strategies.

The transition was not always smooth. In the beginning, both dealers and marketing companies spent a lot of time and money on strategies and search terms that didn’t produce results. It took several years, and plenty of trial and error, before consensus was reached on what works.  

For service marketing, dealers have long relied on direct mail and email marketing as two primary channels to draw customers in. Both of these channels have their place, but if that’s all you do, your reach is limited. Consider expanding your service marketing repertoire.  

The good news is, you won’t have to repeat the same mistakes that were made in 2005 and 2006. Digital marketing attribution has come a long way since then, and fortunately we already know what works.

For service marketing, the more personalized the message, the better. The following digital channels are ideal for sending out targeted campaigns:

1)   Search Engine Marketing (SEM)

Search can be very cost effective for service because consumers search using very specific terms. On the sales side, a customer may use terms like “Ford Focus” that are very broad. With service however, longer search terms come into play such as “brake pads Ford Focus near me.”

Try pairing services, parts and accessories with your brand makes and models. Target customers within a 15 to 20 miles radius. Identify the search terms that perform well and review them on a regular basis, as there is likely to be seasonal fluctuation.

2)   Display Ads

Display ads can be generated based on the same search terms and location criteria as you use for SEM. Additionally, you can factor in demographics information such as age and income.

Retargeting is an effective strategy for people who have visited your dealership’s website service page, and for your customers who are due for service.

3)   Social Media

Thanks to big data, predictive analytics and automated marketing, Facebook is incredibly effective at generating service leads. However, posting generic promotional messages on your Facebook page won’t cut it. Consumers don’t respond to messages that are irrelevant to them, regardless of where those messages appear.                  

Use Facebook to create service offers that are highly relevant. Facebook has access to Oracle/Polk data, which means you can target people who own a certain make/model based on when they registered their vehicle. Try creating offers for OEM recommended services at certain mileage intervals.

Facebook tracks virtually everything its users do. When a Facebook user visits a Discount Tire website, Facebook knows that person may be in the market for new tires. Take advantage of this information to serve up a tire ad, as well as other ads for service keywords.

4)   Who to Target

The primary goal of service marketing is to retain your new vehicle sales customers through the ownership lifecycle. Your secondary goal is to reach new customers that have never visited your store.

Facebook and Google properties allow you to serve up ads to existing customers in your DMS. They also have tools that can be used to create look alike audiences within a defined radius of your store.

Another source of new prospects is in your CRM. Most dealers close about 50 percent of their new vehicle lead prospects. What about the other 50 percent? Many of them may have purchased from another dealership.

They gave you a shot at the sale, so maybe they’ll give you a shot at the service.

Try creating an unsold report of all the customers you didn’t close in the last six months, and create campaigns designed to re-connect and bring them in for service.

Service marketing can be highly effective for generating service appointments. But it requires moving beyond direct mail and oil-change coupons to an omni-channel approach using personalized and highly relevant offers.

Chicago, IL—Feb 19, 2018—In 2017, Fort Bend Kia added more than $416,000 to its bottom line with Affinitiv’s Social Roots™ 1:1 Facebook campaigns. Social Roots 1:1 is a unique digital advertising solution that leverages DMS data and trigger-based algorithms to drop targeted sales and service messages right into Facebook newsfeeds.

Last year, Fort Bend Kia generated $109,240 in sales revenue and $146,950 in service revenue from its Facebook ad campaigns. Since starting with Social Roots, Fort Bend Kia has also reduced its annual advertising expenses by more than $160,000.

“From a marketing standpoint it’s the most effective, least expensive thing we do,” said Virgil Skinner, Owner/Principal of Fort Bend Kia. “The other thing I like is that it doesn’t require a lot of time or involvement on my part.”

Rosenberg, TX is a small town about 35 miles southwest of Houston. Six years ago, Virgil Skinner opened Fort Bend Kia here with a mission to bring a luxury car-buying experience to a mass market store. Skinner’s primary marketing challenge is to convince car shoppers in the nearby Richmond and Sugar Land suburbs to drive south to his store. “Most of the people I want to attract drive north into Houston to work, shop and play, so it’s tough,” said Skinner.

Until two years ago, Skinner’s marketing strategy consisted of cable television spots, direct mail, email marketing, ads in civic association newsletters and ads in local HOA magazines. “We had a Facebook page at the time but I didn’t have anyone talented enough to use it for direct and targeted marketing,” said Skinner. “It was mostly me posting photos of customers buying cars and photos from local events we sponsor.”

