Automotive

If You Build It, They Will Come

The stark reality of marketing and advertising boiled down to the basics.
If You Build It, They Will Come

The Setup

Over the past couple of years, most of what I write on, speak about, and carry on in conversations with centers are marketing being led by some very key elements. Not an exhaustive list by any means, but here are some of my key assertions that drive toward marketing with the highest LTV (lifetime value) of customer and lowest cost per sale.

  • Building brand awareness based on core value alignment
  • Dynamic unique selling propositions
  • Well-rounded media mix modeling
  • Digital medium emphasis for paid media
  • First-party data & data mining leading channels
  • Content-first marketing based on audience and channel

These elements, coupled with an internal matrix for people and processes are what I believe are what is central to both short and long term growth of a franchise automotive retail dealership. For that matter, I believe they are central to retail growth no matter the sector. 

Some of the people and process core elements are:

  • Well defined mission, vision, and values
  • Quality BDC/CRM process with defined, measured, and executed net delivery goals
  • Dynamic sales process that seamlessly integrates online and offline
  • Accountability throughout leadership and front-line employees
  • Clear emphasis on ESI (Employee Satisfaction Index) that leads to CSI (Customer Satisfaction Index)
  • Attention placed on maintaining the flywheel of customer relationships
  • People-first culture dedicated to health and growth of employees

Even just committing and executing on the 12 bullet points above is not an easy task. It takes dynamic leadership, documented processes, incredible people, technology, and most importantly…TIME. 

The problem is, not everyone has a ton of time to give. Though, I would argue, any business not seeing themselves with a long-term growth trajectory has their head too far down to stay afloat far into the future. So, you need to take your time. 

  • Take time to build a brand. 
  • Take time to write processes. 
  • Take time to craft culture.
  • Take time to dial in a well-rounded advertising strategy.

Enough about my musings (we will get back to those) and on to the good stuff!

The Case Study

Recently, I have had the opportunity to look into some data with three different, yet quite the same franchise retail stores. After weeks of being stumped by confounding analytics that include website traffic, customer pay repairs in service, and sales volume, I took some time to try and figure out what was going on. Then, like all good millennials do, I headed to social media (on a Sunday afternoon no-less). 

Any good social media guru knows, posting on social media on Sunday or Tuesday morning is like death to a post. However, when there are strong opinions involved, watch out! I loved seeing the thoughts pour in. Some aligned with my core beliefs and many challenged me to think in new ways. In fact, some of the comments on LinkedIn and Facebook have led to a deeper discovery of the findings within the particular cases I referenced in the post question. 

Don’t get me wrong, to boil down to ONLY 3-4 factors that lead to market spend deltas is simply impossible (not to mention I removed the location variable).

So let me level set a few more elements that a lot of people pointed to as potential variance causes.

Manufacturer

Simply put, the franchise manufacturer has a lot to do with the success of a store in a particular market. Things like tier 1 and tier 2 marketing, new vehicle inventory availability, brand reputation, and co-op guidelines can certainly impact success. In the three examples, we can assume they have similar brands when it comes to how each handles those 4 elements in their market areas. Yes, there are some minor differences, but the delta is minimal.

Inventory Volume

Not that it is a non-factor, but in these examples the reverse expectation is held. In fact, the dealer with the highest marketing spend also has the most inventory and it trickles down from there. Remember, this is available inventory. For each store, the % of new to used inventory is about the same as well. 

Included Elements

In each example, expectations have been for what is to be included in the marketing budget. This includes all advertising spend, agency fees, point of sale expenditures, employee expenses, and websites/website tools. None of the spends take into account co-op fund reimbursements.

Store Age

Each store has quite a long history in their markets, but have changed hands in the last 18 months to new ownership. Over those 18 months, recovery from previous sales volume lows has risen at approximately the same rate due to new ownership.

Process Efficiency

Processes can have a major impact on sales and service efficiency. The delta on showroom closing is around 5% and BDC closing ratios are within 1.5% of each other for the stores referenced. I feel like that is about as level a playing field as you can get.

What Really Matters

Again, I want to reiterate that there are a TON of impact factors on success and I have purposely either level set or removed them from consideration, because, based on how the traffic is acting and the understanding of the stores, they are lower on the impact ranker. Let’s not throw the baby out with the bath water here. Hold on to your outraged social typing fingers for a moment!

I want to pull out 3 elements that are core to the dynamics that I am seeing in so many stores across the country that are front and center for these stores. I have seen these trends impacting small and large stores alike. So finally, the musings:

Inventory Merchandising

That’s right. The little box in vAuto or your inventory management tool that says ‘not frontline ready.’ Your capacity to merchandise your inventory is the lowest hanging fruit to guide efficient marketing and advertising spend. Quality merchandising answers the core questions any in market shopper has:

  • Is it the right car?
  • Is it the right price?
  • Is it available?
  • Do I like the way it makes me feel? (a bit avant garde, but this is why we photo a car, right?)

The store with the lowest cost per sale in this example has their full photos up quickest, descriptions accurate, clean photos without distracting overlays, and the largest % of their available inventory fully merchandised or ‘front line ready.’

Flywheel Prioritization

If you need a lesson in the flywheel of customer retention, Ben Hadley or Todd Smith are probably the best. However, it is not lost on me that the sure fire way to drive down cost of customer acquisition is finding customers that you already have to keep business continuity. 

The dealer with the lowest cost in this example has been spending a majority of their budget for years pushing customers back into the service environment. In fact, they have a higher volume of customers through the doors in service per day than most 250-300 car stores that I know. Think their community knows where they are at?

Digital Customer Journey

Remove the barriers for your customers. This is one of my core tenants and the best of the group has done this well. Speed to inventory on the home page, simplified SRPs (search results pages), reduced VDP (vehicle detail page) calls to action, and lack of interstitials (pop ups and unnecessary tool overlays) are all part of a great website experience. After solving for some UX (user experience) changes, see in the image below how the customer journey changed even with a lower overall spend in marketing, same inventory volume, and no changes to other providers for the dealer referenced with the lowest overall cost. VDP views are certainly not everything, but if leads go up 110% and sales volume is up 30%, the results speak for themselves.

If you are looking for other industry websites to peruse and get ideas for simplification, check out these other retailers:

Digital/Traditional Media Mix

If you have been to Digital Dealer, NADA, DMSC, or any other automotive conference over the past 10 years, you know the story. Digital is the dialed in option for reducing spend by talking to the right people, at the right time, on the right channel, with the right message.

The fact of the matter is that you can still miss on digital budget. Depending on the providers, where you are spending money, and how much you are spending, you can simply overspend or misspend without the right strategy. Assuming your digital strategy is dialed in, it will always result in results growth and a lower total cost per sale than a heavy traditional model. The dealer in the example spends less than 7% of their budget on traditional/print advertising.

The Wrap

There. Is. No. Silver. Bullet.

No matter how hard anyone tries to find it, there is no one way to do marketing, brand, or advertising for every market, product, or business. There are, however, some tried and tested core elements to any marketing strategy that can produce very quick results. By combining brand first marketing, people/process, and core strategy, the speed to growth and lower cost per customer acquisition is always faster than hope-as-the-plan. 

I am also very thankful to all of the people that commented and added their thoughts across social media and text threads to what may be going on. It solidified some thoughts and forced me to think outside the box. If you would like to see some of those comments, you can check out the threads by clicking on the links below:

See the Post on LinkedIn

See the Post on Facebook

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.