One of the best things about my job is the fact that I get to talk to so many owners, GMs, dealers, sales managers and service directors about their dealership’s owner marketing strategies. Or, in some cases, their need for one. I find that when I’m speaking with dealers who are ready to reap the benefits of developing and implementing a strong, sustainable owner marketing strategy, that’s when I find my job most rewarding.
There are only three ways to grow a dealership:
• Increase your number of active customers
• Increase your profit per transaction
• Increase your customers’ repurchase frequency
The most effective way to accomplish these goals is with a well-planned and sustainable marketing strategy.
[bctt tweet="5 Mistakes Dealers Make with Their Owner Marketing and How to Avoid Them" username="JandLMarketing"]
Over the years I’ve heard some of the same responses again and again when discussing owner marketing. It doesn’t matter what part of the country I’m in, the size of the dealership, or the OEM. They’re the same five mistakes and they have the same damaging results.
1. “I need to focus on customer retention.”
Here’s the thing, on average, a dealer’s true customer retention rate is less than 25 percent. However… 58 percent defect from you because they buy another make. Out of the remaining 42% who are loyal to your make, only 12% of those defect to your direct competitors.
So, the fact is, you do a great job retaining people who are loyal to your make! Your customer retention strategy is working.
The real question is… What control do you have if customers defect to another make?
Your biggest opportunity for growth is found in the 75-80% of customers who are defecting from your competitors’ dealerships! I say that because every dealership is facing this challenge.
This means you have more buyers in market today willing to consider your make. What it really means for you is a chance for new business to outpace your defection.
2. “I already have a marketing plan.”
I can’t tell you how many times I’ve had a dealer tell me he’s running a promotion because, “I’ve got to make my month” or “I need to hit my numbers.” That’s not a marketing plan—there’s no strategy. It results in limited communications and virtually no data mining. If you’re lucky, it might get you out of a tight month, but it’s not a sustainable growth strategy plan.
Dealerships need a marketing strategy that’s strategic and data driven. Fortunately, dealers have an enormous amount of data about their customers’ sales, service and F&I histories, which means they can develop extremely competitive offers, communicate them via multi-channel campaigns, and target those customers who are most likely to respond.
A dealer needs to communicate with his customers when it best serves them, not when it best serves him.
3. “My CRM does that.”
Sure, a CRM can identify customers with good equity. It can generate birthday reminders and supply email templates. It provides resources and information, but it doesn’t create a strategy. It can help dealers communicate with customers, but it doesn’t help them motivate customers. That is a critical difference that must be clarified.
Data should serve as the foundation of a dealership’s strategic plan, driving its marketing decisions, but data alone is not the plan. The data needs to be used to develop compelling offers that get customers to take action.
4. “My service lanes are already too busy.”
The easiest way to activate or reactivate a customer is through the service drive, and it should be a part of any owner marketing strategy. Period.
Did you know that the likelihood of a customer purchasing their next vehicle at your dealership is dependent on service retention?1
If the customer has defected from your service department, you only have a nine percent chance that they will purchase their next vehicle from you.
If they visit 1-2 times per year, their likelihood to purchase from you increases to 46 percent!
And customers who visit your service department three to four times per year are 86 percent more likely to purchase their next vehicle from your dealership.
By offering a carefully targeted audience a complimentary 60-minute multi-point inspection at your service department, you’re offering a valuable incentive for current, former, and potential customers to visit your dealership, be on location for a significant amount of time, and experience the quality of care and service you are able to provide.
You’re setting yourself up for success because you’re giving your service department all the time they need to walk through each step of your process with the customer in order to build or regain their trust in your mechanics and earn their respect.
Customers who understand that dealerships have more knowledge of their specific vehicle, quicker turnaround times, and competitive prices are less likely to turn to third-party shops.
5. “The OEM doesn’t give good enough incentives.”
A dealer’s strategy shouldn’t be based on something he can’t control—incentives alone won’t give his dealership a competitive advantage. He needs to dig deeper.
Everyone may have similar incentives, but only a dealership has its customers’ data and the ability to market strategically.
The dealer can gain the advantage by creating an omni-channel marketing strategy that motivates customers by moving them down the marketing funnel and into the showroom. Even better, provide a shopping tool that allows your target audience to sift through your inventory and compare your offers and incentives online – this way you’ll keep them away from third-party websites and show them just how easy it is for them to find their next vehicle.
That’s a marketing strategy that puts the dealer in control.
As a dealer, don’t make these mistakes. Find marketing strategies that are driven by data, ahead of the trends, and are proven to succeed. Don’t let your competition take the lead by assuming that your current marketing strategies are enough.
Market forces are at play that affect each decision you make and what might have worked in the past, will not work now.