Skinner was always frustrated with his advertising’s ROI. “One problem with this area is that the cable company only had 40 percent of the market, while the other 60 percent is split between various dish providers. And, trying to reach Houston through broadcast TV is too expensive,” he said. “Untargeted direct mail was bad. Every time I sent something out, half of the pieces came back. As much as I try, it’s almost impossible to get the service advisors to update customers’ physical addresses.”

Two years ago Skinner contacted Affinitiv, a leading marketing technology company. Affinitiv’s Social Roots product uses predictive analytics to drop highly targeted offers into Facebook newsfeeds.

Social Roots 1:1 campaigns leverage DMS customer data and trigger-based algorithms to generate a variety of messages and offers. In service these include service reminders, past due service reminders and second overdue service reminders. In sales, offers are created for customers with leases about to expire, and messages are sent for after-purchase check ins, and six-month sales follow up to ask for referrals.

In addition to the 1:1 campaigns, Affinitiv runs a custom sales campaign for Fort Bend Kia every month. These typically promote leasing offers or offers from whatever national campaign that Kia is currently running. Custom sales ads are created for three separate audiences: Fort Bend Kia’s current customers, in-market Kia shoppers within a 50-mile radius of the store, and a lookalike audience of in-market shoppers. Each list excludes contacts on the others, so there’s no overlap with advertising.

“I quickly realized we were reaching a lot more people on Facebook than any other media we use, so it wasn’t long before I quit doing television and untargeted direct mail altogether,” said Skinner. This allowed him to cut his annual cable budget of $128,000 and direct mail budget of around $60,000. Fort Bend Kia spends $20,000 to $30,000 annually for Social Roots 1:1, resulting in a total advertising expense reduction of more than $160,000.

The most successful campaign in 2017 was a SUV Clearance initiative that Kia ran in July and August. The campaign generated 2,603 clicks, 17 sales and service conversions, and $49,572 in revenue.

In addition to revenue, Social Roots 1:1 delivers other results that Skinner finds valuable. “We quickly became one of the most Liked Facebook pages on the freeway, we have the highest dealer rating of any dealer on the freeway, and the highest Facebook and Google ratings of any Kia dealer in the Houston metro area,” he said. “All of our reviews are absolutely unsolicited and unpaid for. I have a strong policy here, I don’t pay a single customer for a review.”

However, Skinner can’t give all the credit for his ratings to Social Roots 1:1. “The marketing gets them in here, then it’s up to us to close them. Our goal is to treat every client like family.”

For a Social Roots demo or more information about Affinitiv, visit Booth #3174C at the NADA Convention & Expo in Las Vegas, or visit: www.affinitiv.com

About Affinitiv:

Affinitiv is a leading marketing technology company serving automotive manufacturers (OEMs), dealership groups, and individual dealers. Affinitiv’s Connectiv1 Platform is designed to provide a 360° view of customer, vehicle, dealership and marketing campaign effectiveness all in one place. Connectiv1's advanced predictive analytics engine makes it easy for auto dealerships to leverage data and target customers with the right message at the right time on the right communications channel.

Affinitiv enables dealerships to produce, manage, measure and optimize omni-channel communications to drive brand loyalty and increase revenue. Affinitiv’s digital and analytic capabilities support a consistent customer experience through the entire ownership lifecycle. Affinitiv was formed in 2016 and is headquartered in Chicago, IL.

Industry consolidation is a trend that will remain strong for some time to come. I get a lot of calls from investors, and one of their most frequent questions is about market capitalization; specifically, why market cap values for large, public auto groups are low (relatively speaking) to other retail models.

Carmax, for example, has a market cap of $12.8 billion with just over 180 locations. Compare that value to AutoNation, which has a market cap of $5.2 billion with over 300 locations; Penske Auto Group with a market cap of $4.4 billion and over 320 locations; Group 1 Automotive with a market cap of $1.5 billion and over 270 locations; and Lithia with a market cap of $3 billion and over 160 retail locations (all figures circa Feb 2018).

Large auto groups have several significant advantages over individual stores, such as economy of scale and negotiating power. Yet clearly, there is still room for improvement in terms of increasing value for shareholders.

A share re-purchasing program can help, but increasing value requires an emphasis on brand building along with a shift in how stores are managed. Carmax’s brand is based on the customer experience. It’s unambiguous—every customer knows exactly what they’re getting.

