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There are a lot of options when choosing how to invest your advertising budget. Normally, you may think of dividing your budget across channels such as TV, Internet, radio, newspaper, direct mail, email, social media, etc. Why not look at it a different way? Why not put the priority on attracting leads that you have the highest probability to close? In other words, what if you divided your advertising budget based on referrals, previous customers and conquest (new) business? If you prioritized your ad spend based on the closing percentages of these segments, how would your advertising budget look different?
There are multiple channels to target each of these segments. With referrals and previous customers you can use email, direct mail, the telephone, social media and texting, and you can combine these with micro-sites. With conquest or new business, you have options such as third party leads, TV, radio, newspaper, Internet, direct mail and email (assuming your prospects have opted in). So, out of all these opportunities, which will give you the greatest return on your investment?
Last month, I wrote an article on setting up a referral process. Without question, referrals will give you the greatest return, but you can’t survive on referrals alone. So, based on your advertising budget, where do you invest most of your money and is it prioritized based on what gives you the greatest return?
Are you better off investing into third party leads that are distributed to dealers all over town, or investing in pull-ahead programs right out of your own customer database? If your goal is to sell more vehicles, what is the easiest way to get there? Are you going to have a higher closing percentage with a third party lead or a previous customer who can actually upgrade his or her vehicle for no money down and actually lower his or her payment?
With today’s innovations, dealers have more tools at their disposal than ever before. Like anything, you’re only going to get what you put into a program. With used cars in demand, how important is it for you to acquire more trade-ins from your previous customers?
Imagine marrying your dealership’s customer database and vehicle inventory with current manufacturer incentives and the specific profit level you would like to achieve. Then complex algorithms generate a list, pairing customers with the vehicles in inventory that they are eligible to trade into for lower payments. Using the Black Bookâ value of the customer’s current vehicle and his or her current payment and financing information, the customer is matched with a new or upgraded vehicle with no cash down and often a lower monthly payment. Is this lead easier to close compared to a third party lead? How much do you invest in a program like this compared to third party leads? How much do you work with your staff to make sure these types of leads are handled correctly?
Perhaps the most amazing benefit to this type of innovation is what can be done through the service department. Imagine these same calculations being run every business day with your dealership’s new service appointments, thereby matching your appointment customers to vehicles currently in your inventory!
Today the tools to sell a vehicle have never been more innovative! Are you prioritizing your advertising dollars in systems and processes that create the type of lead you have a better chance of actually closing?
How would I prioritize a budget? I would prioritize these segments in this order (of course only you can choose which programs and channels work best per segment for your store and personnel):
I look forward to hearing your thoughts.