Carmax also manages its brand as a network, not as individual stores. For large auto groups to increase market capitalization, they’ll need to stop managing their business as a collection of stores and start managing them as a branded network of locations, similar to other retail models.

Some auto groups are already doing a pretty good job of this, but there’s more to building market value than economy of scale. Here are five strategies that large auto groups can try:

1) Lower operating expenses

Large auto groups inherently achieve some economy of scale compared to individual stores.

In an average, private dealership, Sales, General and Administrative (SG&A) expense as a percentage of gross profit is close to 88 percent, according to a recent Kerrigan Advisors Analysis. In public auto groups, SG&A expense as a percentage of gross profit is 74 percent. That’s nearly a 14 percent differential, which is significant, but there’s still room for improvement.

Many functions in dealerships can be shifted into a shared services model. Accounting, financing, information technology (IT) and human resources are the obvious ones.

AutoNation, for example, has created a $150 per vehicle advantage simply by consolidating back office functions.

2) Leverage bargaining power

When I worked with AutoNation, it was the largest advertiser in the Miami Herald, which meant it got better advertising rates. As a group, are you leveraging your bargaining power across the board with all vendors? Getting all stores onto the same DMS, CRM and third-party service software can significantly reduce costs. In the same manner, you’ll be able to negotiate better prices with marketing vendors, parts suppliers and Internet and phone carriers.

3) Customer management

Large auto groups are in a stellar position to increase customer retention. As we know, all dealerships lose a percentage of customers to brand defection every year. Dealers can do everything right in terms of marketing and retention strategies, yet still lose a customer because the customer simply wants to buy a Toyota instead of a Honda.

As an auto group, you have the ability to funnel this defector to another store so you won’t lose the revenue. This requires the use of predictive analytics across all your stores to identify which customers are most vulnerable to defection, and to create marketing strategies designed to retain them within the group.

4) Asset Management

This is an area with a lot of upside potential. Even in large auto groups, many stores still make inventory management decisions on an individual basis. A Ford dealer takes in a Toyota on trade, then decides to sell it at wholesale or send it to auction. If that dealer is part of a large auto group, that vehicle can be transferred to a Toyota store in the same group. The Toyota store is better equipped to maximize revenue on that vehicle by selling it at retail, versus accepting the auction price minus the transportation expenses and auction fees.

5) Explore New Business Opportunities

If your auto group has 20 to 30 stores within a metro area, start thinking about getting into the mobility business. Establish a fleet of vehicles and/or form relationships with Uber and Lyft. Start a subscription ownership model that fills the gap between short-term rental cars and long-term leases. You could run your own auctions. Start a rental car business or finance business. Find partners for new service opportunities; for example, AutoNation recently struck a deal with Google’s Waymo to service its self-driving minivans.

Large auto groups are primed to take advantage of a changing industry. There’s no reason to fear disruption; instead, embrace it. Increase market value by using the latest technology to lower expenses, leverage bargaining power, better manage customers and assets, and explore new business opportunities.

One of the biggest marketing challenges is to capture the attention of your intended audience. We are all bombarded with hundreds of marketing messages every day, and to a great degree, we have learned how to “tune out” messages that don’t interest or aren’t relevant to us.

How do you get customers to pay attention to your messages?

First, prioritize engagement over impressions. You may get thousands of daily impressions from your billboards, banner ads and emails, but that doesn’t mean that your customers are paying attention. The best way to measure attention is engagement.

Second, expand your channels beyond direct mail and email. When it comes to service marketing, in particular, dealers still heavily rely on these two channels to reach their customers.

Yes, direct mail and email campaigns are effective and should be used on a regular basis. But a significant percentage of your current and potential customers toss mail in the trash and don’t open your emails. That doesn’t mean they aren’t interested in what you have to offer; it simply means these channels are not effective for reaching these customers.

You can’t afford to ignore a large percentage of your customers. The best way to reach them is to market in the moment they are living. Where do they spend their time? Where are their eyeballs?

Facebook
In 2017 nearly 203 million Americans were Facebook users, and 76 percent of those logged in daily. One in four minutes on a mobile device is spent on Facebook, and users spend an average 40 to 50 minutes a day on this platform.

Your dealership probably has a Facebook page, but as we know Facebook has made it nearly impossible to reach customers without advertising.

But what do you advertise, and whom are you trying to reach?

The goal of your campaigns should not be to “sell” your dealership in a general sense. The power of Facebook really comes from its ability to:

• Connect with and send relevant messages to your current customers
• Reach new people who are likely to be interested in your business because they’re like your best existing customers
• Influence people who visited or took specific actions on your website

What if you were able to identify all of your customers in your DMS due for their 30,000-mile maintenance and drop service reminders right into their Facebook news feeds?

What if you were able to search for all Facebook users within a 10-mile radius that own a Ford Edge? You could post a blog or ad promoting the amazing new features in the 2019 Ford Edge, right into their news feed.

What if you could identify which of your customers had purchased tires from an independent tire shop within a certain timeframe? You could drop a tire promotion right into their newsfeed.

In case you’re wondering, yes, this is all possible right now. The amount of aggregate data that Facebook gathers from its users is staggering, and with the right marketing platform, dealers can easily leverage this data.

Google
Not only does Google hold more than 80 percent of total search engine market share, but 80 percent of all mobile searches start on Google.

The real power of Google is that it captures real-time intent, passion and lifestyle from actions taken on Google as well as the rest of the Internet.

This information can be used to identify what car shoppers are doing before, during and after they visit your website. What actions are they taking? Where are they spending the most time?

You can learn a lot about your audience demographics, including age, gender and interests.

Additionally, predictive analytics can tell you which users are most likely to convert, and can identify the most valuable customers for you to engage with via re-marketing campaigns.

This information can be used to create highly personalized and relevant display ad campaigns. Thanks to Google’s attribution, you will get better results with a lower overall ad spend.

YouTube
People love video. YouTube reaches 91 percent of the online population in the U.S. and supports a billion hours of viewing time every day. It’s also the second largest search engine, right behind Google.

YouTube is also owned by Google, so you can get many of the same benefits from, and accomplish the same objectives on YouTube as you can with Google.

The only difference is you do need to create videos, but it’s worth the effort. Because there are millions of videos to choose from, you’ll need to serve up videos that “stop the thumb.” An image of a car or information about a blowout sale are not going to stop the thumb, so you do need to get a little creative.

Of course, there are other marketing channels and social media platforms. But none of them can compare to Facebook, Google and YouTube when it comes to measuring where people spend their time.

It’s time to expand service marketing beyond direct mail and email. To capture your customers’ attention, market in the moment they are living.

I once heard influential thinker Michael Porter say that strategy is as much about what you choose not to do, as what you choose to do. Over time, I have found that, while rewarding, choosing what not to do is far harder. It is always tempting to chase sales by stretching into new demographics, new geographies or product segments. Like an elastic band, the further you stretch the weaker the band is at any one point. Therefore, we must choose carefully where to stretch.

Subaru is a great example. In the early 90s, Subaru of America almost went bankrupt chasing better capitalized competitors by extending beyond its all-wheel drive roots and cultivating a mainstream image. The bottom was an unsustainable 80,000-unit annual sales rate. Amid declining sales, Subaru executives found the courage to abandon front-wheel drive models, nearly 50% of the volume at the time, and refocused on AWD, reliability and niche appeal.

Over time, Subaru grow its brand by adding broader meaning to those attributes. This resonated with its core customers, culminating in the “Love Campaign,” which created a decade of uninterrupted growth with sales approaching 650,000 in 2017. Over the past 25 years, Subaru has resisted the temptation to go where the volume is and stayed true to its customers’ core values.

Building a brand starts with a clear understanding about the intersection between your unique capabilities and your core customer needs.

So, where do you start?

First, when attempting to find that intersection, start with examining the buyer values of your best customers, not those who defected. In service, those values probably include your expertise and amenities, especially the convenience of loaner vehicles which your dealership can uniquely provide. Core customers accept the fact that these benefits come at some premium. So long as your dealership delivers those benefits within levels acceptable to them, they will remain loyal.

Next, when it comes to brand-centric growth, it is important to take these unique capabilities and core customer needs and explain and promote the unique value your dealership delivers. For example, look at your invoice. Do you place a value on multi-point inspections, loaner vehicles and other services provided? Do you highlight technician certifications and tenure, or show videos on OEM provided equipment at every available opportunity, online and in waiting areas? I recently saw an independent repair facility employment ad underlining the phrase “no experience required.” Brilliant! But perhaps not the best way to promote its “unique” capabilities!

Once you have your promotions nailed down, then, and perhaps most importantly, build your brand by executing your brand promise every day. Focus on high quality delivery and recognizing that your customers have a choice. You will never be the lowest cost or most convenient, so you must deliver the best value to those who trust you the most.

Your marketing and showroom behaviors often undermine brand-centric growth. Too often ads and sales behavior are not geared to attracting your best customers. With slowing growth and declining front end margins, I believe dealer profitability is an increasing battle for customer quality, not just customer quantity.

Rather than blasting the airwaves with dubious claims, you would be better served by more direct dialogue with customers who value your services.

One retailer I know redeployed broadcast media money to support Mothers Against Drunk Driving and safe driving clinics at local schools. Which do you think results in more consumers oriented to servicing at dealers – the community-focused message or the dubious claims?

In summary, when looking to grow service, you should first look for and satisfy more customers who value your unique attributes. This limits brand stretch, simplifies execution and builds lasting value.

Yes, this means you have to say “No” to chasing customers with low prices and $9.99 oil changes which undermine your brand, disrupt pay plans and do not build a loyal consumer base, as they defect for the next coupon. But remember, the best way to build your dealership brand is to choose carefully where you stretch.

Too often, CRM and direct marketing are used interchangeably. In so doing, focus on the “relationship” part of CRM is lost.  I think we can learn a lot about the value of that relationship, and how best to foster it, by thinking about successful personal relationships. 

If you expect to build a relationship with consumers, you cannot always ask for an immediate sale. This does not work in personal relationships, so don’t expect it to work with customers.   

Speaking from experience, I know dealers respect vendors who rise above the immediate sale, but too many lose focus on this basic value in pursuit of this month’s goal.  

The law of reciprocity is critical in building a relationship. If you want something of value, give something of value. No successful relationship is one way. If you want a consumer to set an appointment, value that appointment.  If you want an email address, provide a real price.  Look to sustain relationships between service intervals with invitations to special events, small gifts, or valued information. Are your communications reciprocal? What do you expect consumers to give, and what did you give in exchange? 

To create a relationship, communication needs to align with others’ needs, not yours. Focusing exclusively on sales offers not only falls on infertile ground, but dulls the senses to your future messages, which may be relevant. For example, as avid Yankee fans, my son and I buy StubHub tickets every year to see a Yankee home and away series. Consequently, I receive offers for Braves, Orioles, and – insultingly -- Red Sox tickets every week, drowning out Yankee offers.  The logic being that the common thread in my behavior should make it easy to get my business.  Whereas, the opposite effect is created. 

Are you reading your customers’ signals?  Are you analyzing that behavior and suppressing the irrelevant to allow focus on the truly valued? 

And, if you are not asking for the order with each communication, how do you measure success? 

1. Customer Knowledge.  Good relationships require intimate knowledge. Let’s get back to personal relationships here for a minute; you cannot anticipate and respond effectively without knowing how to reach your friends, their needs and the context surrounding their situation.

Yet, many dealers do not audit or value their customer data.  It’s wise to strive to know at least all contacts, all household members and all vehicles.  If you properly valued this data, you could explicitly invest to grow your consumer knowledge breadth and depth.  Many dealers lament that consumers do not provide email information.  If we all lived by the law of reciprocity, this would be less of a problem.  You could also reward based on CRM record quality, run safety clinics for soon-to-be drivers, or make other, similar investments focused purely on increasing knowledge. 

2. Engagement.  While we all have friends we see only occasionally, our strongest relationships are woven into the fabric of our everyday lives.  Interestingly, a dealership’s product is critical to its customers lives, yet through their communications and interactions, many dealers have conditioned their customers to think about the dealership only for infrequent transactions. 

With each customer you have an opportunity to form non-transactional bond -- from auto dealer, to mobility concierge.  For example, think about the complexity of vehicles today.  Most customers aren’t enjoying their vehicles to the fullest.  When is the last time you invested time in learning a new feature?   

As your communication intents become more diverse, your measurements need to become more multi-faceted.  Hold your communications accountable to producing the desired engagements – e.g. email open, website visits, clinic attendance – and then build models which link these engagement events to direct revenue drives, so that you can adequately allocate resources. 

Building relationships with customers is a fundamental part of this business. No dealership will last long if it cannot develop rapport and make a connection with the customer. So, put the “R” back into Customer Relationship Management and start building real relationships with your customers.  I promise you will soon see these efforts boosting your bottom line.